July 10, 2026
Hi Everyone,
Every headcount decision has a cost.
Hiring too quickly costs money. Cutting too quickly costs money. Keeping a role open, or keeping the wrong role in place, costs money too.
A bad mid-level hire can cost 50 to 200% of annual salary once you include ramp time, severance, management time, and the drag on the team. A rushed cut can create its own bill.
Bloomberg’s data found that after a layoff, the average remaining employee lost about an hour of productive work a day. In a 100-person company, that can add up fast.
So before you hire, hold, or cut, price the decision. Here’s how.
Two questions first
Before you fill an open role or review a seat you're not sure about, ask two questions.
1. Can you afford another person right now? An easy check is revenue per employee. Look at what similar businesses in your industry generate per person and see where you sit. If you're well below the average, hiring needs a stronger case than a growing business hitting its numbers.
2. Is this seat earning back what you pay for it? Netflix's culture memo has a version of the question that works for any role, filled or open: "Knowing everything I know today, would I hire this person again?"
If you weren't already hiring for a role, would you start today?
The answers combine into four options
Hire: The business is healthy, and the role clearly pays for itself. Move fast, but write down what you expect the person to deliver in their first six months before you sign.
Hold: Either the business is uncertain or the role's payoff is unclear. Wait, but set a specific reason to revisit: a revenue number, a project date, or a change in what a competitor is doing. If nothing changes by next quarter, you decide again.
Cut: Growth is soft, the role isn't important, and knowing what you know now, you wouldn't hire for it today. Be clear about why, handle the transition properly, and plan for the extra work the remaining team will absorb.
Move: The person is good, but this seat isn't the right fit. Combine the role with another one, move the person to work that matters more, or split the responsibilities across two teams. Teams often skip this option and go straight to hire or cut. Moving someone into a better fit is usually cheaper than replacing them.
Hold is a decision, too
Most companies are leaning toward "hold" right now. Carta's data shows that startup headcount has been roughly flat since early 2023 – hires roughly matching departures, month after month.
Holding feels safe because you haven't committed to anything. But every month a revenue role stays open is revenue you're not earning. The work still needs to get done, and it usually lands on the people you can least afford to lose.
Cutting in a hurry can cost more than holding does. Orgvue estimates companies spend about $1.27 for every $1 they save through workforce reductions, once you add severance, lost productivity, and the cost of hiring back.
Klarna is the public example – CEO Sebastian Siemiatkowski told Bloomberg in May 2025 that the company had gone "too far" replacing customer service agents with AI, and started hiring people again.
Go deeper
👉 SaaS Capital: 2025 Revenue Per Employee Benchmarks — private SaaS benchmarks by revenue band. For other industries, look for peer data from your sector association or trade press.
👉 Netflix: Culture Memo (2024 update) — the keeper test in Netflix's own words.
👉 Forbes: 7 Hidden Costs of Layoffs — a free write-up of the ActivTrak productivity findings covered by Bloomberg.
👉 Orgvue: Cost Reduction Solution Brief — the source of the $1.27-per-$1-saved analysis.
Coming up on Monday
On Monday, we're covering four questions worth asking before you draft a performance improvement plan.
Have a great weekend!
P.S. Is “hold” your default on headcount right now? Reply and let us know. We’d love to understand what the reality looks like across our readers.