Create Your Hiring Plan

Deciding who to hire and when means carefully balancing your budget and talent needs. As an early-stage startup, it can be easy to approach hiring somewhat loosely. After all, if you’re in the early days of building out your product, many details might still be up in the air and you may not want to give up the flexibility you need.

However, building a strategic hiring plan is important. It keeps your recruiting and hiring focused, strategic, and aligned to your budget, freeing up your time to focus on what really matters: growing your company. Here’s how you can get started.

1. Understand your hiring needs at each stage of company growth

If you begin recruiting before you truly understand your hiring needs, it’s easy to get it wrong. Hire too many employees prematurely and you’ll burn through your runway; hire too few, and it’ll be impossible to grow as quickly as you’d like. Much like Goldilocks’ porridge, you’ll want to get your headcount planning just right — taking into account your budget, needs, and current company size.

• Venture capitalist Fred Wilson does a great job of outlining optimal headcount for startups that are currently building the product, growing usage, or working on the business, with team sizes ranging from 5 to 25.
• For those who have raised a Series A or further, Craft Ventures founder David Sacks breaks down what the org chart should look like for teams of 50+.

2. Prioritize your hiring needs for the year ahead

Most companies will set a budget in early Q4 that will determine their ability to hire new headcount over the next year. As you set your hiring budget, you’ll want to consider a few things:

• What are your company goals over the next year?
• In order to hit those goals, what are your most pressing hiring priorities now, in six months, and in a year’s time?
• Is there room in your budget for you to hire for all the jobs you’ve listed above? Keep in mind that this goes beyond salary and includes recruiting and hiring costs.
• How will you deal with any unexpected hiring needs? (Don’t forget: the average business will have to replace 10 - 13% of its employees every year.)
• How long will it take you to find, hire, and onboard each new employee?
  

3. Don’t forget to factor in your recruiting needs

At earlier stages, founders at smaller startups might own the entire recruitment and hiring process themselves. However, as a company grows, its recruiting needs become more complex. And so, as you work through your headcount planning, it becomes imperative to ask: who will be hiring for these roles?

If you have in-house recruiters, you’ll want to make sure they have the capacity to hire for the number of roles you’re forecasting. Keep in mind that it’s more challenging for recruiters to find and hire your next Chief Technology Officer than it is to hire a third Customer Support Coordinator.

If your hiring plans are too large for your current recruiters to fill, consider adding additional recruiters to your hiring plan or outsourcing recruitment to an agency.

4. Estimate your salary costs

Once you’ve mapped out your projected hiring based on your goals and priorities, it’s time to crunch some numbers. The Buffer Salary Calculator can help you estimate what you can expect to pay as a salary for different roles, based on the job type and where you’re hiring.

5. Estimate your recruiting costs

For early-stage startups:

If you’re an early-stage startup, you’re probably not ready to invest in inbound and outbound recruiting yet. Job boards and external recruiters deliver a much stronger ROI when you’re hiring at scale.

At this stage, you’ll want to direct most of your budget towards new hires’ salaries, then lean on your network of investors and existing employees to scout out new talent through referrals. This helps you bring in quality talent even when you don’t have a large, recognizable brand name or extraneous budget to spend on specialized recruiters.

You can organize your own referrals through an informal system, such as an Excel sheet, LinkedIn, and emails, or you can automate the referral process using software like The Swarm’s Company Graph.

Other technology, such as an Applicant Tracking System, can help automate the hiring process, as well, without digging into your budget.

For growth-stage startups:

If you’re hiring at scale, your recruiting costs will likely be higher. In addition to referrals, recruitment can include inbound or outbound channels, and will often include both. Your recruiting strategy will somewhat depend on your recruiting budget. However, make sure you’re focusing your budget on the channels that will be most effective for the role and industry you’re hiring for.

Job boards- Job boards will usually charge you a set fee to post to their audience. They are typically free - 15% of a hire’s first-year salary
In-house recruiters: Expect in-house recruiters to be able to hire an average of 50 employees per year. Their average salary is $56,332 - $85,149 (based on Glassdoor).
External recruiters- Working with niche external recruiters for highly specialized or executive roles can often be more helpful than working with an in-house recruiter. They typically charge 30 - 50% of a hire’s first-year salary, plus any agency fees.

When estimating your recruitment costs, make sure you’re doing so by role. Hiring a CFO, for instance, is going to cost more (and be a more complex process) than hiring a front-end engineer.

5. Come up with a plan for unexpected hiring needs

Don’t expect your year to follow your headcount planning exactly. Plan for the unexpected by setting aside a budget and a plan for how you’ll manage any hiring needs that haven’t been forecasted.

Most companies will ask hiring managers to use a requisition form when they need to request a new hire. You can find a sample requisition form from SHRM here.

The requisition form is then sent to Human Resources and reviewed with any decision-makers (such as the CEO or COO) and the Finance team. If approved, the recruiter is given information to move forward with the process.

6. Calculate your cost-per-hire

Once you’ve landed on all of the costs above, divide them by the total number of roles you need to fill over the next year. This will help you predict exactly how much you’ll be spending on hiring.

Cost per hire = (Cost of job boards + in-house recruiters + external recruiters + technology costs) / Total # of hires. You can then use this cost-per-hire number to forecast costs for your hiring over the next year.

Wondering how your CPH stacks up? According to Workable CFO Lacey Brandt, companies can expect to spend an average of $3,000 - $5,000 per hire in recruiting costs.

Extra resources

• If you would like extra guidance when it comes to headcount planning, ChartHop’s headcount planning software lets you create visual plans, forecast costs, and pull in data to help you get a full picture while planning.
• Not sure how often you’ll need to replace employees? Find your industry in LinkedIn’s industry benchmark post for a rough estimate.
• Ongig has three free recruiting budget templates available to help guide your recruitment budgeting.
• SHRM’s talent acquisition benchmarking report is a great tool to give you insight into how other companies are hiring and what they’re spending on hiring.

Harness the power of networks to make your recruiting more efficient. Start free at theswarm.com