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Updated August 24, 2022You’re reading an excerpt of The Holloway Guide to Technical Recruiting and Hiring, a book by Osman (Ozzie) Osman and over 45 other contributors. It is the most authoritative resource on growing software engineering teams effectively, written by and for hiring managers, recruiters, interviewers, and candidates. Purchase the book to support the author and the ad-free Holloway reading experience. You get instant digital access, over 800 links and references, commentary and future updates, and a high-quality PDF download.
You’ve decided that it’s the right time to hire and you aren’t at risk of hiring for the wrong reasons. You’ve considered some hiring philosophies that will help guide your planning, and you’ve mapped out the appropriate title, level, and compensation for the role. The next step is to become aware of any constraints you might have. Time to devise a hiring plan.
A hiring plan is a strategic document that outlines the budget and option pool amounts available for hiring new employees into specific roles. It may take the form of a spreadsheet, formal document, or some other form of written target, typically over a one-year period.
“Hiring plan” is a frustratingly loose term—some people take it to mean the plan for your entire hiring process, while others use it to mean a very specific financially driven document that allocates dollar amounts and headcount numbers by team. What constitutes a hiring plan can also vary widely across size, stage, and maturity of a company. At a startup, the hiring plan might simply be, “We have $2M in runway and can afford two engineers this year.” At a much larger, decades-old organization, there will likely be a budgeting department, layers of management, and a formal process for requesting headcount numbers for a given timeframe.
important Hiring plans ultimately require companies to evaluate constraints: What are your goals as a company or team? What roles (and associated skills and qualities) do you need to accomplish those goals? How much will it cost to hire and employ those people? How much money can you allocate to that? In other words, what are your goals, roles, and dollars? Hiring managers are almost always the ones coming up with the goals and roles; depending on the organization, they may also have budgetary insight, or they have to get approval from somewhere higher up. More advanced teams might also need to factor in recruiting costs and metrics to gain a complete picture of their recruiting and hiring effort’s budgetary impacts.
The folks over at Workable wrote about the process of developing a hiring plan at a larger organization, and offer a sample goals, roles and dollars spreadsheet. Hiringplan.io offers a tool for startups to use in modeling compensation for new hires, using market data from HR firm Connery.
The gory details of financial planning for hiring budgets are out of the scope of this Guide, but it’s important to know who makes those decisions in your organization, what the process is, and what the deadline is for making sure your hiring needs are included. There is always time between when a company opens a role, and finds, hires, and onboards a candidate. Some searches, especially for rare and senior roles, can take months to complete. A proper hiring plan thus looks not just at the present moment, but where the team and company might be in the future. This is also why it’s important to be proactive about things like building a network and investing in your employer brand, and any other activity that can reduce the time it takes to make a hire. If you’re in a position where you “need that role filled yesterday,” not only will your team be lacking the people it needs for that stretch of time, but you’ll also be more likely to lower your hiring bar out of desperation.
Equity is a key part of compensation and hiring plans. In larger companies, defined employee stock plans or grants of restricted stock units (RSUs) are common.
Startups grant equity as a key part of compensation, and plan its allocation. Generally before the first employees are hired, the founders will reserve a number of shares for an employee option pool (or employee pool), which is part of a legal structure called an equity incentive plan. A typical size for the option pool is 20% of the stock of the company; but especially for earlier-stage companies, the option pool can be 10%, 15%, or other sizes.
Well-advised companies will reserve in the option pool only what they expect to use over approximately the next 12 months, so as not to over-grant equity. Your company may never use the whole pool, but it’s still wise to try not to reserve more than you plan to use. The size of the pool is determined by complex factors between founders and investors. It’s important for employees (and founders) to understand that a small pool can be a good thing in that it reflects the company preserving ownership in negotiations with investors. You can always increase the size of the pool later.
important Once the pool is established, the company’s board of directors grants stock from the pool to employees as they join the company. Hiring managers don’t typically have much say over those amounts, but you will want to be aware of the details so as to be able to discuss compensation with candidates.
candidate For more information on equity as part of the compensation package, visit The Holloway Guide to Equity Compensation.
Definition A job requisition (or job requisition form) is an internal company document a manager uses to formally request permission to fill a role or position. These documents are particularly useful for coordination and wider alignment at larger companies. For instance, the requisition might require approval (often from finance, HR, and upper management) to ensure sufficient space and funding are available for a new hire. Once the requisition receives the necessary approvals, it can serve as the starting point for a discussion between the hiring manager and their designated recruiter (for instance, at a role intake meeting).
Companies that use such forms will usually have a template the manager can fill out to share information the decision makers need, including:
A title and brief description of the role
The team or manager requesting the new hire
Targeted start date
Salary and other budget considerations
Reason for the new hire (a new project, backfilling a departing employee, and so on).
A job description outlines the main features of an open position at a company, including the work the future employee will be expected to do, expectations for applicants, and ideally, a number of reasons a candidate should want to apply, including a description of the company’s mission and the benefits offered. It also typically includes the position’s title; it may or may not disclose its compensation. The job description may be in the form of a single-page statement, or a position may have a marketing-like web page to it. The hiring team may create a few versions of each job description, so that people can share it externally across a variety of platforms, like career sites, job boards, and the company website. A well-written job description should give an accurate picture of the role, and entice desirable candidates to apply.
cautionWriting a job description before having had any conversation with your team or colleagues is a common pitfall; it’s essential to understand the role you are hiring for and the value proposition of the company, and to be aligned internally on each. If a candidate meets with interviewers who all have different ideas of what the role is or why the person might want to join the company, this leads to confusion, a poor candidate experience. It’s also inefficient. It’s critical to have clarity on the position’s target level and compensation before advertising for the job.
important Many large companies offload the responsibilities of writing the job description to a recruiter. You know more about your company, the role, and your ideal candidate than the recruiter does. The most effective way to craft a great job description is for the hiring manager to work with the recruiter directly whenever possible.