(MoneyWatch) I just read an Inc. Magazine article on the hot-button topic of job-creation, by veteran entrepreneur and contributing editor Norm Brodsky. Brodsky's position is that, while he and all good business owners are happy when they can give people jobs, creating new jobs isn't -- and shouldn't be -- a goal. I'm a long-time fan of Brodsky and his down-to-earth advice, and an admirer of his tremendous business accomplishments. But I don't fully agree with his argument, or at least the way he frames it.
In his piece, Brodsky focuses on job-creation as it relates to overhead and productivity. He says "no one operates a company with the goal of maximizing labor costs," and of course in that regard he is right. We business owners naturally want -- and are generally obliged -- to generate the highest possible return on every dollar we spend. That means getting the most we can out of our real estate, machinery and people. Certainly no one has "increase rent" as a business goal, and Brodsky is saying the same thing in his labor cost argument. He is looking at the expense angle (the very conservative approach with which I almost always agree), rather than the investment view of hiring.
I look at it a different way, and I don't think it's semantics or nuance. To my mind, creating jobs is a legitimate and even important goal, based on the reasonable assumption that a good business person knows not only what is best for the business today, but what will make it grow tomorrow. All businesses are limited by their available resources, with money and time (people) being at the top of the list. For most, growth beyond a certain point requires more of both.
Going back to the rent analogy, no business owner wants to increase his occupancy costs when all other things are equal. But many dream of a bigger factory, warehouse or office that will allow them to increase capacity, offer new products and services, and otherwise take them to the next level. Yes, it's a chicken-and-egg thing: It's incumbent on us to do the most we possibly can with our existing resources, yet those resources also create limitations.
As Brodsky says, we must "constantly search for ways to maximize the productivity of the people we have, rather than adding to head count." Again, he's right if you look only at today's results. But if you know (or at least believe) that adding a new sales manager, shift supervisor or driver will put your business in a different, better place, creating those jobs should be a very real goal.
Some people will say I am confusing a want with a need -- in other words, you hire people because the growth of the business requires it; "backfilling" rather than "paying it forward," if you will. But the two aren't mutually exclusive. Yes, on a day-to-day basis you should try to hire optimally, in sync with your business, and maybe for some businesses that's enough. I fully respect Mr. Brodsky's financially disciplined argument and his acumen, and his successes speak for themselves. But sometimes it's wise not to count every single bean.
For many of us, having job-creation as a goal is not altruistic, it's critical. How many small business people have said "if I only had someone to...," knowing that creating that new job would make new things happen, open new doors. I can't hire people every day, but not a day goes by that I don't want to, and I assure you it's not because I want to make less money.
Adding employees is unquestionably a double-edged sword. On one hand, it is a risk like any other investment: If the employee doesn't produce results that justify the hire, productivity is diluted, and her job (and perhaps others) may not last long. Turnover is painful and expensive. But on the other hand, making the right forward-looking hires at the right time, and accepting the initial overhead impact, can be critical to growing your business, so I submit that creating new jobs can and should be a legitimate business goal.
I could get into much broader, philosophical arguments, like the long-term value of helping to grow the consumer base by putting money in people's pockets. Hiring supports a healthy business "ecosystem" for all of us, and unemployed people don't buy what we sell. But that's a very big and very different discussion.
Finally, though you won't find it in any business book, I think that as long as your business is healthy and can meet its existing responsibilities, creating jobs is, well, good karma. It's one of the great privileges and rewards of owning a business. And even if you don't buy the "what goes around comes around" angle, you should know that the value of hiring goes beyond getting more work done. It also contributes to a positive culture and reputation, and it's good PR, all of which have very real worth.
Oh, and boy, does it feel great to give someone a job when you can.