Bridging gaps in headcount management: Q&A with Jeff Merlin, Strategic Finance at Harness

Learn how Jeff helped optimize headcount planning to help Harness grow from 120 to 800 people.
Jeff Merlin
Sr. Director Strategic of Finance at Harness
min read
March 28, 2023

About Jeff Merlin

Jeff is the Senior Director of Strategic Finance at Harness. When he joined the company three-plus years ago, there were roughly 120 employees. Today, Harness has over 800 employees and its valuation has soared to $3.7B.

There are many ways to grow headcount by 8X, and most of them are pretty messy. But Jeff and his team of four have worked extremely hard to implement tight processes and responsible growth strategies.

This blog will give you a bit of insight into how Jeff did this at Harness. We’ll focus on team structure, headcount operational excellence, and how to collaborate with key business partners.

For the full story, check out our podcast, The Headcount People, on Spotify, YouTube, or Apple Podcasts.

[We lightly edited Jeff’s answers for clarity and easy reading.]

Q: What does a great headcount planning process look like?

I think great headcount planning starts with a clearly defined process for all key stakeholders. At Harness, our process has evolved a lot because the challenges we had 24 months ago are different from the challenges that we have today.

We mapped the process that needed to be followed, and worked through it with our recruiters, HR team, and business partners. There are a lot of different people involved in headcount planning, so everybody needs to be on the same page. A clearly defined process helps.

It’s also my belief that the actual creation of a job req actually lives within the financial model of the Finance team. It doesn’t live in your HRIS or your ATS. It’s generated by Finance – inputting that row into the spreadsheet or whatever tool you use. We call it the Finance ID.

When the req is created by Finance and has a Finance ID, we can better tie the financial model to the operational reality of the headcount plan as it changes.

Another thing I’ll mention around great headcount planning is that it’s important to collect as much information about the req as possible: title, level, location, department, hiring manager, start date, and other relevant data. It informs the total rewards team so they can set compensation levels, which we input into the financial model and which guides Talent Acquisition about who they need to target.

Lastly, great headcount planning should also include what needs to happen once someone is hired. What equipment do they need? Which systems do they need access to? We can build more robust models and create better onboarding processes when all of this information is determined early on in the process. 

Q: How do you determine the envelope for total headcount and for each department?

Essentially, the envelope starts at growth rate and burn. We ask ourselves what we’re comfortable with, what we’re targeting, and what our investors are expecting of us. And that gives us a pretty good idea of the total headcount budget. 

Then, we start to create envelopes for each of the departments, which often tie back to bigger goals.

In determining the envelopes, we try to be as scientific as we can, while also incorporating flexibility. 

For Sales, we start with the revenue target and capacity plans to hit the target. Since we typically want to have one manager for every 6-10 BDRs or AEs, we can work backwards to create the headcount envelope. 

We do the same thing on the engineering side. It's less revenue focused, and more product focused. We have a pretty detailed model for how many engineers, UX designers, and PMs we need to build a new product. 

We typically want to have one product manager and one UX designer for every 12-15 engineers, and again can work backwards to create the engineering headcount envelope.

These org structure models are something our CEO, Jyoti Bansal, has developed over the course of his career as a multi-unicorn founder. They’re really useful for growth planning in a responsible way.

Q: What tools do you use? Do you see any opportunities to fill gaps in the process?

It’s a little funny that so much of headcount management is done by Finance, but a lot of the core systems like the HRIS (human resources information system) and the ATS (applicant tracking system) aren’t actually owned by Finance. We have to try and influence folks around how they should use their tools.

For example, we use Lever as our ATS. One of the very early things that we did was put in an approval process. We have both a job req approval and a job offer approval. It’s pretty basic, but we're using the offer approval as a way to get the most up-to-date offer information and input it into our model so that we have almost real-time information.

For us, that’s important. We try to provide real-time visibility to our executives on where we are with headcount at any given time. That means having fairly robust categories for headcount stages that we can track closely, including: 

  • Active headcount
  • Pending starts
  • Pending attrits
  • Offers about to go out
  • Future headcount

These categories came about from Finance needing to fill the gap between different systems, like after an offer is accepted but before the headcount exists in the HRIS. So that’s another area where we’ve influenced but not necessarily owned.

Overall, we still do all of our planning inside of spreadsheets.

We're starting to see the limitations of it, and we're working to bring in a headcount planning and management tool that will help keep all of our information updated and fresh for the greatest visibility. That’s one big area of opportunity for Harness.

Q: In this ‘new world’ where growth must be more responsible and efficient, how are you thinking about headcount over the next 24-36 months? 

Growth at all costs is out. Prioritization is in. From a strategic standpoint, the headcount that you're putting in now is truly the strategy of the company.

In other words, any headcount you're adding at this point should be tied to the strategic investments of the company. It’s very clear at Harness what our objectives are just by looking at the headcount plan.

In addition, we’re also hyper focused on how we can narrow the budget variance from 5-10% to more like 3%, or even 1%. We want to give our leadership team as accurate a picture as possible so that we can all have better conversations around prioritization. Every point of variance that you’re off is a point of variance that could’ve gone to some other strategic objective.

Every point of variance that you’re off is a point of variance that could’ve gone to some other strategic objective.

The end goal is to be as precise as possible, and headcount spend is a really big piece of getting that right.

Get more headcount tips from Jeff in the full podcast

In our podcast of The Headcount People, Jeff goes much deeper into all of the topics above. 

To learn more about TeamOhana and strategic headcount management, contact us.

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