Smarter scaling: A startup's guide to headcount, capacity, and location strategy

Building a startup team is just as hard today as it’s ever been, despite what the headlines suggest. Yes, layoffs were up over the last couple of years, and resumes are flooding inboxes, but the time it takes to fill critical roles hasn’t budged. Because great hiring isn’t about volume—it’s about precision. And in today’s market, precision is harder to come by. 

Every startup and scaling business faces the challenge of balancing headcount growth with business needs, budget constraints, and market conditions. Yet, too often, headcount planning is treated as a seasonal, isolated exercise rather than an ongoing, strategic practice that consistently aligns with business outcomes.

As someone who's led people and talent functions at companies like Google, Full Story, and now Ashby, Jim Miller has seen firsthand how traditional approaches to headcount planning fail. At a recent SignalFire event, he shared his tried-and-tested approach for scaling an organization.

Let’s start by highlighting what many successful companies have in common:

• They tie hiring to business outcomes rather than arbitrary timelines.
• They use data-driven prioritization to ensure hiring resources are allocated efficiently.
• They align recruiting capacity with business needs to aim for steady hiring flows.
• They adopt flexible location strategies to build exceptional teams.

Here’s how they are doing this:

Reimagining traditional headcount planning

By definition, headcount planning is the structured process of forming, organizing, and tracking hiring plans to align with business goals and the talent needed to meet those goals. 

When done well, this helps companies:

• Determine and manage hiring goals against key business outcomes
• Ensure success and return on investment (ROI) for each hire
• Organize and track role titles, levels, total rewards, and hiring priorities
• Align hiring with revenue targets, budget constraints, and workforce capacity, while also supporting talent density 

The conventional wisdom around headcount planning typically revolves around quarterly or annual targets. But in reality, most companies are planning headcount more frequently. A reactive approach leads to reactive hiring and potential overstaffing, which in turn can lead to redundancy and layoffs.

Savvy headcount planning is about building a framework that consistently keeps short-term and long-term needs in sight. What helps is a model where inputs and outputs relate to each other logically, guided by principles that prepare and plan for change rather than being disrupted by it.

How to choose the right headcount planning approach

There are three primary approaches to headcount planning, each with its own advantages and trade-offs:

1. Top-down planning

• Leadership sets overall hiring goals based on high-level business objectives and financial targets.
• Pros: Clear alignment from the top line executive team, connected to company goals, faster decision-making, typically ideal for small-to-midsize startups.
• Cons: Can overlook department-specific needs and often lacks input and collaboration from department leads.

2. Bottom-up planning

• Department leaders propose hiring needs based on operational demands, within a framework set by finance and people teams.
• Pros: Empowers managers, builds trust and collaboration, and reinforces departmental ownership, but it requires a structure that typically exists in larger companies.
• Cons: Can lead to overestimated or inflated needs, organizational dependencies might be overlooked, and could create top-heavy hiring plans.

3. Budget-based planning

• Hiring is determined based on predefined budgets allocated to every department.
• Pros: Provides financial control and ensures alignment with company spending priorities.
• Cons: Can over-prioritize budget constraints at the expense of real business needs, potentially stifling growth. Relies on advanced people and finance team structures, typically more common in larger startups or companies.

When developing a headcount and staffing model, be realistic about your company’s size and bandwidth. Overly complex methods may not be necessary and could slow down achieving the right outcome. Keep it practical and tailored to your needs.

Regardless of the method, successful headcount planning should always:

• Align with business outcomes: Tie hiring to revenue milestones, customer growth, or product launches rather than arbitrary timeframes.
• Involve the right stakeholders: Finance and talent teams should be key stakeholders (if applicable for smaller startups), working closely with department leaders to ensure a holistic approach to headcount planning.
• Leverage data and tools: Make informed decisions based on historical hiring trends from ATS, productivity metrics (time to hire), and workforce capacity (recruiter bandwidth and capability).

Moving to an approach anchored to business outcomes 

At its core, headcount planning isn’t just about filling roles—it’s about shaping the company to meet strategic business outcomes. The key is balancing immediate hiring needs with long-term workforce planning. 

We’ve found that anchoring your headcount strategy to business outcomes works better than time-based planning. 

Some examples: 

• When your company hits $25 million in ARR, what should your organizational structure look like? 
• How many enterprise customer success managers do you need for every $4 million in net new ARR? 
• What's the optimal engineering team size at different revenue milestones?
• What ratios are needed to support the business properly, i.e., product managers to engineers per pod?

This approach creates a feedback loop that delivers just-in-time hiring during growth periods, early protection against over-hiring when growth slows, and smoother growth curves without spikes. It also offers a better balance of investment across functions.

To implement this strategy effectively:

1. Start with the end state: Work with department heads to envision their ideal team structure at major business milestones, mapping out necessary functions, reporting structures, and team ratios. Then, create clear triggers for when new roles or teams need to be added.
2. Work backwards: By calculating revenue or other key business metrics that justify each new hire, you can define clear thresholds for expanding different teams. This also enables you to create flexibility and appoint key recruiting support for hiring needs.
3. Build in adaptability: Allow for hiring prioritization adjustments based on business performance and factor in voluntary and involuntary attrition rates. Also, ensure balanced growth across interdependent functions.

Adding prioritization to your hiring plan with a P0-to-P3 system

Not all roles need to be filled simultaneously, as business needs and hiring timelines vary based on function, seniority, role complexity, location, and competition for specific skill sets. Prioritization ensures critical hires happen first, and dependencies between departments are considered.

A simple model for prioritizing roles in headcount planning:

Use a tiered system:

• P0 - Mission-critical hires required to meet immediate business goals.
• P1 - High-priority roles that support scaling but are not urgent.
• P2 - Nice-to-have roles that can be deferred if necessary.
• P3 - Opportunistic hires based on availability of top talent.

Understand interdependencies:

Here are some examples:

• Sales growth requires marketing and pipeline creation first.
• Engineering hiring should align with product development cycles.
• Support teams must scale alongside customer acquisition.

By phasing hiring priorities and sequencing them correctly, companies can prevent resource misalignment and wasted spending and hopefully avoid overstaffing.

One of my favorite examples comes from Jim’s team at Ashby, where they've moved away from traditional "hires per quarter" metrics. 

Instead, they:

• Drip new openings into the recruiting team weekly
• Plan based on actual work capacity (screens, interviews, etc.)
• Maintain consistent application flow throughout the quarter
• Focus on high-priority roles without end-of-quarter desperation

The results speak for themselves. Using this methodology, they've seen individual recruiters handling 35+ hires per quarter (versus the industry standard of 8).

They’ve also seen a better quality of hires through consistent, measured processes that drive more predictable growth and reduce the risk of overhiring or layoffs. 

Capacity planning: Aligning hiring with resources

Workforce planning isn’t just about identifying the roles you need to fill—it’s about ensuring the company can support the hires you plan for. Hiring at scale, without proper capacity planning, can lead to confusion, unbalanced req loads for recruiting teams, and poor candidate and hiring manager experiences. 

For a more seamless hiring experience all around, consider the following: 

1. Recruiting team capacity: Hiring goals must be aligned with the realistic workload that your recruiting team can handle. Overloading open reqs can lead to rushed processes, missed top candidates, decreased quality of hire, and a poor candidate reputation in a competitive market. 

When evaluating recruiting team capacity, consider the number of active roles each recruiter can effectively manage at any given time, factoring in the average time-to-fill for similar roles and the complexity of roles, such as technical, executive, or niche hires that require greater strategic effort or have a limited candidate pool.

2. Interview load: Interviews demand a significant amount of internal team time, especially when hiring for multiple roles simultaneously. When hiring teams are stretched too thin, interview quality declines, feedback loops slow, and candidate engagement drops, ultimately increasing their time to hire.

• Assess the average number of interviews required per hire.
• Ensure interviewers have the bandwidth to conduct and provide feedback in a timely manner.
• Establish interviewer rotation pools to spread the interview load across a larger group. This ensures hiring teams aren’t overburdened while maintaining consistency in evaluation.

3. Onboarding capacity: Proper onboarding support is crucial to avoid issues like poor ramp-up times and high attrition. HR, IT, and department leads need resources to integrate new hires smoothly. This involves ensuring efficient processing of new hires, equipment, and system access, managing the number of employees onboarded per cycle, balancing hiring across time, using cohort-based onboarding, and implementing peer mentoring.

4. Direct manager and team bandwidth: A manager's ability to mentor new team members significantly impacts retention and productivity. Overburdened managers can lead to struggling new hires, team cohesion issues, and performance dips. It is important to assess how many direct reports a manager can support, ensure time for 1:1s and feedback, avoid hiring multiple people into a department all at once, and introduce structured onboarding plans.

Location strategy: Building your global talent blueprint

Startups must strategically choose hiring locations as they scale, impacting talent, costs, culture, and growth. Poor location strategy can lead to inefficiencies. A deliberate approach reduces hiring friction, optimizes costs, and builds resilient teams by aligning locations with business goals and workforce needs.

Understanding location models

Each company’s location strategy depends on factors like company stage, talent needs, and cost structures. Below are the four primary approaches companies take when determining where to hire:

Location Strategy Approaches:

Hub-Based (Centralized):

• Focus: Offices in talent hubs, in-person work.
• Pros: Strong culture, collaboration, talent access.
• Cons: High costs, competition, limited talent.

Nearshore (Regional):

• Focus: Lower-cost regions with similar time zones.
• Pros: Cost savings, tech talent, real-time collaboration.
• Cons: HR/legal setup and remote infrastructure are needed.

Offshore (Global):

• Focus: Global markets, lower-cost talent.
• Pros: Cost savings, large talent pools, 24/7 operations.
• Cons: Time zones, cultural differences, communication challenges.

Remote/Asynchronous:

• Focus: Best talent, regardless of location.
• Pros: Global talent access, diversity, cost flexibility.
• Cons: Documentation, remote tools, compliance, and culture maintenance.

Key factors in choosing a location strategy

Every company’s hiring needs are unique, but three primary factors should guide location decisions:

Talent pool concentration:

• Where does the best talent for the roles you need exist?
• Are there strong universities, technical training programs, or industry clusters in a given region?
• Are there enough candidates to sustain long-term hiring needs?

For example, a cybersecurity startup may prioritize hiring in Israel, a known global hub for security talent.

Labor costs:

• How do salaries vary across different geographies?
• Can the company achieve cost efficiency while maintaining quality?
• What are the tax and employment law implications of hiring in specific markets?

For example, a startup building out its customer support may look to India or the Philippines for lower-cost hiring, while maintaining high-quality service.

Competitive landscape:

• Are there established companies in your industry from which to recruit talent?
• Is the job market oversaturated with competition from larger companies?
• Are there strong economic and business incentives to hire in a particular location?

For example, many SaaS companies hire BDRs/SDRs in cities like Chicago, Denver, or Phoenix—markets with strong sales talent but lower salaries than San Francisco or New York.

‎For instance, Ashby embraces an asynchronous, remote-first hiring model, prioritizing talent over location. With employees in 16 countries and growing, they’ve built hiring processes that optimize for:

• Access to the best talent, regardless of location.
• Cost efficiency, leveraging global hiring markets strategically.
• Flexibility and scalability, allowing them to grow without office constraints.

This model works well for companies prioritizing remote collaboration, documentation, and flexibility. However, some companies may choose to centralize certain functions—for example, hiring all SDRs in a single city for training and career development purposes.

Build a hiring plan, not just a hiring process

Location strategy is a long-term investment. A poorly planned hiring footprint can lead to talent shortages, operational inefficiencies, or unnecessary costs. Start with business goals and optimize for talent access, cost efficiency, and collaboration. Every strategy has pros and cons as you try to balance costs with talent quality. 

Location strategy: what matters most:

• Plan, don't just process: A long-term location strategy is vital. Poor planning leads to talent gaps, inefficiencies, and extra costs.
• Start with your lead goals: Align location choices with business objectives, focusing on talent, cost, and collaboration.
• Think long term: Decisions should support the company's direction for the next 2-5 years, not just immediate needs.
• Intentionality is key: Regardless of the model (hub, nearshore, offshore, remote), a clear strategy is crucial for efficiency, scalability, and success.
• Strategy should evolve: Location plans should be regularly assessed and adjusted to keep up with company growth and market changes.

Smarter hiring - The blueprint for scalable success

The hiring landscape is shifting fast—AI, economic volatility, and evolving employee expectations are making traditional headcount planning obsolete. Startups that excel in headcount management, capacity planning, and location strategy will build more scalable and resilient teams.

Outdated metrics are no longer sufficient. To thrive, companies need flexible frameworks that tie hiring to business outcomes, not arbitrary targets. Effective planning goes beyond simply filling roles; it's about achieving efficient growth and maintaining your strategic direction.

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Want to optimize your headcount strategy? At SignalFire, we help scaling companies rethink hiring with data-driven insights and guidance you actually need from seasoned experts in your industry. If you're looking for more innovative ways to plan and scale, let’s connect! Visit our website to learn more.