Whilst hiring is a critical aspect of your growth strategy, it can also have a significant impact on your capital efficiency. As a Founder or People Leader, it’s crucial to understand how hiring impacts your bottom line and how you can balance solid hiring practices with maintaining capital efficiency along the way.

Here are 5 major elements of hiring that will affect your capital efficiency:

Hiring costs 🧲

Recruitment costs can quickly add up, especially when hiring for hard-to-find roles which might take longer than usual and require new sourcing tools and techniques. For example, a particularly niche Developer might only be found via specialised job boards or tech communities which command a fee for access. Whilst attraction is only one element, it’s an example of how one part can disproportionately raise the costs of the entire process. To assess the true impact of hiring on your capital, it’s critical to consider the hiring process in its entirety; include the costs of job postings or external support and allow for employee referral payments when planning your hiring strategy.

Hiring velocity (time-to-hire) ⚡️

This one’s simple; the longer it takes to fill open positions, the longer you’ve got an ’empty seat’ and the more productivity is lost. The greater the loss of productivity, the further you can fall behind your competition and the longer you spend playing catch up. That all adds up.

To combat this, take the time to plan before you go to market. If you have a clear idea of where you’re going to find the candidate(s) you need, what it is they’re looking for and how much they’re going to cost, you’ll have a pretty good chance of keeping your hiring velocity up and empty chair time down.

Training and onboarding costs 🧠

Regardless of what level they’re coming in at, all new talent in your business will need some form of training and onboarding. Both can be time-consuming and costly, so make sure you’re clear on what their first few weeks/months looks like with you. It’s all good and well getting a role live and making a quick hire, but if their training and onboarding needs aren’t accounted for, the money you saved at the front end of the process is getting spent at the back end and undoing the efficiencies you’d gained.

Employee retention 🔒

This is where your employer brand (EB) plays a part in boosting your capital efficiency. A strong employer brand encourages retention; you’ll have an engaged, happy team and generally be seen as a great place to work. Don’t slack on EB investment as you grow; it’s not just about the cost of hiring new talent but the costs of replacing a steady stream of leavers. As you grow, you can improve capital efficiency by keeping turnover rates as low as possible. Achieve this by ensuring your team always have a voice; gain feedback as regularly as possible from them on what they love (and don’t love) about working for you. It’s less about giving the team everything they ask for and more about ensuring your proposition evolves and your business grows – team productivity and morale levels will speak for themselves!

Employee productivity 🚀

Speaking of which… the productivity of new hires can take time to ramp up, which can impact your ability to grow efficiently and as quickly as you need to. In the same way as training and onboarding, consider the time-to-productivity expectations of new hires when planning their first few months in your team.


Now that you know how hiring can impact capital efficiency, it’s important to understand how you can balance the two. It’s a tricky ask, but here’s where you should start:

To see each of these points explained in more detail, check out our recent blog Balancing hiring needs with financial constraints on our website.

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