Mosaic’s Guide to Headcount Planning

We cut our teeth at Palantir, where we joined as early finance hires in 2012. During our time there, the company grew from a few hundred folks in Palo Alto to several thousand employees across the globe.

Since then, we have gone on to lead strategic finance for several high-growth venture-backed companies before eventually building Mosaic. The lessons below have helped ensure our organizations, along with our customers are growing efficiently in both bull and bear markets.

Learn the Dynamics of the Business to Assess Interdependencies

Employees are a SaaS companies’ single largest expense, comprising around 70% of total spend. Understanding the roles and responsibilities of the brilliant people building, selling and supporting the software through accurate workforce planning is critical to identifying efficient growth trajectories.

Schooling did not prepare us to deeply understand how different parts of the engineering department work together to execute on the product roadmap, nor did it teach us the nuances of the company’s sales team.

So, what is workforce planning? It’s defined as the process put in place by an organization to assess its current workforce and determine the best path forward for future staffing needs that will scale the organization.

Proactivity and curiosity go a long way toward building the trust and understanding needed for collaboration and determining what are the necessary steps in workforce planning for your organization.

Once you have established a first class understanding around how different teams and departments work together, you can begin to assess headcount driven dependencies and focus more on strategic resource planning. Here are a few examples.

• Customer Success Employees to Customer Count
• Customer Success Employees to Revenue
• Managers to Employees
• QA Engineers to Developers
• G&A/Operational Support to the Rest of the Business
• SDRs to Account Executives
• Sales Team to Revenue
• R&D/S&M/G&A Staff to Total Employees

Form Baselines for Efficiency and Model them into the Future

Once you have determined the interplay between different departments across the org, leverage a headcount planning template and establish baselines around what efficient teams look like at scale.

Carry those baselines forward using the hiring plans you receive from your business partners. Push back when ratios start breaking the mold. Be proactive by recommending solutions that scale non-linearly with relevant headcount metrics.

Here are a few examples:

• Encourage department leaders to implement software that gives their people a force multiplier. Some examples are customer success ticketing software, sales automation tools, marketing aggregators.
• When ramping engineering teams for a new product launch, consider contract to hire models that ensure you are not left with unallocated resources once the surge is over.
• Ensure new devs are not spinning up cloud instances unnecessarily. If you need to surge, ensure you are buying reserved instances vs paying based solely on usage.

Determine the Fully Loaded Cost of Your Employees

Salary and benefits are not the only costs to consider when adding new folks to the team. There are several other direct and indirect costs that need to be factored into your model.

These costs contribute to the fully loaded cost per employee, the metric you should track as you scale.

Here are additional costs contributing to the fully loaded cost per employee:

• Employer Payroll Taxes
• Dependents Benefit Expenses
• Signing Bonuses
• Relocation Fees
• Computers & Equipment
• Software Licenses
• Recruiting placement fees & job postings
• Rent and Space Requirements
• Travel
• Performance Bonuses
• Salary Adjustments
• Office meals and supplies

Factor in Timing of Hires and Employee Ramp

Your headcount model should reflect goals that are challenging, but attainable. Make sure hiring plans are realistic with what your company has been able to do historically. Setting goals that are not realistic will leave you with a bloated model that is not reflective of what is happening across the business.

If you have an applicant tracking system, leverage the data from this tool to understand the number of resumes in the queue, historical pass through rates and time to hire. Fact check these metrics against hiring assumptions and timelines to ensure they make sense.

If meeting your top-line goal is dependent on new sales reps, make sure rep ramp times are factored into your model. To calculate rep ramp, you will need data from your CRM as well as data from your HR system. Figure out how long it has taken for your reps to contribute meaningfully to pipeline from their start date. Bake these timelines into your projections.

You’ll find that you should often hire sooner than you thought to meet your near-term goals.

Reassess Often

Its important to constantly re-assess hiring plans against business performance, especially during challenging markets and economic conditions. At the end of each quarter, gauge hiring performance against your plan. If you fell behind in your goals, be sure to push existing hires into future quarters and extend future hires into later periods.

Conclusion

Smart, sustainable headcount planning will help you avoid, or at least minimize, worst-case scenarios.

Implementing these practices will give you a more data-driven approach to headcount planning, ensuring that you hire the right people, at the right time, for the right business reasons.