What is headcount planning?
Headcount planning is a way for companies to plan and manage their workforce in order to ensure they have the right number of employees at all times. This effective process helps organizations align their workforce with their business goals while taking into account both current and future needs.
The goal of headcount planning is not only managing employee numbers but also managing headcount costs in order to maximize efficiency and productivity.
People are often the largest cost when considering operating budgets. The headcount of an organization can account for 70-80% of the P&L of a business. It is important to consider how headcount decisions will influence costs when developing a budget, but also how headcount changes may impact the ability to reach business goals.
When balancing headcount needs with economic constraints, the smartest companies weigh all factors carefully in order to maximize returns efficiently.
Why headcount planning is so crucial right now
Headcount planning is crucial right now, as resources are more limited yet outcomes must continue to be delivered. With a carefully planned approach, it's possible to maximize the potential of headcount budgets and drive success by ensuring that employee roles align with the organization’s goals.
By strategizing on how best to deploy staff and invest in necessary hires, businesses can ensure they make the most efficient use of their headcount budget while meeting key objectives. Furthermore, it helps develop an effective workforce plan to prepare for future growth or economic upturns when times are good.
Understanding headcount spend can offer key insights into trends within the business that might otherwise be overlooked and open up new pathways for innovation.
Best practices in headcount planning
When it comes to headcount planning, it’s important that you establish clear objectives and then develop strategies based on those objectives.
Build the headcount plan
First, you should identify what roles your organization needs in order to meet its desired goals. This comes to life as a headcount plan and is typically developed once a year.
In the current climate of uncertainty, your headcount plan may look a little different than before. Companies may be utilizing internal transfers between departments and looking at ways to backfill only the most critical positions. This is more cost-effective, in terms of both time and resources invested into recruiting externally.
Focusing on employee training and providing opportunities for employees to move into new roles in the organization can help your business continue running smoothly despite any lulls in hiring activity, as well as foster an engaged workforce.
Track the headcount plan
Once you begin executing against the headcount plan, it's important to track it very closely so that you can forecast accurately and in real-time.
Accurately forecasting headcount and headcount spend is an essential part of any successful business strategy. Accurate forecasts are necessary for ensuring that burn rate is kept in check, preventing the company from overspending or running deficits. Accurate forecasts also allow for proactive decisions to be made regarding hiring strategies and budgeting, keeping the organization agile and well-positioned in competitive markets.
The only way to ensure accurate forecasting is to take headcount data from both ATS (applicant tracking systems) and HRIS (human resources information systems). By gathering and reconciling these two sources, you can get an accurate representation of current and future effective headcount that should be used for strategic planning.
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Keep the headcount plan up to date
Keeping headcount plans up to date is a crucial part of budgeting and strategic planning. To ensure it's always up to date, Finance and/or HR must frequently review and update the data.
Typically, you have to continue to pull the data from ATS and HRIS and reconcile it on a regular basis. You also need to have regular meetings with other key stakeholders like Talent and hiring managers to verify the accuracy of the data.
Guide the business based on the headcount forecast
When you have an accurate headcount forecast that is up to date, you can guide the business towards smarter decisions, which are crucial in today's changing environment.
You can help show that when hiring is delayed, goals and headcount plans need to change. You can help reallocate funds from departments that no longer need budget into more mission critical activities.
What's key is you can help make these decisions before it's too late – before you hire too many people, increase burn rate, and need to make difficult decisions about what to do next.
Adapting your headcount planning strategy
As businesses continue to navigate through these uncertain times, it’s essential that they adjust their strategy accordingly in order to remain competitive. Companies need to be flexible with their approach by being open-minded about new skills or tasks that may be required due to the changing landscape.
Additionally, employers must take into account any potential changes in customer demand or shifts within the industry when making decisions about their workforce numbers and structure. Finally, it’s important for employers not only to look ahead but also review past performance data so they can understand how various events have impacted them over time—and prepare accordingly moving forward.
As the business landscape continues to shift and evolve, it’s more important than ever for companies to focus on developing a strong workforce strategy. By being flexible, proactive, and data-driven in their approach, businesses can stay competitive and continue to succeed in today’s rapidly changing environment.
Headcount planning in a fast-changing world
Headcount planning is an invaluable tool for businesses looking to stay competitive during these unpredictable times by ensuring they have enough staff without going overboard on expenses or cutting too many jobs during layoffs.
To make sure these processes run smoothly, companies should focus on understanding their current needs while also adapting their strategy as necessary given changes in customer demand or shifts within the industry.
With a solid headcount plan in place, businesses will find themselves better equipped than ever before when tackling challenging situations like those presented by our current economic climate.
How TeamOhana can help with headcount planning in a fast-changing world
TeamOhana helps you save time and money by automating all the manual work involved in building and managing headcount plans. Our customers have saved more than 35 hours a month, time that they can dedicate to growing and adding value to the business.
Our platform is purpose-built to give Finance leaders a single source of truth for accurate headcount data, making it easier to forecast and manage burn. TeamOhana also empowers your key business partners – HR, talent, and budget owners – to work more effectively with you throughout the entire headcount process.
- Headcount Ledger: Ensure that every open req has gone through the proper approval process. No hiring surprises.
- Requests & Approvals: Set up dynamic workflows for headcount pre-approvals with a complete audit trail.
- Hiring Tracker: Get complete visibility into how hiring is going against the plan.
- Budgets & Forecasts: Forecast budget variance in real-time by tracking actual expenses against headcount budget.
- Recruiter Workboard: Ensure recruiters only work on approved headcount.
To learn more about TeamOhana and strategic headcount management, contact us.