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Hire Risk Of Hiring

(December 04, 2003) - In the 1990s, existing companies in Silicon Valley actually cut 121,000 jobs, while companies started after 1990 created 259,000 jobs, according to the Public Policy Institute of California . It's fairly common knowledge that small businesses are the fundamental fountain of job growth. Things do not get hot and bothered in the big firms until the smallcos have swallowed the talent.

Compared to larger operations, life in a small company is volatile and constantly changing. Jobs come and go, layoffs and business planning are inseparable. At the heart of the job creation engine, a job is a different thing than it is in a large enterprise.

As we start the gentle progression towards the inevitable renewal of our economy, it's useful to remember that the addition of a new employee to the workforce is a risky proposition. Exactly how risky it is depends on the size of the company. It is far more dangerous to add employees to a small concern than it is to add them to an enterprise sized operation. One new employee in a group of ten means that 10% of the culture will be changed! One in a thousand is something else altogether.

As is always the case, operations with less to lose can risk more of it. Entrepreneurial shops take the higher risk of hiring earlier on in the cycle. Right now is a great time to be a staffing company as a result. Customers have stopped whining about price and started demanding results. Recruiting shops are hiring in the staffing and contract industries.

Capital is created by small firms and managed by the large ones. As we speak, the creaky wheels of capital creation are beginning to turn.

John Sumser

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