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Standard: Bluegrass HR: how safe is its growth?

You run the case. Read the prompt, answer questions from the notes below, and share data only when the candidate asks for it or gets stuck. Score at the end.

Case timer

00:00

Target length:

1. Read the prompt aloud

Read it slowly, then pause. Let the candidate ask questions before they structure.

Bluegrass HR sells payroll and HR software to mid-sized US companies, priced per employee (per seat). Its board asks how healthy its growth is. What would you tell them?

Format note: Difficulty: Standard. Format: candidate-led, with interviewer dialogue. Industry: Technology (software). Region: US. Interview length: about 30 minutes. The company is fictional and all figures are illustrative.

2. Answers to clarifying questions

Give these answers only if the candidate asks. If they ask something not listed, give a sensible answer or say it does not matter here.

If asked: How big is the business?
Answer: USD 50 million of annual recurring revenue (ARR) at the start of the year.
If asked: What happened to existing customers over the year?
Answer: 8 percent of ARR churned, 2 percent downgraded, and existing customers added 15 percent through more seats.
If asked: How much came from new customers?
Answer: About USD 12 million of new ARR.

3. The hypothesis a strong candidate states

Listen for an early, testable guess like this one. It does not need to match word for word.

Software growth depends a lot on existing customers growing. My hypothesis is that growth relies on customers adding seats, which makes it exposed to a hiring slowdown.

4. A model structure

Compare the candidate's structure with this one. A different split can be just as good if it is clean and fits the problem.

Growth = existing customers (net revenue retention) + new customers
- Churn and downgrades
- Key: Expansion from more seats
- New customers

5. The working, step by step

Each step shows how a strong candidate works it out. Share a new fact from it only when the candidate asks or is stuck, and let them do the math: the result in the dark box is what they should reach.

Step 1: ARR lost to churn
What a strong candidate does: Candidate: "8 percent of USD 50 million."
Churned ARR (USD): 50,000,000 × 0.08 = 4,000,000
Step 2: Net revenue retention
What a strong candidate does: Candidate: "Start, minus churn and downgrades, plus expansion, divided by start."
Net revenue retention (%): (50,000,000 - 50,000,000 × 0.08 - 50,000,000 × 0.02 + 50,000,000 × 0.15) ÷ 50,000,000 × 100 = 105
Step 3: ARR at year end
What a strong candidate does: Existing customers at 105 percent, plus USD 12 million of new ARR.
Ending ARR (USD): 50,000,000 × 1.05 + 12,000,000 = 64,500,000
Step 4: Growth
What a strong candidate does: Change over the starting ARR.
Growth (%): (64,500,000 - 50,000,000) ÷ 50,000,000 × 100 = 29
Step 5: Curveball: hiring slows
What a strong candidate does: Interviewer: "Our customers are slowing hiring. Expansion could halve." Candidate: "Net revenue retention would be:"
Net revenue retention (%): (1 - 0.08 - 0.02 + 0.075) × 100 = 97.5
Step 6: Growth in that case
What a strong candidate does: Same new ARR.
Growth (%): (50,000,000 × 0.975 + 12,000,000 - 50,000,000) ÷ 50,000,000 × 100 = 21.5
Step 7: A lever not tied to seats
What a strong candidate does: Interviewer: "We could sell an analytics module." Candidate: "If 20 percent of customers buy it at 10 percent of their current spend:"
Extra ARR (USD): 50,000,000 × 0.2 × 0.1 = 1,000,000

The recommendation to listen for

At the end, say: "The CEO walks in. What is your recommendation?"

Growth is healthy today but depends too much on customers hiring. First, the business grew 29 percent, with existing customers growing 5 percent net (105 percent retention). Second, most of that expansion comes from added seats, so a hiring slowdown that halves expansion drops retention below 100 percent and growth to about 21.5 percent. Third, 8 percent churn is the largest single loss and worth reducing. Reduce churn with better onboarding, and add revenue not tied to seats, such as an analytics module worth about USD 1 million of ARR at 20 percent take-up.

Risks a strong answer names: A deeper hiring slowdown; Module take-up may be lower than 20 percent.

Next steps: Find which customer groups churn most, and why; Test the analytics module with 50 customers.

Strong versus weak

A strong answer

Split growth into retention and new sales, calculated net revenue retention, and tested its dependence on hiring.

A weak answer

Reported 29 percent growth as strong and stopped, without asking where it came from.

Score the candidate

Score each criterion from 1 to 5. A 2 or a 4 sits between the descriptions.

This case has no exhibit. Score Exhibit reading on how the candidate used the data you gave them: did they pick out the number that matters and say what it means?

Structuring

1: No clear structure, or a memorized framework that does not fit the problem.
3: A sensible structure, but with some overlap, a gap, or no clear priority.
5: A structure built for this problem, with no overlap and no gaps, a stated hypothesis, and a clear first step.

Math

1: Frequent errors, no units, or needed heavy help to finish.
3: Right answers but slow or messy working, or one error caught late.
5: Accurate and clearly narrated, with units, a sense check, and what the number means.

Exhibit reading

1: Read the chart aloud without finding the number that matters.
3: Found the key number but gave only part of the so-what.
5: Pulled the right number quickly and said what it means for the case.

Synthesis

1: Summarized what was done, with no clear answer.
3: Gave an answer, but with weak reasons or no next step.
5: Answer first, then two or three reasons with numbers, the main risk, and next steps.

Communication

1: Hard to follow: long silences, no signposting.
3: Clear most of the time, with some rambling.
5: Calm and concise, signposted each step, and checked in with the interviewer.

Total

0 out of 25

Score all five criteria to see the band and the feedback template.