Ask Inc.

How do I know when to start hiring salaried staff again after a recession? Over the past two years, our IT services company has gone through multiple rounds of layoffs. But recently, business seems to be improving, and we've been hiring contract workers. Ultimately, we are going to have to hire full-timers to rebuild the business, but I'm reluctant to bite the bullet.

Phillip Mosely
OnSphere Corp.
Raleigh, N.C.

Your phrase "seems to be improving" doesn't exactly ring with confidence. Nor should it. According to IDC Research, tech spending is likely to stay underwater until 2004, and anyone trying to rise too quickly could develop a nasty case of the bends. Indeed, most advisers warn against getting fat and sassy until you have at least a year's worth of projects in the pipeline.

On the other hand, tech talent is going cheap these days, so there's an argument for stocking up now. But go slowly. That's what Jon Piot did when he started adding back staff at Impact Innovations, a Dallas-based IT services firm. Impact had laid off roughly 10% of its work force in 2000 and 2001, when it was closing only two in 10 business proposals. Last year, that number spiked to one in four, and COO Piot started bulking up. At first, he hired one full-time employee for every three contract workers, but let the contractors know they had a shot at permanent gigs, giving them more incentive to shine. Since last summer, Impact has added 50 full-timers, positioning it well for an upturn. "Our employees feel safe," says Piot, "and our contractors come and go as we hit the peaks and valleys of business demand."

Speaking of valleys, keep in mind that tech salaries may be climbing out of theirs. For programmer/analysts, average salaries increased 3.5% from 2001 to 2002, according to eWeek. So don't wait too long: Once the market recovers, that number could go up fast. Talk about getting the bends.

My best customer is the government -- which is a good news/bad news scenario. The products we sell have long implementation schedules, which wreaks havoc on cash flow and makes for a lot of juggling in terms of day-to-day expenses. Is there a better way to deal with government work?

Jay B. Myers
Interactive Solutions Inc.

Government projects can stretch out as far as a gymnast's hamstring, so small contractors should keep about three months worth of cash on hand, advises David Rowe, co-founder of Sierra Monolithics, a Redondo Beach, Calif., tech firm that gets about 75% of its revenue from the public sector. If that's not possible, Rowe says, try securing a credit line from your bank. Does that make your stomach feel funny? Them's politics.

You can also structure your contract to require as much as 30% of a project's value up front. "The assumption is always that the agencies are slow paying," says Stan Soloway, president of the Professional Services Council, which represents government contractors. "But often it's because of how the contract is constructed." Soloway says many companies focus solely on the back end of a deal without considering how other elements could work in their favor. That's not a mistake you ever see a politician make.

My CFO and vice president are both strong performers, but I am constantly trying to keep them from killing each other. They always make up, but this is not healthy for my business.

Richard A. Cartagena
Clearwater, Fla.

Why can't businesses work like cop movies, where you take a couple of Joes who drive each other crazy, subject them to a series of car chases and gun battles, and transform them into friends for life (or at least until the sequel)?

Absent such adrenaline-inspired bonding, you're left with the usual set of management tactics: reasoning, pleading, threatening. If those don't work, consider that the fault may not lie with your star performers, but with you. "Many times, the CEO's behavior helps create infighting, and they aren't even aware of it," says Minnesota HR consultant Arlene Vernon. Most employees blame turf battles on their unit managers, according to a recent survey by the American Marketing Association. It could be that a murky compensation structure has execs scrapping over bonuses or opportunities for advancement. Or maybe you're not dishing out the love in equal portions. "Sometimes, fighting stems from jealousy -- the CEO clearly favors one employee over the other," says Vernon.

If you clear the field of such kindling and the fires still rage, you may have to let one of your squabblers go. "Employees look to top leadership for signals," says Robert Bies, a professor at Georgetown University. "If the fighting continues, your employees will think you condone it. That's when a two-person fight can begin to undermine your entire organization."

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