When to hire your next person, and how to know you can afford them

Most agency hires are triggered by a feeling: everyone is slammed. That feeling is real, and it's still a bad signal, because it turns up in three different situations and only one of them is fixed by adding a person.

Before you write a job post, work out which one you're in.

Three reasons the team feels slammed

You genuinely have more committed work than capacity. Signed work, scheduled, with dates. This is the hiring problem.

You have the same work but a process problem. Rework because briefs are vague. Three rounds of internal review before anything reaches the client. A designer spending six hours a week chasing assets. Hiring here buys you a second person to be inefficient with, and your margin gets worse, not better.

Your team mix is wrong. A senior editor doing subtitle passes, a lead developer writing release notes, a strategist formatting decks. The hours are full but they're the wrong hours. The fix might be a junior or a freelancer, not another senior.

Only the first one is a capacity shortage. The other two feel identical from the inside, which is why "we're drowning" is not sufficient evidence.

The capacity test

Use hours, not vibes. Take a nominal 2,080-hour year, remove leave, public holidays and realistic sick days, and you get roughly 1,776 available hours per person — about 148 hours a month.

For a five-person delivery team at a 70% utilisation target:

Available hours per month (5 × 148)	740
Target billable at 70%	518
Actually delivered last month	600
Actual utilisation	81%

Running at 81% for one month is a busy month. Running at 81% for a quarter is a structural shortage, and it's being paid for somewhere — in overtime, in declined work, in quality, or in someone's resignation letter in about five months.

Now check whether it continues. Add up signed and scheduled work for the next quarter. Not proposals out. Not "they said they'd probably renew."

Committed hours, next quarter	1,900
Team capacity at 70% (518 × 3)	1,554
Gap	346 hours

One additional person at 70% utilisation delivers about 103.6 billable hours a month, or 311 across the quarter. The gap is roughly one person, and it holds for three months. That's a hire.

If the gap only exists because of one project that ends in six weeks, it's a freelancer.

The cash test

Capacity says you need someone. Cash says whether you survive them.

Take the fully loaded annual cost — salary plus employer taxes, benefits, equipment, software and a share of overhead. Rates for taxes and statutory benefits vary enormously by country, so build this from your own payroll figures. For a worked example, assume the hire's fully loaded cost is $118,000 a year, which is $9,833 a month.

At a $150 billing rate, break-even is:

$118,000 / $150 = 787 billable hours a year
787 / 1,776 available hours = 44% utilisation

That's 66 billable hours a month. Under half the person's available time. Which sounds comfortable, and is exactly why agencies hire into trouble — the annual number looks fine and the first four months are the problem.

The ramp curve, which is where the cash actually goes

Nobody bills at target in week one. They need accounts, context, introductions, a shadowed project, and someone senior to review their output — which costs that senior person time too.

A hypothetical ramp for a mid-level hire, at $150 an hour against a fixed $9,833 monthly cost:

Month	Utilisation	Billable hours	Revenue	Net	Cumulative
1	20%	29.6	$4,440	−$5,393	−$5,393
2	40%	59.2	$8,880	−$953	−$6,346
3	55%	81.4	$12,210	+$2,377	−$3,969
4	70%	103.6	$15,540	+$5,707	+$1,738
5	70%	103.6	$15,540	+$5,707	+$7,445
6	70%	103.6	$15,540	+$5,707	+$13,152

The number that matters is not the $13,152 at month six. It's the −$6,346 at the end of month two — the deepest point of the hole. That is the cash you need available, on top of normal working capital, before you sign anything.

Then add the bits people leave out: recruitment time or agency fees, notice periods you may pay through, a laptop and licences on day one, and the senior review time that comes out of billable hours during ramp.

A rough affordability rule: you can afford the hire if you can absorb the deepest cumulative dip twice — once for the ramp, once for the possibility that it doesn't work out and you're back at month one in six months' time.

Hire the role, not the person you happen to like

Before the job post, write down three things:

1. What work leaves someone else's plate. Name the projects and the hours. If you can't, the role isn't defined yet.
2. What level. If the hours leaving other plates are mostly production work, you want a mid or junior, and hiring a senior because seniors are impressive will make your margin worse.
3. What happens when the current pipeline ends. Is this person sellable into other work, or do they only fit one client?

That third question is what separates a hire from a liability. A generalist mid-level designer, editor or developer can absorb whatever lands. A specialist hired for one account is a bet on that account renewing.

Two things to do this week

Pull your trailing twelve weeks of utilisation by person. Not this week's — the trailing average, because one bad week is noise and a quarter is a pattern. If the team average is under 70%, you have a sales problem or a mix problem, and a hire will make both worse.

Then add up committed hours for the next quarter and put them next to capacity, as above. If the gap is smaller than one person, or disappears when one project ends, use a contractor and revisit in six weeks. If it's a full person and it persists, start hiring now — because the ramp curve means the person you hire today is useful in month four, and the shortage you're feeling started last month.