Somrat is the Head of Business for Gusto Embedded Payroll, so he oversees a cross-functional org that includes finance, HR, go-to-market, and product teams. He previously oversaw Gusto’s strategic partnerships, technology ecosystem, distribution partnerships, and the developer ecosystem. Somrat also has founded two VC backed companies, both of which were later acquired.
We interviewed Somrat to find out why he cares so much about headcount management and what’s made him successful over the course of his career. Responses have been lightly edited for clarity.
At the highest level, strategy is about people. In order to execute any strategy, or achieve any business outcome, you need to have the right people, in the right roles, with the right levels and functional design, and the right reporting structure.
I will say that headcount planning is not just a one-time event. It’s an always-on process, and I suppose that’s why we shift to call it headcount management. Because as you’re growing and evolving, you're rethinking what the next phase of team and organization is to get to the next business outcome.
To me, leaders are ultimately accountable to the business outcomes and plan. People are a core part of it, and planning and managing headcount is an important input to the process.
What has worked really well is starting with org design by removing the people out of the equation first. What is the right org design that can help align to the outcomes we’re trying to achieve?
I institutionalized this process where my leadership team is defining their orgs and functions independently. They build out what they need to achieve our goals. This provides me with various inputs to determine what the optimal org design is.
Next, we look at headcount requests. This is typically done through lots of spreadsheets.
These spreadsheets become the starting point of a next level conversation around prioritization at two levels. One is the priorities within the actual functional department. Two is the leaders coming together and prioritizing against all departments. It forces our leaders to operate with an understanding across all functional teams and units.
It also enables us to listen and learn from each other, and to continue to come back to our goals and processes so that we can identify the right people strategies needed to ultimately achieve the goals.
At that point, we have to triangulate our plan against the budget that finance designates for us. While finance sort of dictates the budget, we have the ability to influence it. And that’s something I believe leaders have a responsibility to do by providing scenarios for finance to take into consideration.
My leaders typically designate a high case (biggest budget), middle case (average budget), and low case (smallest budget). This provides the ground for us to stand on when negotiating with finance.
I think about effective org design as, “What’s the right organizational structure that creates clarity of function, roles, and responsibilities across functional teams to get to an aligned outcome?”
It ties to both short term and long term initiatives so you’re always thinking about what’s required in the next one, two, three quarters as well as what’s needed now.
Once a quarter, I get together with our leaders and we talk about the different challenges with the way that we operate. We do scenario planning to see different ways that organization design can help us achieve better outcomes. We talk about the maturity of different functional areas, better functional reporting structures, better reporting structures in the context of our people, and much more.
Sometimes there are action items and changes to be made. Other times we just put the discussion in a corner because we’ve planted the seeds and we can go back in the next quarter and reevaluate.
Where things become messy for us is how we document and maintain all these different ideas, because the GMs aren’t the only ones doing this. We ask our leaders to do the same thing. And it typically ends up in spreadsheets and slide decks.
But because the business is constantly evolving, so are our thoughts and scenarios. At that point, our documents get out of sync because there’s no single platform to ultimately bring it all together. But we’ve done the best job we can through our spreadsheet process. It works, but it clearly has a lot of room for improvement.
The most important thing is having a culture of shared accountability. We’re all helping each other out to achieve the same shared outcomes. Quite frankly, we won’t be able to do that without the amazing partners in HR and Talent. But it takes effort and commitment.
I’ve had the great fortune to work with some amazing HR business partners at Gusto and other companies, and all of them were deeply embedded in the business.
So for HR teams, it’s really important to learn about the business and the challenges in the business. Build a strong partnership with your business counterparts so that you can understand what’s going on and help them think through the people dynamics that they have to prepare for in the near and long term.
That can only be achieved if you really understand the outcomes they’re driving towards and have empathy as to why the headcount plan is what it is, why there’s a need to hire folks with certain levels at specific times.
Here's the full interview with Somrat.
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