Workforce planning process best practices and tips from the pros

Upwards of 70% of your operating expenses are tied up in the workforce, which means every hiring decision, delay, or reorg has both immediate and long-standing financial consequences. 

And yet, fragmented workforce planning processes held together by spreadsheets remain the norm. We’ve all accepted the fact that HR sees one picture of the workforce, Talent sees another, and department leaders plan against assumptions that rarely match the financial model. You know it’s a problem that Finance is left reconciling the fallout and explaining variance that shouldn’t exist in the first place, but what’s the path forward?

The best organizations in the world operate differently. They treat workforce planning as a continuous operating rhythm, not a once-a-year scramble, and they anchor it in data that everyone can trust. When Finance, HR, and Talent work from the same view of current headcount, approved roles, hiring velocity, and budget constraints, decisions speed up and surprises fade.

What sets these organizations apart is a set of disciplined habits: clear goals, thoughtful modeling, consistent sequencing, and a commitment to tying every role to a measurable outcome. Those principles form the backbone of modern workforce planning and the foundation for the best practices that follow.

The workforce planning process every business should follow

Effective workforce planning starts long before headcount requests hit Finance. The organizations that run this well follow a clear process that aligns business goals, financial constraints, and hiring realities into one operating system. It isn’t complicated, but it does require structure. You need a shared understanding of what the company is trying to achieve, an accurate view of your current workforce, and a planning rhythm that keeps teams aligned as conditions change.

Most companies struggle because these foundational steps happen in isolation. Revenue targets get set without a view of hiring timelines. Department plans get drafted without understanding budget implications. Recruiting is asked to deliver against assumptions that were never validated. A disciplined workforce planning process solves that fragmentation and gives Finance the control, clarity, and predictability it needs.

With that foundation in place, the essential steps of workforce planning fall into a logical sequence you can run quarter after quarter as your business evolves.

Align on business goals and growth outcomes

Workforce planning starts with clarity at the top. Before Finance can model hiring capacity or sequencing, the company needs a firm definition of what it’s trying to achieve in the next one to three quarters. Revenue targets, product milestones, market expansion plans, and investment priorities all determine the shape and pace of the workforce. Without agreement on those goals, every downstream decision becomes guesswork.

This is where Finance runs point. You’re the only function with full visibility into burn, runway, margins, and investor expectations, so you’re best positioned to translate ambition into constraints the organization can actually operate within. When goals are specific and financially grounded, workforce planning shifts from a debate about headcount to a strategy conversation about outcomes. That alignment is what prevents the late-stage surprises and budget reshuffling that derail execution later in the year.

Build an accurate picture of your current workforce

You can’t plan the future if you can’t trust the present. Before Finance models spend or sequencing, the organization needs a clean, reconciled view of its actual workforce. This is where most plans start to drift. Outdated rosters, unclear backfills, inconsistent compensation data, and ambiguous role statuses all create the kind of variance that compounds down the line.

A reliable baseline should include:

• Active headcount, with accurate job data, levels, compensation, and department mappings.
• Pending starts, including start dates, negotiated comp, and any dependencies that could shift timing.
• Open roles, with clarity on whether they’re net-new or backfills.
• Known departures, planned exits, and historical attrition patterns to inform replacement needs.
• Cross-functional discrepancies, especially mismatched data across HRIS, ATS, and Finance models.

When this baseline is wrong, every forecast is wrong. When it’s right, Finance can model burn, ramp schedules, and hiring velocity with far more confidence.

Forecast future workforce needs

Once the current-state baseline is stable, Finance can shift from describing the organization to predicting it. This is where modeling becomes a strategic exercise rather than a numbers drill. Every future role should map to a business outcome, a timeline, and a financial reality. Strong forecasting forces departments to articulate why a role matters now, what measurable impact it will drive, and how sensitive it is to changes in the plan.

A good forecast demands clarity across five inputs:

• Expected hiring velocity
• Ramp schedules for revenue and technical roles
• Compensation ranges and merit cycles
• Anticipated attrition
• The sequencing required to hit revenue or product milestones

When these inputs are clear, Finance can run scenarios with confidence instead of padding assumptions. And when they’re not, forecast variance grows, usually in ways that surprise people at exactly the wrong moment. Modeling isn’t about predicting perfection; it’s about tightening the band of uncertainty so decisions stay grounded and budgets hold.

Sequence and prioritize headcount

Even the best forecast breaks down if everything is treated as equally urgent. Workforce planning only works when the organization acknowledges a simple operational truth: the timing of a hire can matter as much as the hire itself. Sequencing is where Finance earns its keep. By forcing clarity around dependencies (i.e. revenue targets, product roadmaps, customer commitments, and onboarding capacity), Finance turns a collection of requests into an executable plan.

This is also where unrealistic expectations surface quickly. Many leaders want all their roles opened in Q1, even when the business can’t absorb that volume or the budget can’t sustain the burn curve. A clear sequencing model brings discipline back into the conversation. It shows which roles unlock downstream work, which ones can wait without harming outcomes, and which requests don’t hold up when mapped to financial or operational constraints.

Good sequencing prevents the “hiring cliff” that derails teams later in the year. It also protects TA from impossible timelines and ensures the organization invests in the roles that create momentum.

Align cross-functional stakeholders early

Workforce planning breaks down fastest when teams operate on parallel tracks. Finance builds models, HR tracks changes, Talent manages pipeline, and department leaders make assumptions about timing and budget that rarely match the reality. 

Effective alignment requires three things:

• A shared source of truth so every team is reacting to the same data, not reconciling differences after decisions are made.
• Clear ownership of each step, from role definition to approval workflows to communication back to hiring managers.
• A predictable cadence for validating assumptions as conditions shift. Hiring velocity, attrition, revenue pacing, and budget updates all affect the plan.

When leaders don’t align at the start, they end up aligning under pressure. When they align early and often, forecasting becomes cleaner, approvals move faster, and teams spend less time debating numbers and more time executing the plan.

Monitor, update, and reforecast continuously

Workforce plans age quickly, especially in organizations where hiring velocity, attrition, and budget assumptions change month to month. Treating the plan as a static document guarantees drift. Finance sees it first in rising variance; Talent sees it in mismatched expectations; HR sees it in surprise backfills and comp adjustments that weren’t modeled. Continuous reforecasting is the only way to keep these shifts visible before they create downstream friction.

The best teams establish a rhythm that mirrors how the business actually operates. They review hiring progress, validate timing, adjust for unexpected departures, and update cost assumptions as market conditions or strategy evolve. Small corrections made early prevent the large, reactive swings that happen when a plan goes untouched for a quarter. Continuous forecasting is what keeps the plan aligned with reality and preserves the trust Finance needs when headcount is the largest line item on the books.

7 workforce planning best practices from the pros

The steps of workforce planning look similar across most organizations. You set goals, establish a baseline, model scenarios, sequence roles, and adjust as conditions change. That framework works everywhere. But the teams that consistently outperform their peers succeed because they understand the judgment calls, the tradeoffs, and the patterns that only surface through real operational experience.

Leaders at high-growth companies like Novo, Harness, Demostack, Invoca, Second Front Systems, Snap Inc., and Ashby have all shaped their workforce planning processes around these subtleties. Their approaches reveal what actually moves the needle: how to pace hiring responsibly, how to reduce variance, how to preserve runway without freezing progress, and how to create alignment across functions that rarely speak the same operational language by default.

The following best practices distill those lessons. Use them to sharpen your own process and transform workforce planning from a procedural requirement into a strategic advantage for your organization.

1. Set the right pace for growth

High-growth companies often assume the fastest path to results is to hire aggressively. Florian Gendeau, Head of Finance at Novo, argues the opposite. The real work is determining how quickly the organization can scale without losing productivity, clarity, or financial control. That requires Finance and leadership to set a realistic cadence for growth.

“As we see layoffs across all kinds of organizations, it is especially important to reflect on headcount planning, because getting it wrong affects people’s lives.” — Florian Gendeau, Head of Finance, Novo

Florian pushes teams to interrogate whether each incremental hire is tied to a clear contribution. He also notes that most companies experience peak productivity around 40 employees; beyond that point, output increases, but productivity per person drops. The implication is straightforward: scaling too quickly can slow you down.

Done well, pacing becomes a safeguard that keeps the organization building capacity at the speed it can actually sustain.

2. Approach every hiring decision with deep financial rigor

“Always be narrowing the variance. The opportunity cost of the difference between your projected outlook and actuals can be very high. So, if your variance today is 5-10%, work towards bringing that down to 1-2%, which will give you a lot more flexibility over time.” — Jeff Merlin, Sr. Director of Strategic Finance, Harness

Because payroll carries so much weight, headcount planning deserves the same rigor and scrutiny as any major capital allocation. Too many organizations treat hiring as a decentralized exercise driven by short-term needs, while Finance is left to reconcile burn, runway, and variance after the fact. Jeff recommends flipping that model so Finance sets the parameters early and brings mathematical discipline into the process.

High-performing teams anchor their planning in three practices Jeff emphasizes:

• Model the business before modeling the roles. Growth rate, burn tolerance, and investor expectations define how much hiring the company can sustain.
• Use ratios to benchmark organizational design. Whether it’s engineers per PM, AEs per SE, or managers per team size, these ratios help maintain structure while scaling.
• Continuously narrow variance. Jeff’s guidance is explicit: if variance sits at 5–10%, work it down to 1–2%. The tighter the variance, the more strategic flexibility the company gains.

Financial rigor gives leaders confidence that the hiring plan supports both execution and financial durability.

3. Plan for sustainable growth in volatile markets

Sustainable workforce planning isn’t about freezing hiring. It’s about understanding the macro environment well enough to make deliberate, defensible decisions. Dave Wieseneck, VP of Finance at Demostack, underscores how quickly markets can shift and how essential it is for Finance to protect the company’s downside while still enabling progress.

“With interest rates being high and investments at an all-time low, Treasury and all the processes that go with it are critical.” — Dave Wieseneck, VP of Finance, Demostack

That’s why he pushes teams to evaluate headcount decisions not just by cost, but by return, timing, and alternatives.

Dave’s approach focuses on three levers:

• Cut what doesn’t produce clear ROI. Software with low utilization, consultants on peripheral work, and roles without a measurable impact dilute financial stability.
• Evaluate total cost of ownership, not sticker price. If a $25,000 tool requires $40,000 of internal admin time, the cost structure changes and maybe your decision should, too.
• Look for internal capacity before opening new roles. In downturns and in growth cycles, efficiency gains often come from internal employee transfers, not expanding teams.

Dave’s philosophy is simple: preserve optionality. In good markets, it helps you accelerate. In tight markets, it keeps you alive.

4. Replace traditional annual planning with rolling workforce forecasts

Annual workforce planning locks teams into assumptions that rarely survive the first quarter. Markets shift, hiring timelines slip, attrition hits at unexpected moments, and priorities evolve. Daniel Fulmer, Finance Director at Invoca, argues that a rolling 12-month view is the only way to maintain agility without sacrificing financial discipline.

“This keeps the machine going, always having a clear view of this quarter and four quarters ahead. It helps reduce variance in forecasting and allows you to adjust strategy.” — Daniel Fulmer, Finance Director, Invoca

Rolling forecasting isn’t just a Finance preference. It keeps every stakeholder grounded in the same updated reality and eliminates the scramble that happens when static plans drift too far from actuals.

Daniel’s approach sharpens planning in three ways:

• It reduces variance by continually correcting assumptions before they compound.
• It accelerates decision-making because leaders don’t wait for a new fiscal cycle to adjust course.
• It strengthens alignment by giving Finance, HR, and Talent a shared operating horizon instead of a once-a-year reset.

The outcome is a workforce plan that behaves like the business itself: dynamic, responsive, and grounded in real-time data instead of outdated expectations.

5. Invest in the right systems when complexity demands it

“When you reach 200 people, it’s time to consider a headcount planning and management system.” — Daniel Fulmer, Finance Director, Invoca

Daniel Fulmer explains a tipping point where manual reconciliation stops being scrappy and starts being a liability. Around 200 employees, the volume of data, the number of stakeholders, and the pace of organizational change make spreadsheets a risk to both accuracy and execution. Finance teams spend more time validating inputs than analyzing outcomes, and decisions slow under the weight of data checks no one trusts.

A purpose-built system like TeamOhana changes the job entirely. Instead of stitching together HRIS exports, ATS data, and a forecast that goes stale by the end of the week, leaders get a real-time view of headcount, approvals, hiring timelines, and budget impact. It creates a single operating environment where Finance, HR, and Talent work from the same information.

The best teams don’t wait until planning becomes unmanageable. They invest when process pain starts to outweigh the illusion of flexibility spreadsheets provide.

6. Build cross-functional relationships early, especially between TA and Finance

“When I went to Salesforce, the first thing I did was build my relationships with Finance. Because one of the worst places to be in recruiting is at the bottom of the funnel, where reqs just get foisted on you.” — Mike McDonald, Head of Talent Acquisition, Snap Inc.

Workforce planning collapses when functions operate in silos. And somehow the Finance/TA connection is often the most overlooked despite being the one that determines whether hiring plans are realistic, sequenced, and financially aligned.

Recruiters become far more strategic when they understand why certain roles matter, when they’re needed, and how they impact the financial model. Likewise, Finance gains sharper forecasting when TA flags hiring velocity constraints, market data, or sequencing risks before they appear as variance.

Mike’s philosophy reframes TA’s role. Recruiting isn’t an execution arm, it’s an early-warning system and a strategic partner. Building relationships with Finance upfront ensures that role prioritization, hiring timing, and budget expectations stay in sync long before a req ever hits the pipeline.

The result is smoother hiring, fewer surprises, and a planning motion where Talent and Finance reinforce each other instead of reacting to each other.

7. Challenge outdated headcount models and build what works for your org

Many teams cling to headcount formulas that no longer reflect how their business actually operates. Jim Miller, VP of People & Talent at Ashby, warns that rigid “X revenue, Y reps, Z managers” thinking creates more risk than clarity. Companies evolve. Products change. Markets shift. Your workforce plan should adapt accordingly.

“TA leaders often accept hiring targets… What business and TA leaders need to remember is that it’s a budget, not a target. You don’t want headcount that will cost you more if they don’t align with your business needs.” — Jim Miller, VP of People & Talent, Ashby

Your model should reflect your company’s risk appetite, sequencing priorities, customer commitments, and financial strategy. That means questioning default ratios, pressure-testing assumptions from executives, and designing a hiring plan that matches your real path, not an idealized one.

Build a modern workforce planning process with TeamOhana

A modern workforce plan isn’t defined by how well the steps are documented. It’s defined by how well the organization can execute them together. Finance needs real-time visibility into what’s approved and what’s changing. HR needs clarity on how workforce decisions affect compensation and employee movement. Talent needs accurate timing and sequencing so hiring goals are achievable instead of aspirational. And business leaders need confidence that every role in the plan ties back to measurable outcomes.

The problem is that most companies try to run this motion through tools never designed for it. Spreadsheets drift. ATS and HRIS data don’t reconcile cleanly. Approvals happen in Slack or email threads that never make it back into the model. Forecast variance grows not because people are careless, but because the system itself works against them.

TeamOhana solves that fragmentation. By connecting Finance, HR, Talent, and business partners in one shared environment, it turns workforce planning into a single, continuous operating rhythm.

Leaders work from the same real-time headcount data. Approvals follow a governed workflow. Scenarios update instantly. Plans and actuals stay aligned without hours of manual reconciliation.

The result is a workforce planning motion that behaves the way your business does — dynamic, accurate, collaborative, and financially grounded. It gives Finance tighter forecasts. It gives HR and Talent predictable workflows. And it gives the entire organization a clear line of sight into how people decisions shape the company’s future.

Reach out for a demo and see how TeamOhana can change the way you approach workforce planning.