Standard Modeled Hire Build Types


Intro to Modeled Hires Video:

Hi there! This section is where you can reference everything you need to know to build, understand, and incorporate modeled hires into your financial model.

What is a modeled hire?

  • A modeled hire is a single line item, or "hire", in the model that represents multiple people of the same type.

Why should I care or how do I use this?

  • Honestly, modeled hires are extremely useful- especially when you think about wanting a flexible and easy to maintenance financial model. Usually a modeled hire represents a key role in your business plan that you know will be essential to the operation of your business. The advantage here is that if you know there will be 30 developers on your team in the long-run but you don't know exactly when you'll be hiring each individual person, then you can use a single line item in the model to fully account for the costs of that team as they become needed. That's speaking to the flexibility, but in terms of maintenance, which would you rather look at and maintain on a monthly basis- one line item or 30?

What kinds of modeled hire are there?

  • There are really two versions of the modeled hire that we work with. Version 1, which is the automatic event driven hire that, for example, could say you bring on 1 developer every time you reach a new multiple of $50,000 in monthly revenue. Version 2 is a bit more manual but gives you full control to say exactly when you want to hire on / terminate people in a single position while still just being one line item to maintenance.

Why is my headcount wrong now that I've added modeled hires?

  • Full explanation and instructions for this at the very bottom of the article.

How do I build a Version 1 Modeled Hire:

Screenshot of Metrics Needed:

Description of Metrics Needed (the numbers used in the formulas correspond to the number of the metric in the list, example: [2] refers to metric "2" which is "Annual Salary"):

  1. Cost- default

  2. Annual Salary : Calculation = [6] X [7]

  3. Taxes & Benefits : Input

  4. Revenue [This Month] : Calculation = Add {Insert Any Metric / Event}

  5. Hiring Criteria / Lever (Ex: Hire 1 Dev Every ___$ in MRR) : Input

  6. Total Hires Needed: Calculation = [4]/[6]

  7. Average Annual Salary Per Hire = Input

  8. Headcount Correction: Input = "-1" ONLY

How to Build a Version 2 Modeled Hire:

Screenshot of Metrics Needed:

Description of Metrics Needed (the numbers used in the formulas correspond to the number of the metric in the list, example: [2] refers to metric "2" which is "Annual Salary"):

  1. Cost- default

  2. Annual Salary : Calculation = [5] X [7]

  3. Taxes & Benefits : Input

  4. New Hires [This Month] : Input = "0" ONLY

  5. Total Hires in This Position : Calculation = [4]+[6]

  6. Last Month's Total Hires: Past Value = [5]

  7. Average Annual Salary Per Hire = Input

  8. Headcount Correction: input = "-1" ONLY

Building "True Headcount Metric" & Explaining "Headcount Correction" Metric:

Why is the "headcount" wrong in each section now that I've added modeled hires?

Written Explanation: The reason your "headcount" is incorrect once you've added in modeled hires is because, at the moment, a "modeled hire" is a custom logic that the platform doesn't know what to do with. This won't be the case in future releases when "modeled hires" are selectable as a type of hire from the "Add people" drop-down but for the time being this is how the platform thinks:

The platform views each individual line item, or name, as 1 object to count and depending on when you have the start date set within that object it will line up with and add to the "headcount" metric the platform gives you by default. For example, every item with a start date of February 2022 or earlier will be "added" to the headcount in the month of February as 1 contributing line item to that "headcount".

What makes modeled hires special, however, is that they are a single line item that represents more than one person. So in order to capture the "real number" of people we're hiring (modeled hires included) we need to add a metric that will live somewhere in your model, usually within the CEO hire (since that's universal to every business) called "true headcount".

This "true headcount" metric is going to be a very simple calculation that effectively does 3 things: 1) collects the headcount the model "thinks" is correct, 2) takes the modeled hire line item the model is counting out of the count, and 3) replaces that line item with the "total hires needed" in that position to give us an accurate headcount.

To do this the true headcount metric formula needs to work like this:

  • Metric Type: Calculation

  • Operation: Add

  • Value Type: Integer

Then add the following metrics to the calculation:

One time only:

  • People > Scenario Metrics > Total Headcount

For EVERY Modeled Hire in the People Section

  • People > Department with Modeled Hire > Modeled Hire Name > "Total Hires Needed"

  • People > Department with Modeled Hire > SAME Modeled Hire ^^^ > "Headcount Correction"

This means you should have two metrics that you add to the formula for each modeled hire in the people section, one for the "total hires needed" and the other for the "headcount correction".

This should add clarity to why the Headcount Correction has to have a static value of Negative One, because the model counts each line item as a value of 1, so using a negative one we subtract that line item from the default count (1 + "-1" = 0) and then replace the value that was "1" with "total hires needed" instead.


Specialty Modeled Hire Build Types

This modeled hire would be the solution you need if you want to, for example, hire 1 Manager for every X teammates in a specific department.

Description of Metrics Needed (the numbers used in the formulas correspond to the number of the metric in the list, example: [2] refers to metric "2" which is "Annual Salary"):

  1. Cost- default

  2. Annual Salary : Calculation = [6] X [7]

  3. Taxes & Benefits : Input

  4. Hires [This Month] : Calculation = Add {Insert Relevant Headcount Metric}

  5. Hiring Criteria / Lever (Ex: Hire 1 Manager Every ___# of Salespeople) : Input

  6. Total Hires Needed: Calculation = [4]/[6]

  7. Average Annual Salary Per Hire = Input

  8. Headcount Correction: Input = "-1" ONLY

This modeled hire would be the solution you need if your business has irregular or "lumpy" revenue that would cause revenue in some months to be much higher than in other months. This would prevent your number of hires needed in a position from fluctuating "up" and "down" as revenue does.

Description of Metrics Needed (the numbers used in the formulas correspond to the number of the metric in the list, example: [2] refers to metric "2" which is "Annual Salary"):

  1. Cost- default

  2. Annual Salary : Calculation = [8] X [9]

  3. Taxes & Benefits : Input

  4. New Revenue [This Month] : Calculation = Add [Relevant Revenue Metrics]

  5. Total Revenue [To-Date] : Calculation = Add [4]+[6]

  6. Last Month's Total Revenue [To-Date]: Past Value [5]

  7. Hiring Criteria / Lever (Ex: Hire 1 Dev Every ___$ in MRR) : Input

  8. Total Hires Needed: Calculation = [5]/[7]

  9. Average Annual Salary Per Hire = Input

  10. Headcount Correction: Input = "-1" ONLY

This modeled hire would be the solution if your company focuses all of its language on "ARR" targets rather than "MRR" targets or "Monthly Revenue" goals. The translation of an ARR goal to a MRR goal is just ARR divided by 12, but this video shows the extra step we can take to make the model align a little more closely with the language you're used to using.

Description of Metrics Needed (the numbers used in the formulas correspond to the number of the metric in the list, example: [2] refers to metric "2" which is "Annual Salary"):

  1. Cost- default

  2. Annual Salary : Calculation = [6] X [7]

  3. Taxes & Benefits : Input

  4. Static Value 12: Input = 12

  5. Revenue (ARR) [This Month] : Calculation = Multiply {Relevant Revenue Metric * [4]}

  6. Hiring Criteria / Lever (Ex: Hire 1 Dev Every ___$ in MRR) : Input

  7. Total Hires Needed: Calculation = [5]/[6]

  8. Average Annual Salary Per Hire = Input

  9. Headcount Correction: Input = "-1" ONLY

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