Impact of Hiring on Cashflow

Many people are familiar with the idea of looking at a sales pipeline and discounting the potential revenue by the probability that the deal will close.  (e.g., a $1M deal that has a 10% chance of closing is discounted to $100k).
 
For relatively small organizations, it turns out that using this thinking and applying it to recruiting can be helpful, too.  As you go through the recruiting process with a new prospect, they move along in probability of hire (introduction, first interview, second interview, etc. — whatever your actual process is).  Since the prospect is being sought for a specific position with a known average salary, you can discount that salary based upon the probability of hire and then see what effect that discounted salary bump might have on your cash flow.  If you have several people in the recruting pipeline at various stages, the overall probable effect can be watched and adjusted for over time.

Have a thought or opinion?