Is my newest hire adding margin, or absorbing it?
Most owners answer this from feel, because the books are not set up to answer it any other way.
Compare fully loaded cost against the revenue or capacity genuinely attributable to the role, over a ramp period you set in advance, with payroll tracked by function as a percentage of revenue.
The four places to look
Start with the fully loaded cost, not the salary
Payroll taxes, benefits, insurance, software seats, equipment, and the time other people spend on onboarding are all part of the cost. Fully loaded, a hire typically runs well above base salary — and comparing revenue against base alone flatters every hire you make.
Attribute the revenue honestly
For a billable role, utilisation and realised rate tell you directly. For a role that supports revenue rather than producing it, the honest measure is capacity created: what the team could not do before and can now. If nothing changed, that is the answer.
Expect a lag, and decide its length in advance
Almost no hire pays for itself immediately. The useful discipline is deciding, before you hire, how long the ramp should be and what has to be true at the end of it. Without that, a hire is never evaluated — it just becomes permanent.
Watch payroll as a percentage of revenue, by function
One combined payroll figure tells you nothing. Split by function — delivery, sales, admin — and tracked against revenue, it shows whether the hire moved the ratio in the direction you expected.
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