Many years ago, I led another layoff. Nearly five hundred people across multiple countries. We had operated under the principle that more salespeople would create more sales, and we needed more sales to become profitable. It didn’t work out. Instead, frontline sales reps cannibalized each other’s opportunities, leading to atrocious unit economics. Within a year, I found myself sitting across from a great employee I had hired, taking away his laptop (policy) because of the wrong bets we had made.

And it happened again. Several times.

We want to grow. And more people means more growth, right? In tech, aggressive hiring feels like a natural part of scaling a business. You take bets. If some don't work out, layoffs follow. When you’re moving fast, everything is, at the end of the day, a hope and a dream.

But as a CFO, you can break this cycle by stopping the hiring until it makes sense and ensuring the current team is being evaluated appropriately. It is that easy. Don’t hire sales reps until pipeline generation or outbound selling supports the numbers. Make sure the relevant teams are evaluating performance. Use the “finance/budget” stick if you have to. You are the person responsible for enforcing this. Everyone else just wants more people…

It’s time to focus on the people side of your company in tandem with your relevant People team and/or executive team.

Let’s get to work:

1. Establish the baseline by tying burn to Operational Results

If you’re aiming for profitability or strategic burn, headcount is your largest cost driver. Just check now, what % of your cost is salary? In terms of benchmark of ARR per employee, public SaaS companies achieve about $283k ARR per employee while the median for early companies is about $50k. Of course, if you just stay pre-revenue this number doesn’t matter. With that said, some guidelines.

• Map headcount to functional areas. Break down your team by Sales, CS, Engineering, Product, Marketing, G&A. Make sure you split your executive team into these buckets as well.

• Calculate Burn per FTE. Monthly burn divided by total FTE. This is a quick gut-check on how much each employee in each department is costing the team.

• Reconcile headcount against the strategic plan. Align staffing next to your priorities. You should be putting your money where your mouth is. If something is critical, and you are spending 2% of your budget on it…

• Get into the metrics. There are a ton of benchmarks. Each department should have a general metric for headcount. Both to assess scale and potential. See beginning chart.

• Examine management ratios: Every team wants to stay ‘flat,’ which is great. To do this, you need to have 6-8 direct reports for each manager. This can be hard, as everyone wants ‘department heads’ or deputies. 

Of course, headcount will vary drastically across industries. So, take these with a grain of salt, but the exercise is quite helpful for answering questions on best practice or getting a general sanity check on the team’s performance. Sometimes it’s easy to put a chart together like this:

Tip: Track “Burn Multiple” (cash burned per $1 ARR added). Early-stage companies typically see burn multiples around 2–3; mature firms should aim below 1–2 to indicate healthy efficiency (David Sacks, Craft Ventures).

2. Put Clear Milestones on Hiring

As mentioned earlier, everyone wants to hire. People believe that headcount equals growth. This obviously does not make sense. So, take a look at your numbers and have the answer at the ready. When should we hire? To answer:

• Don’t hire until core metrics are hit. If your key projections aren’t being met, adding more employees won’t fix the problem. It will just create more chaos. Instead, have the discipline to require teams to hit their targets with the same headcount before adding on top. 

• Require pipeline before you hire. Across the commercial team, you shouldn’t hire team members to close sales if the pipeline doesn’t exist. Of course there is ramp time, but you can track leading indicators like MQL creation to proxy this quickly. The pipeline coverage should be greater than 3x. This logic can be applied to all roles.

• Ensure onboarding capacity. A new hire is only as good as their onboarding process. If your managers are stretched too thin, you risk underutilizing new hires and slowing down productivity.

• Make it clear that basic admin has been met. Make sure that there is some performance structure in place in the team. If there is not, how will the team know how to use a new hire?

• Stay flat! This was mentioned in the last section. But, if you want to stay flat, each manager should have 6-8 direct reports. You don’t want the dreaded 1 Director -> 1 Manager -> 2 Analysts situation which burns people out, makes things hierarchical, and slows growth. Once you start on this path, it is nearly impossible to fix without tremendous upheaval.

Strangely, controlling hires (which is your responsibility as CFO) is one of the most powerful tools you have in changing behaviors as well as the easiest way to control cash burn. Use it to make sure that the company is taking the right risks and holding themselves accountable to targets and performance.

Tip: The downside of hiring too quickly is huge. Unhappiness, loss of control, and inefficiency. The downside of hiring too slowly? Minimal. You might grow a month or two more slowly, but you’ll be far more efficient and your sales team will be happy and awash with leads.

3. Productivity Metrics

None of your projections or plans will work if the teams don’t know what their targets are and how to hit them. While dashboards are great at this, these processes need to be reinforced through monitoring individual performance. This provides an unbiased view of performance and helps you identify both top and underperformers. To do it:

1. Tie each operational metric to the team. For example:

1. Sales might focus on pipeline generation, ARR closed, or quota attainment.

2. Engineering could use story points completed, deployment frequency, or feature throughput.

3. Marketing might measure qualified leads generated, conversion rates, or pipeline contribution.

4. Customer Success (CS) can track metrics like NRR, upsell revenue, or customer health scores.

2. Tie each employee to your operational metrics. Each productivity metric should directly correlate with the strategic goals of the team.

3. Introduce a quality component. Make it clear that these metrics emphasize quality. If someone is intentionally gaming the system, that’s grounds for dismissal. Keep it fair.

4. Assume about 80% capacity across the team. In your model, expect employees to hit about 80% of their target. Some will exceed expectations, while others may only reach 60%.

5. Line up and review results each quarter. Yes, this is another item to add to your monthly operational review. But you can quickly create a table by team, showing the percentage of target achieved and color-coding the results. This provides an efficient way to assess whether your targets are reasonable.

There’s no need to overthink this. Start with a soft introduction for one quarter as a test run, then implement it fully in the next quarter. Iterate to refine the process and build a high-functioning team.

Tip: This may seem minor to management, but employees generally appreciate fair targets. It helps them prioritize when they’re juggling dozens of requests every day.

4. Hiring, Promotion, Probation, and Termination

People need to be treated with respect. They are your best asset. To do that, make sure the basic HR processes are met. This means that people have clear targets and are assessed on the targets. If the targets aren’t met, then the targets should be adjusted or you should part ways. 

• Hiring. Ensure the people team has built a strong pipeline of candidates. Track how long it takes to fill roles. The company needs to be in a position where you can replace someone quickly if they leave and scale rapidly with great people. Not just whoever is available at the last minute.

• Promotion. Promote top performers quickly. This is often overlooked in fast-moving startups, but it’s one of the main reasons people join small companies in the first place. If they don’t see growth, they leave.

• Probation periods. Enforce them rigorously. There should be a clear checkpoint before a probation period ends (usually defined legally within the country). At that point, you either commit to full-time employment or terminate the relationship. No gray areas.

• Termination. This varies by company, but in general, you want great and good performers. Toxic performers, however, can be incredibly damaging. Address these issues decisively.

While these responsibilities fall under the People team, as a finance leader, you need to ensure they are in place, not just for financial health, but also as part of your responsibility for risk and controls.

Tip: Consider making time-to-onboard a key HR metric. Many companies are bad at this. Prioritizing a fast, efficient onboarding process prevents wasted time and ensures great people become productive quickly.

5. Get into the weeds of bonuses. Why shouldn’t everyone have them?

Okay, this may be controversial, but as a CFO, you should consider having everyone tied to some sort of bonus structure (not just equity). Why? Because this is your way of monitoring performance. If managers are required to give out bonuses each quarter, they will need to spend time reviewing their team’s performance. To do this properly:

• Align bonuses with productivity metrics. Each employee should have a specific target they are working toward. If they hit it well, they get the top end of the bonus. If they don’t, they miss it.

• Shorten feedback loops. Quarterly bonus metrics enhance motivation and encourage timely performance improvements.

• Balance equity and cash bonuses. Early-stage SaaS companies can conserve cash through equity-heavy bonuses, which can also be issued based on performance targets (though once a year is more appropriate for this).

• Ensure pay transparency and equity. Benchmark salaries and regularly assess pay equity to prevent morale issues or unintended turnover. This is hard to fix later. If you establish transparency early in the startup, you can build trust in the company.

Yes, this is extra work. But it keeps everyone on the team aligned with short-term targets while also providing frequent opportunities for reviews and feedback.

Tip: The bonuses don’t have to be big. You can start at 10%. The real gain here is the review process, the discussions, and the further alignment with your strategic plans. If you can’t tie a bonus to a person… there may be an issue.

In Conclusion 

Your people are your biggest investment and the engine of your growth. By applying rigorous analytics with the people team you can spot inefficiencies, align incentives, and ultimately build a happier, more productive team.