# Hiring Model A 12-month forecast of new hires, attrition, ending headcount, and fully-loaded compensation expense across Engineering, Sales, Marketing, G&A, and Customer Success - with a sales-productivity view that converts ramped reps into monthly revenue capacity. - Canonical: https://finamodel.com/templates/hiring-model - Excel download: https://finamodel.com/templates/hiring-model.xlsx - Category: Corporate Finance - Model type: Operating model - Difficulty: Beginner - Audiences: Founders & operators, CFOs & FP&A, Founders, Heads of People, Sales leaders - Tags: headcount, hiring, compensation, fp&a, people ## Overview A hiring model forecasts headcount, fully-loaded compensation expense, and sales productivity across a 12-month horizon for an early-stage operating company. The workbook tracks five departments - Engineering, Sales, Marketing, G&A, and Customer Success - with a parallel row layout that lets totals roll up cleanly and per-department metrics tie back to a single source. The Hires sheet drives every downstream calculation: new hires per month come from a per-department plan, attrition is computed off the prior month's ending headcount times a department-specific attrition rate, and ending headcount is built as a rolling balance. The Compensation sheet multiplies ending headcount by an annual base salary and a benefits-load multiplier (typically 1.25–1.35× for US tech orgs) and divides by 12 to land a monthly fully-loaded expense; a cumulative line shows the full Y1 burn from hiring. The Productivity sheet applies a static productivity factor to sales ending HC - a deliberate simplification that captures the blended state of ramped plus ramping reps without forcing the user to model a cohort ramp curve - then converts that productive HC into monthly revenue capacity using an annual quota assumption. Founders, CFOs, FP&A teams, and Heads of People use this template for annual hiring-plan reviews, sales capacity planning, and burn-from-hiring sanity checks. The Summary sheet rolls each department into starting HC, ending HC, Y1 hires, Y1 attrition, Y1 comp, and average annual fully-loaded comp per head, with a separate sales-productivity rollup that ties Y1 sales comp back to Y1 revenue capacity for a quick efficiency check. ## What's included - 12-month hires sheet with new hires, attrition, and ending headcount per department - Fully-loaded compensation expense by department with cumulative running total - Sales productivity sheet: ramped headcount and monthly revenue capacity - Editable assumptions: starting HC, hires per month, salary, benefits load, attrition %, quota, productivity factor - Per-department Y1 rollup: hires, attrition, ending HC, total comp, average annual fully-loaded comp per head - Sales comp / revenue capacity ratio as an efficiency check - 12-month hires sheet with new hires, attrition counts, and ending headcount per department - Compensation sheet computing monthly fully-loaded comp by department plus a cumulative running total - Sales productivity sheet converting ramped reps into monthly revenue capacity - Editable assumptions: starting HC, monthly hires, salaries, benefits load, attrition %, sales quota, productivity factor - Per-department Y1 rollup with starting/ending HC, total hires, attrition, and comp expense - Sales comp / revenue capacity ratio so the plan ties back to top-line efficiency ## Hiring Model: Headcount, Compensation, Burn, and Sales Capacity Forecast This hiring model is a 24-month forecast of headcount, compensation, recruiting cost, cash burn, and runway for a growing company. It tracks hires, attrition, and ending headcount across five departments, translates sales headcount into monthly revenue capacity, and offers Base, Bull, and Bear scenarios to test the plan's financial impact before making offers. ### Operating Drivers and Scenario Structure The hiring model is driven by a scenario selector and a set of assumptions covering starting headcount, hiring-pace multiplier, base salaries, annual merit, benefits-load components, sales commission and quota attainment, monthly attrition, recruiting-cost components, starting cash, non-compensation operating expenses, and sales quota and ramp months. - The Base, Bull, and Bear scenarios each carry their own values for these drivers, and the model resolves which set to use based on the selected scenario. This allows a founder, CFO, or talent leader to compare hiring plans under different market conditions without rebuilding the model. - The assumptions feed every calculation sheet, so changing the scenario updates the entire forecast consistently. ### Calculation Flow: From Planned Hires to Ending Headcount The hiring model starts with an editable grid of planned hires by department for each of 24 months. These planned hires are multiplied by the hiring-pace multiplier and rounded to whole numbers to produce realised hires. - A running raw headcount balance carries fractional attrition, and from this the model calculates expected departures and then rounds to integer ending headcount. Attrition for each month is derived so that the integer rollforward equation holds exactly: ending headcount equals prior ending headcount plus realised hires minus attrition. - This approach ensures that the headcount figures a CFO reads are whole numbers while correctly accounting for attrition on the prior month's ending headcount. The model also sums departmental ending headcount to a company total. ### Compensation, Recruiting, Burn, and Runway Calculations Compensation expense is built from ending headcount per department. Base salary expense uses departmental ending headcount times base salary, escalated by annual merit, divided by twelve. - For sales, a variable commission component is added based on sales ending headcount, sales commission rate, quota attainment, and merit escalation. Benefits are loaded as a percentage of total base plus variable compensation, with the benefits-load multiplier composed of payroll tax, healthcare, retirement, and other components. - Total compensation per month is base plus variable plus benefits. Recruiting cost is gross hires times cost per hire, where cost per hire is the sum of agency, signing, and onboarding components. Monthly burn combines total compensation, other operating expenses, and recruiting cost. Ending cash is starting cash minus cumulative burn, and runway is ending cash divided by monthly burn. ### Sales Productivity and Practical Use The hiring model includes a sales-productivity view that converts sales headcount into revenue capacity. It starts with sales ending headcount and applies a linear-decay ramp over the ramp months to determine productive sales headcount. - Monthly revenue capacity is then productive sales headcount times sales quota divided by twelve. This shows how quickly new sales hires can contribute to revenue. - The model also provides a summary per department with two-year rollups of starting and ending headcount, net change, gross hires, attrition, base salary, and average loaded compensation per head, plus a company rollup. A checks sheet validates 13 relationships, such as headcount rollforward, compensation aggregation, and cash never going negative. The hiring model is intended for founders, CFOs, and talent leaders to sanity-check a hiring plan against burn, runway, and revenue capacity before committing to offers. ## Built for headcount planning When the question is "can we afford the hiring plan?" the answer needs to fold burn, ending HC, and revenue capacity onto one summary tab. This template does exactly that. ## Designed for finance / people handoff Every figure in the Summary sheet ties back to a clear source row in Hires, Compensation, or Productivity, so the model is easy to defend in a budget meeting. ## Audit-friendly mechanics Every input is a named range, every formula is one or two operations, and the workbook passes static-value, self-reference, and dead-assumption scans. ## Built for headcount planning When the question is "can we afford the hiring plan?" the answer needs to fold burn, ending HC, and revenue capacity onto one summary tab. This template does exactly that. ## Designed for finance / people handoff Every figure in the Summary sheet ties back to a clear source row in Hires, Compensation, or Productivity, so the model is easy to defend in a budget meeting. ## Audit-friendly mechanics Every input is a named range, every formula is one or two operations, and the workbook passes static-value, self-reference, and dead-assumption scans. ## Workbook structure ### Cover Workbook overview, sheet legend, and tab-colour key for navigation. - Title and scope framing - Sheet-by-sheet purpose summary - Tab-colour legend ### Assumptions Every driver in one sheet: starting HC, hire plan, salaries, benefits load, attrition %, sales productivity. - Starting headcount per department - Monthly hire plan per department - Average annual base salary per department - Fully-loaded benefits multiplier - Monthly attrition % per department - Annual sales quota and productivity factor ### Hires 12-month new hires, attrition counts, and ending headcount per department with totals. - New hires from per-department monthly plan - Attrition = prior ending HC × attrition % (HC_Start in month 1) - Ending HC = prior ending HC + hires − attrition - Total row across the five departments ### Compensation Monthly fully-loaded comp expense by department plus a cumulative running total. - Comp = ending HC × annual salary × (1 + benefits load) ÷ 12 - Total comp row across all departments - Cumulative comp from Jan to current month ### Productivity Sales ramped headcount and monthly revenue capacity. - Productive sales HC = ending HC × productivity factor - Revenue capacity = productive HC × annual quota ÷ 12 - Cumulative revenue capacity ### Summary Y1 rollup per department plus sales-productivity efficiency block. - Starting HC, ending HC, net change, Y1 hires, Y1 attrition, Y1 comp - Average annual fully-loaded comp per head - Peak productive sales HC and Y1 revenue capacity - Y1 sales comp / Y1 revenue capacity ratio ### Cover Workbook overview, sheet legend, and tab-colour key for navigation. - Title and scope framing - Sheet-by-sheet purpose summary - Tab-colour legend ### Assumptions Every driver in one sheet: starting HC, hire plan, salaries, benefits load, attrition %, sales productivity. - Starting headcount per department - Monthly hire plan per department - Average annual base salary per department - Fully-loaded benefits multiplier - Monthly attrition % per department - Annual sales quota and productivity factor ### Hires 12-month new hires, attrition counts, and ending headcount per department with totals. - New hires from per-department monthly plan - Attrition = prior ending HC × attrition % (HC_Start in month 1) - Ending HC = prior ending HC + hires − attrition - Total row across the five departments ### Compensation Monthly fully-loaded comp expense by department plus a cumulative running total. - Comp = ending HC × annual salary × (1 + benefits load) ÷ 12 - Total comp row across all departments - Cumulative comp from Jan to current month ### Productivity Sales ramped headcount and monthly revenue capacity. - Productive sales HC = ending HC × productivity factor - Revenue capacity = productive HC × annual quota ÷ 12 - Cumulative revenue capacity ### Summary Y1 rollup per department plus sales-productivity efficiency block. - Starting HC, ending HC, net change, Y1 hires, Y1 attrition, Y1 comp - Average annual fully-loaded comp per head - Peak productive sales HC and Y1 revenue capacity - Y1 sales comp / Y1 revenue capacity ratio ## Features - **Department-level rollup:** Engineering, Sales, Marketing, G&A, and Customer Success each track new hires, attrition, ending headcount, and comp expense on parallel rows that aggregate cleanly into a Total. - **Fully-loaded comp:** A single benefits multiplier scales base salary into fully-loaded monthly expense, covering payroll tax, healthcare, retirement, and overhead in one number. - **Ramp-aware sales capacity:** A productivity factor blends ramped and ramping reps into a single multiplier so the revenue-capacity line reflects realistic sales output, not nominal headcount. ## Use cases - **Annual hiring-plan review:** Pull the plan into a Q4 budget meeting and pressure-test department hire counts against ending HC, total comp, and revenue capacity all on one summary tab. - **Sales capacity planning:** Use the productivity sheet to back into how many ramped reps you need to hit a target ARR run-rate, then size the hiring plan accordingly. - **Burn-from-hiring sanity check:** Plug the cumulative comp line into a runway model to see how quickly the planned hires consume cash before any revenue offset. ## Frequently asked questions ### What is a hiring model? A hiring model is a 12-month plan that maps department-level new hires and attrition into ending headcount, fully-loaded compensation expense, and (for sales orgs) revenue capacity. It is the spreadsheet that lets a CFO or founder pressure-test whether the planned hires fit the budget. ### How does the model handle ramp time for sales reps? It uses a single static productivity factor (typical range 0.7–0.8) applied to sales ending headcount, rather than a per-cohort ramp curve. Tune the factor so the productive-HC line reflects the blended state of fully-ramped plus ramping reps. ### What does the benefits load multiplier cover? Employer payroll tax, healthcare, retirement match, and standard fully-loaded overhead. US tech orgs typically run 1.20–1.35× of base salary; European orgs run 1.30–1.50× because of higher employer social charges. ### Can I add or remove departments? Yes. The builder is parameterised by a five-row layout per section. Add a row in Hires, Compensation, and Summary, extend the named-range list for starting HC, salary, and attrition, and update the Total SUMs. ### Does this replace a full FP&A model? No. It is a people-cost forecast only. Pair it with the budget-vs-actuals or 3-statement template to wire compensation into the rest of the P&L and the cash flow. ## Related templates - [Startup Financial Model](https://finamodel.com/templates/startup-financial-model) - [SaaS MRR/ARR Forecast Model](https://finamodel.com/templates/saas-mrr-arr-model) - [Budget vs Actuals Tracker](https://finamodel.com/templates/budget-vs-actuals)