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Celarity Blog • Updated Apr 21, 2023

Build Your Case: Increasing Headcount on Your Team

How can you justify and build a business case for additional staff ? This question is easily one of the most frustrating things for hiring managers. You feel your team is understaffed and overworked. Even worse, you’re starting to worry about employee morale and the quality of work being pushed out the door.

So, what are some of the reasons it’s so hard to advocate for more staff? And more importantly, how can you overcome the common objections raised by the decision-makers when it comes to hiring more employees?

Why it’s so tough to convince decision-makers:

• Costs – People are a large expense for companies. Eliminating employees increases equity for owners and decreases costs associated with benefits, salaries, equipment, training, etc.
• Productivity – Companies sometimes downsize to increase productivity. Counterintuitive? Maybe. But, some companies think they can increase individual worker output while keeping production constant.  A company might also downsize to increase productivity by replacing workers with technology.
• Value – Downsizing generally signals restructuring or change. If shareholders/investors think these changes will increase profitability, it will increase the value of company stock. This can result in more investors coming on board or current investors increasing their contributions. In either case, downsizing can increase the company’s perceived value.
• Failed Evaluation – Some managers fail to critically evaluate their needs and the type of help required.
• Outsourcing – Some companies overextend the number/types of services they offer which leads to the elimination of products/services or outsourcing certain activities. In turn, this often leads to a decrease in employees.

How To Build Your Case for Additional Staff:

Follow the steps in this guide to help you build a solid business case to justify an increase in headcount for your team.

Step 1: Identify your needs

Identify your needs by asking yourself some simple questions:

• Do you need help during specific times of the year?
• Are you seeing a higher volume of work right now? Do you expect that volume of work to continue?
• Do you have specific gaps on your team? Do the gaps frequently change?
• Is your business growing?
• Do your team members seem more emotional and/or sensitive than usual?
• Is the quality of work on your team decreasing?
• Are you experiencing a higher turnover than normal?
• Are employees working early mornings, evenings, on weekends and missing family or social engagements to work?

If you answer yes to any of these questions, it’s time to identify the type of help you need…

Step 2: Be specific about what you’ll be asking for in a new hire

Not being specific with your requests is a critical mistake to avoid! When you’re asking for an increase in staff, focus on:

• Skills/knowledge
• Industry experience
• Specific backgrounds
• Personalities

In addition, think about how many employees you need to hire and what kind (full-time, part-time, temporary, freelance, etc.). No need to start from scratch – check out these job description templates that include responsibilities, key role metrics, competitive salary information, and more!

Step 3: Collect the right data

You’ll want to collect the data that will help you frame your argument for why you need more staff, exactly how many new employees, what kind , and why.

Use real-life scenarios to illustrate the negative impact of being understaffed and how an increase in headcount can help your team meet its goals. The best data you can collect on your own to help you make your case include things that will show:

• Impact on company goals
• Indisputable facts that highlight a need for action
• How the business has been/will be negatively impacted by not hiring

Examples of data you can collect to showcase trends (some may currently be tracked by your team, and some may not):

• An increase in the number of projects being assigned to the team but with the same number of resources (or less) assigned to complete the tasks
• Working hours of current staff, which show everyone is consistently working extended hours. You can use data like this to calculate a specific deficit in your needs. For example, 6 months of tracking shows a 2-head deficit relative to capacity (ask salaried employees to track their hours in a spreadsheet)
• An overall decrease in employee satisfaction, work quality, and customer service

If you don’t already have a Headcount Planning Strategy, consider creating one, so you can show how you can maximize efficiency and help justify your need for hiring when necessary.

Step 4: Show your current state and the consequences of not hiring

There can be serious consequences for not hiring if the customers, team, and business are suffering. This phenomenon is often referred to as the opportunity cost, which represents the lost benefits that would have been achieved if the new hire had been made.

Point out some of these consequences to the decision-makers:

• Increased attrition/turnover
• Decrease in qualified marketing and sales leads
• Decrease in sales revenue
• Missed growth opportunities
• Competitive disadvantages
• Delayed projects and initiatives
• Other enormous impacts on the overall goals of the company

Step 5: Exhibit the positive impacts of hiring (for the customers, employees, and business)

Compare the current state to the future desired state. Focus on the impact. When you outline your plan, include how these things positively impact customers, employees, and business. For example:

• Improved marketing efforts can positively impact the customer experience from a consumer perspective
• Time to pursue career development opportunities can positively impact the morale and stability of a team
• Generating higher-quality leads can positively impact big company goals, such as increasing sales revenue

Step 6: Know when and where to discuss this topic with decision-makers

When and where you should bring up adding more headcount to your team is crucial and wildly depends on your company and situation. So, follow these tips:

• Pay attention to timing. It’s best to plead your case when your company has the money, when you can identify where to save alternative dollars and spend, or when your team recently had huge accomplishments
• Ask yourself if it’s best to broach this topic during budget planning at the beginning or the end of the fiscal year; be smart about it and base it on your company structure
• Always schedule an in-person, one-on-one meeting with the decision-makers; avoid getting ignored or shot down by email or phone

Step 7: Consider alternatives to full-time employees

If executives are hesitant to add full-time employees, you can explore other options, such as freelancers or contractors . The key is to show how these temporary workers can fill skill gaps, provide flexible staffing solutions, and allow for a trial period before committing to a full-time employee. This is also a great opportunity to show the need for more full-time staff in the future.

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Headcount Planning Defined: Steps, Tips & Free Checklist

Every business owner knows the positive impact of a great hire—and the drag of not having the right number of people with the right skills in the right places to serve customers and support growth.

While headcount planning is a resource-intensive process, the investment is well worth making because the success of any organization hinges on smart hiring. How do we define “smart” here? You hire people who are willing and able to execute nimbly on strategy changes, work as a team toward long- and short-term goals, enthusiastically serve customers and forward the organization's growth plans.

Here’s how to build your high performance team.

What Is Headcount Planning?

Headcount planning is a strategic exercise undertaken to ensure an organization's team members and organizational structure can meet short- and long-term goals within a defined budget. Also referred to as “org charting,” the headcount planning process guarantees a company has the right number of people with relevant skills to execute its strategy, without overspending on labor.

Teams of departmental leaders, senior executives and human resources and finance specialists work on headcount planning. The work produced includes hiring plans or targets, reducing employee churn, analysis of worksite occupancy and space utilization data and organization-specific insights and direction.

A multidisciplinary team delivers a more complete outlook and ensures that hiring goals and strategies can be revised quickly should the company’s needs change.

Video: What Is Headcount Planning?

Why Is Headcount Planning Important?

It's crucial that a business’s leadership understands what the company is paying for labor — that’s a major line item for most businesses. In addition, tying headcount planning to the financial planning and analysis (FP&A) process means companies can align talent acquisition efforts with business goals.

Headcount planning also ensures an organization's future stability in that it helps leaders implement succession plans, and for those seeking funding, it encapsulates a company's understanding of its current organizational design, labor costs, productivity and human resources expertise.

Benefits of Headcount Planning

The main benefit of headcount planning is to support current and future business goals. Most companies experience the following benefits when they achieve success with headcount planning:

• The ability to respond quickly on a workforce level to emerging challenges across the business, industry and overall economy.
• A more efficient, productive and effective workforce because employees are more likely to possess relevant skills and be good fits for their positions.
• A method to control and quantify costs by directly linking talent expenditures with business objectives.
• Ongoing monitoring of attrition and ensuring there is a pipeline to fill critical roles; this includes succession planning.
• A better understanding of an organization’s worker profile so that HR policies can be shaped to maximize talent goals.

What Team Members Should Be Involved in Headcount Planning?

While HR takes the lead, four constituencies should be involved in headcount planning.

HR teams traditionally head up this effort. Companies that have mature human capital management (HCM) practices are more likely to have well-defined talent management processes.

Executives bring insights into overall goals and budgets and plans around M&A, new product launches and other strategic efforts. While HR teams use their knowledge of the larger organizational structure to create a talent roadmap, business leaders provide the destination.

Departmental leaders , such as those from operations, sales or production, bring to the table insights into their individual group budgets, priorities and strategies.

The finance department also plays a critical role since they're the ones who create the company-wide budget.

Short answer, the headcount planning process needs to be a collaborative effort led by HR but with plenty of input from business and financial leaders.

Simplify HR and Payroll

When Should Headcount Planning Occur?

Organizations traditionally do headcount planning annually. However, when external forces or industry-specific fluctuations arise, companies should be willing and able to plan in a more iterative and agile way.

Ideally, your headcount plan is a living document that leaders revisit regularly to make adjustments based on real-time data. That way, the organization can respond quickly to internal and external factors that could disrupt business operations.

How Do You Align Corporate Real Estate Planning and Headcount Planning?

Aligning real estate and headcount planning enables organizations to efficiently utilize their space, spend wisely on new real estate and build a strong workplace culture.

Incorporating real estate into headcount planning requires knowing your workspace capacity, and then tracking occupancy and calculating space utilization rates. Besides looking at workstations, like a traditional cubicle or space suited to industry-specific activities, you’ll also want to factor in conference rooms and other common areas.

Say your tax preparation business rents an office suite with 15 cubicles, a conference room and three private offices for executives. If 15 accountants, your CEO, VPs of HR and sales come to work for eight hours per day, five days per week, and clients visit several times per day to meet in the conference room, you can feel pretty good about utilization.

But if the VP of sales and seven of your 15 employees work remotely three days out of five, and you do most client meetings on Zoom, it’s time to recalculate your space requirements — that is, unless your headcount plan shows that you expect to hire new accountants and a VP of marketing in close proximity to the office.

Bottom line, while CFOs need to run the numbers on the per-employee cost of various work models , that calculation is incomplete without workforce projections.

Space planners likewise need to understand current and future headcount goals before they can create a real estate strategy that accounts for such variables as an increase in hires and department adjacencies that encourage team building, while taking into account the realities of how people are actually working.

Here are some steps your organization can take to align both types of planning.

1. Look at how your business operates: The space needs to support the way your people work. That means looking at functional needs, such as whether an open floor plan is appropriate and whether you need designated areas for meetings, in your workforce plan.

2. Consider the future: What is your projected maximum headcount over the term of a lease? Is there expansion room should you experience growth and, conversely, a clause to sublet space if you need to downsize?

3. Take remote workers into account: The reality is that certain businesses have implemented permanent remote work policies. Consider how many employees are likely to be on the premises at any given time. If your utilization starts going down, you may want to consider a smaller space with a "hoteling" arrangement .

5 Steps to Create a Successful Headcount Plan

These five steps will help any organization create an effective headcount plan:

1. Identify business challenges: Leverage your scenario planning and forecasts to predict customer needs, the competitive landscape, regulatory changes, new technology or other innovations and growth within current and new markets. Use these insights to inform your headcount planning process.

2. Establish metrics: Smart leaders base decisions around data while factoring in “what ifs.” Common workforce metrics that should influence your headcount strategy include:

• Performance ratings
• Position requirements
• Employee skill sets, certifications and licenses
• Attrition rates, overall and by department
• Departmental hierarchy
• Retirement eligibility data
• Payroll data compared with industry and geographic averages

3. Evaluate your current workforce: Once you've established metrics, evaluate your current workforce against them. This exercise will reveal, for example, shortfalls in your ability to fill current and future critical roles based on a too-low salary range, how you’re doing growing or hiring succession-eligible employees, problems with attrition, positions that can be eliminated and employees considered flight risks.

4. Make headcount planning agile: As mentioned, headcount plans should be living documents that are reviewed and revised frequently based on up-to-date data and current business realities.

5. Forecast costs: Once you understand job requirements and current resources available, gather insights from HR to ensure salary expectations are realistic. Then finance can begin to forecast future costs of labor.

10 Tips to Improve Headcount Planning and Position Budgeting

Being proactive about headcount planning and budgeting for needed positions can ensure you can afford to meet short- and long-term needs.

Here are 10 tips to help you improve your planning process.

1. Analyze overtime data: Take a look at your overtime costs for each position for the last year and compare that number to the previous three to five years. Map this data to specific positions, then determine whether the causes of overtime are likely to persist. Calculate whether it would be more cost-effective to add headcount.

2. Audit data for accuracy: Using faulty data will result in plans that aren't conducive to success. Some organizations don’t have the ability to track certain metrics; an automated human capital management system that provides a single repository where all employee records are stored can make planning more effective.

3. Review employees who hold multiple roles: Sometimes, cross training is a win/win. A receptionist who contributes to marketing materials from time to time is gaining skills and providing the business with flexibility. But if an employee fills multiple positions and consistently works more hours than budgeted, or is displaying signs of burnout, you risk vacancies in multiple roles. Consider a different staffing model or increasing headcount.

4. Assess seasonality: It's crucial to take into account the cost of adding temporary workers during peak seasons. A human capital management system can help you run reports to gather historical data to make planning easier.

5. Be transparent: All departments need to feel that their requirements are being taken into account. Ensure your headcount planning team gathers feedback from managers in the trenches and provides constructive feedback to demonstrate that the company is responsive to current and future needs.

6. Simplify benefit calculations and salary increases: A standard formula for benefits and raises makes it simpler to see the correlation between budgetary realities and staffing goals.

7. Budget for education: Company-provided training is a great retention tool. If you currently provide or plan to subsidize professional development programs or certifications, you need to budget for that. Consider both the cost of the programs and the time required.

8. Stay compliant: Companies that are required to have employees with certain certifications, like ServSafe for food handling, must forecast the number of certified employees required during both peak and non-peak times. That way, your company won't get caught short.

9. Document decisions and rationales: Have the headcount planning team keep detailed records on how they assessed whether changes in strategy or budget are needed to reach company goals. This ties back to staying compliant while also providing documentation should your company become the target of a workplace lawsuit.

10. Use a checklist: Having a customized headcount planning checklist ensures consistency across all departments and is a way to analyze the results of decisions more effectively.

Free Headcount Planning Checklist

Our free checklist will help you create an effective and complete headcount plan., manage costs and improve your bottom line with hcm.

HCM, or human capital management, software is intended to empower managers and HR professionals to keep a central repository of employee information, easily onboard and orient new hires, track individual worker performance, keep tabs on payroll and compensation changes and overall help a business manage its employees.

Look for software that integrates the features you need, including payroll, productivity analytics and time-sheet software, into one interface. Ensure any HCM system can scale up to automate processes such as recruiting, staffing and performance reviews. This way, leaders can plan around future and current staffing needs and allocate the appropriate resources and funds.

Choosing the Right HCM Solution

To select the right software, work with your headcount planning team and HR department to understand what functions your business needs now and whether the system can deliver the right data to project future talent requirements.

Most HCM software records and stores information about employees in a central database. HCM software offers advanced features to help organizations understand the best ways to handle administrative HR details, such as paid-time-off requests, and total payroll cost analysis.

Headcount planning is one of the most powerful ways to ensure success in your organization. It's essentially the direct link between strategic budgetary, growth and talent management strategies. Having a clear plan in place plus real-time data ensures smooth changes or shifts in strategy.

Human Resources

Headcount Planning Best Practices for 2021

In a large company, managing headcount gets complicated fast. Total employees and contractors, approved-to-fill positions, proposed positions, unapproved positions, positions aligned with cost centers, positions not…

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• ORGANIZATIONS

The Ultimate Guide to Headcount Planning And Forecasting

By heather miller.

Headcount planning and forecasting can be critical to organizational success. It affects everything from production to customer service to employee morale. It’s affected by everything from employee turnover to labor market trends to budget planning.

Without the right tools, headcount planning and forecasting can be inaccurate and inefficient, leading to deficits in your workforce and difficulties in filling skills gaps. Headcount planning ties directly into your larger hiring intelligence and acquisition strategy for building a future-proofed workforce.

What Is Headcount Planning? 

Headcount planning and forecasting is a pair of processes designed to make sure that your organization can meet its short- and long-term business needs while staying within a defined staffing budget. 

You’ll always need a minimum number of employees with sufficient skills to achieve company goals without overspending on labor. Since these goals and the skills required can be constantly in flux, it’s critical to be able to accurately predict future headcount needs and plan for how to fill them.

Headcount is often used to simply mean how many seats a company has, but forecasting and planning should be about more than filling empty seats. It should be about identifying current and future skills needs, attracting the right people to fill those needs and making plans to retain them and reduce attrition company-wide.

The #1 priority of recruiters worldwide is improving Quality of Hire. Without this approach to headcount planning and forecasting, skills gaps will widen. Plan on combining headcount forecasting strategies with workforce L&D to achieve your recruitment and business goals.

87% of executives say their organization is or is expecting to experience skills gaps

59% of L&D experts worldwide say upskilling and reskilling is their current #1 priority  

What Is A Headcount Planning Model? 

Your headcount planning model is built on data. A solid headcount planning model will focus on drawing together and analyzing the following crucial data points:

How many workers are needed to cover all necessary labor hours for peak productivity 

Anticipated growth (how many new employees will be needed over the next year)

Anticipated churn (how many existing employees or new hires will quit)

Cost per hire

Time to hire

Skills gaps (current and anticipated)

Skills potential (in current employees)

Sources of hire (historical data to guide resourcing)

Labor budget

Worksite occupancy and space utilization

All department heads, senior executives, human resources, and finance specialists should be part of the process so if there is a need to shift or pivot, it can be accomplished painlessly and efficiently. They can all be invaluable in helping to define which data sources are the most reliable and accurate for creating your headcount planning model.

How To Do Headcount Planning Effectively

The key to headcount planning is to be proactive instead of reactive. If you wait until you’re desperate for new hires and employee churn is through the roof, you’ll be scrambling to play catchup. 

In a tight labor market, this can spell disaster as a lack of qualified talent and widening skills gaps are impacted further by a revolving door of recruitment. Be future-focused and play the long game of talent acquisition and retention .

A template is a good place to start. Our free, customizable, downloadable headcount planning template lets you track your hiring progress by recruiter, department, and hiring stage while helping you crunch the numbers to predict headcount needs over the coming year.

Best Headcount Planning Strategies

Top strategies have a carefully laid out series of steps to get your organization from point A to point B. When it comes to headcount planning, follow these steps for a solid set of strategies that will pave the way to success.

Gather All Applicable Data

You’ll need access to short-, mid-, and long-term business plans for the company, strategic goals, and the budget to establish meaningful key headcount metrics. Look for the following datasets to help you build your headcount approach:

Job role requirements

Salary data

Employee data including diversity stats and skill sets

Organizational hierarchy (by department if necessary)

Performance ratings across all employees and departments

Attrition rates and frequency

Retirement and benefits eligibility

Once you establish benchmarks, you can track key metrics over time, making your headcount forecasting more accurate.

Analyze Your Current Headcount State

Running a headcount planning exercise can help you get a 360-picture of the current state of your workforce. You’ll be able to lay out a clear picture of hiring priorities, skills gaps, and total workforce costs to help you project future headcount needs and challenges. 

Evaluate the Current Workforce

You also need to drill down and granularly evaluate your current workforce to build the profile of what an ideal employee looks like. You can also use analysis to spot patterns and reveal:  

Where critical roles are staying empty for too long

When, how, and why attrition is occurring

Competitiveness when it comes to salary and benefits  

Which employees should be considered flight risks

Current and potential skill gaps

Opportunities to nurture employees for internal promotion.

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Develop your headcount plan.

You’ll need to identify specific business challenges that may affect the company’s headcount needs in the months or years ahead. Consider:

Shifting customer demand

Talent sourcing and availability

Regulatory changes in the industry

• New approaches to identify top talent

Plans for scaling or other growth

Execute On Your Strategies

Before you can execute, figure out if budgets align with workforce requirements, and make adjustments as needed. Tailor your strategies for any special circumstances.  You may be able to close skills gaps and retain high-value employees with upskilling or reskilling. Likewise, close seasonal or temporary headcount gaps with part-time or temporary hires or contractors.  

Evaluate, Revise, Repeat

Monitor your headcount planning and execution over time, measure your progress against set milestones, and be prepared for the need to revise plans in a challenging and ever-changing market that may make labor easier or harder to acquire and retain. Re-deploy your forecasting and planning strategies as needed to maintain Quality of Hire and keep all seats filled.

Benefits of Effective Headcount Planning and Forecasting 

Headcount planning is critical for keeping productivity in line with business goals. When done correctly, this process can help your organization achieve additional, more subtle goals.

Top Talent Acquisition

Without headcount planning, there is an increased risk of misalignment between talent acquisition strategy and the ability to execute that strategy. Headcount planning makes it easier to identify and hire the right people for each open role and keep that role from becoming vacant again before the year is out. It dovetails with your recruitment strategy, helping you develop a talent pipeline that will feed you, highly-qualified candidates, practically on demand. 

Better Budget Adherence

Staying within budget is more than keeping salaries under a certain mark for each new hire. Attrition, re-recruiting, and lost productivity all rack up additional labor costs that can blow the budget out of the water. If your business has been struggling with keeping hiring efforts in line with the approved headcount budget, it’s time for a realistic headcount strategy that gets recruiters and finance managers on the same page.   

Streamlining Headcount 

Many headcount strategies go off the rails when employee types and schedules don’t line up with standard 40-hour-a-week expectations. Proper headcount planning looks at the company’s needs holistically and allows room for employee downtime as well as different schedules and worker classifications. Some businesses may find it more cost-effective to bring in contractors or seasonal employees to handle spikes in production, while others may turn to automation to reduce labor needs and free up employees for more challenging tasks.

Better Workspace Management 

A common challenge for companies that are in growth mode is space. Constraints on available equipment and workspace areas can make scaling difficult. In today’s more flexible hiring environment, remote employees can neatly solve this problem, lowering the total costs of employing each worker. It is also beneficial for recruitment efforts, opening up negotiations with new hires who may be happy to take a 5%-10% pay cut in exchange for a flexible arrangement and who will be more likely to stay with the company long-term.

Get started with headcount planning today by downloading the free and fully customizable headcount planning template developed by the Crosschq team.

For more information on how Crosschq can help your organization predict and plan for recruitment needs while improving retention and Quality of Hire, contact our hiring intelligence team for a free demonstration of our entire suite of products today.

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• Org Charting

4 Headcount Planning Strategies to Drive Success

Published:  jul 10, 2020 time to read:  6mins category:  org charting.

Written by: Stacy Soley

Stacy Soley has more than two decades of experience working with organizations solving strategic issues. Stacey has been with PeopleFluent since 2013, and is responsible for the execution and progression of multiple ad hoc initiatives to advance the company's business strategies. She has completed a variety of research efforts into the human capital management marketspace and the talent management products. Stacy began her career as a CPA and combines financial understanding with an MBA. Her continuing education includes emotional intelligence, product development and management, pricing, data, and leadership.

• Compensation
• Talent Management

In this article, you’ll find four strategies that drive success and make the headcount planning process simpler and more effective. Managing your organization’s headcount, while staying within budget, and having the employee resources to meet your organization’s strategic goals for growth is a crucial component to any talent management strategy. Although 70% of HR executives understand the need for workforce transformation, only 37% of these same leaders are confident that their HR departments have the ability to make future progress.

What Is Headcount Planning and Why Is It So Important?

Regardless of industry, executives and leaders need to know that talent costs and goals are aligned across the organization. That’s where headcount planning comes in, and why it’s vital to your future success.

A critical talent management exercise, headcount planning (also known as org charting) is a systematic process designed to ensure an organization has the right number of people with the right skills in the right roles so the company can execute on its business strategy. For enterprise organizations, the process typically culminates in a talent review meeting where leaders talk about hiring targets, succession, organizational structure, and more.

Before making hiring decisions or implementing a succession plan, managers need to understand their current and future organizational design. The best way to tackle this level of planning is with the use of an appropriate solution that allows decision-makers to see the design, performance, costs, and span of control for the organization as it exists today. Taking that a step further, a capable org charting tool will also include open positions and contingent workers, as well as additional resources that are necessary for the organization to function properly.

Furthermore, the right org charting tool can help managers create and share visual representations of how all these factors will come together when a change is made; such as a restructuring, an office closure or a company merger. A successful headcount planning process accounts for both internal and external changes, empowering the organization by:

• Aligning talent strategies with organizational strategies and goals
• Identifying skills the current workforce lacks, but that you need to be successful
• Focusing recruiting teams on the right candidates—the ones with the skills you need in the near term
• Allowing managers to identify and mentor employees who can—with additional training—fill critical skills gaps
• Projecting costs associated with hiring new staff and developing current employees, as well as salaries for your future workforce.

Related reading: 'Visualizing Analytics: The Answer to Workforce Planning '

To reap the benefits of workforce planning, organizations should take these four steps to create their headcount plan.

1. Identify Your Business Challenges

When identifying business challenges, there are a few questions to ask yourself:

• Has your competition broadened or deepened their offerings?
• How are your customers’ needs evolving?
• Are there regulatory changes ahead that will affect your businesses?
• Are there technologies, process automations, or other innovations you can adopt to your competitive advantage?
• Is your goal to grow within current markets, expand into new markets, add products or services, or enhance existing lines?

With a firm understanding of your business goals, strategies, and market landscape to inform the headcount planning process, you can keep pace with what’s ahead while anticipating your organization’s future needs.

2. Establish Metrics to Evaluate Existing Talent, Define Workforce Needs, and Inform Budget Projections

Smart leaders—and successful organizations—ground their critical decisions in data. As with effective succession planning and other talent decisions, headcount planning should be as free of individual bias, guesswork, and subjectivity as possible.

Define the objective measures by which you will determine whether individuals or departments are staffed with the right people, and let those metrics drive your workforce evaluation and headcount strategy. Common workforce metrics include:

• Performance ratings
• Position requirements
• Employee skill sets, certifications, and licenses
• Attrition rates (overall and by department)
• Department hierarchy
• Retirement eligibility information
• Salary data

During your headcount planning exercise, HR and business leaders who lead and participate in headcount planning exercises will benefit from data visualizations that capture these workforce metrics in real time.

3. Evaluate Your Workforce

Now it’s time to put the metrics to work. Some important considerations to think about during this stage:

• Which roles are critical now and which ones will be in the future?
• Which positions (if any) can we do without to maximize the overall ROI of our workforce?
• Where are we having problems with attrition and what can we do about it?
• Are we growing or hiring succession-eligible employees?
• Do you know who your high potential employees are? And which employees are a high flight risk?

As you evaluate the workforce, pay particular attention to critical roles. This includes leadership positions—the ones typically accounted for during succession planning and talent reviews—but don’t neglect other roles.

Depending on your industry and market dynamics, other critical positions might include sales, customer service representatives, R&D, retail associates, or project managers. Essentially, whichever roles are necessary for implementing your business strategy in the near and mid-term.

You might also like: ' 6 Foundations for Effective Succession Planning'

4. Make Headcount Planning Agile and Inclusive

Organizations that engage in formal headcount planning typically do the exercise annually. But given the current landscape due to COVID-19, which has shown us how quickly markets can pivot, the truly strategic approach should be agile, inclusive, and iterative. That is, your headcount plan should be a living document.

Ideally, leaders should revisit and adjust their strategic workforce plan regularly, using real-time data. This enables the organization to respond nimbly to internal and external factors that could otherwise be disruptive.

The headcount planning team should reach out routinely for insights from departmental and business line leaders, and their HR counterparts, to surface near and long-term skills needs.

The Competitive Advantage of Headcount Planning

As a significant element of workforce planning as a whole, headcount planning is one of the most powerful and critical exercises led by HR teams. Your headcount plan makes a direct connection between strategic organizational priorities, budgets, and talent management strategies—including hiring, learning and development , and succession planning.

Being able to plan a proposed organizational structure will have the greatest benefit for senior leaders, like the VP of Human Resources, who are looking at larger organizational structures. Having a clear roadmap and process for success in place, along with real-time data to inform course corrections or shifts, gives your business an edge on the competition.

Take the guesswork out of organizational planning with your 30-day free trial of OrgPublisher , where you can see all your critical workforce data in easy-to-read org charts.

Discover how org charting helps you see your enterprise in new ways.

An organizational chart can be more than something to look at. It can tell you things. See and understand your workforce in real time and living color.

Related Reading On Org Charting

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Best practices for efficient headcount planning

Abacum Team

5 min read · Published: February 29, 2024

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Headcount planning is more than just a process; it’s a crucial component of any business’s growth and structure. Having a systematic approach to managing your team ensures you have the right talent in place when you need them. In this article, we’re going to look at why headcount planning is so important. We’ll show you how it can make a difference in your business and give you some straightforward tips to make your team planning even better.

The Importance of Headcount Planning

Effective headcount planning is crucial for a successful organization. It optimizes the workforce, ensuring the right people are in the right roles to drive growth and achieve strategic objectives. By understanding its importance, you can transform your business. We’ll explore four key benefits demonstrating its vital role in organizational success.

1. Cost Efficiency

The primary and most evident advantage of effective headcount planning is cost efficiency. By precisely aligning your staffing levels with business needs, you prevent the financial burden of overstaffing. This prudent approach enables you to allocate your budget effectively, investing in areas that promote growth while maintaining a lean, efficient workforce.

2. Operational Smoothness

Having the right individuals in the right positions is essential for seamless operations. Proper headcount planning ensures that each role is occupied by someone who possesses not only the necessary skills but also fits well within your team. This minimizes bottlenecks and boosts overall productivity, keeping your business operating like a well-oiled machine.

3. Talent Management

In today’s competitive job market, attracting and retaining top talent is a priority. Effective headcount planning makes your company a desirable destination for A-players. By thoughtfully designing roles and career paths, you create an environment where talent flourishes, enhancing your team’s performance and driving business success.

4. Scalability

The business landscape is ever-changing, and flexibility is key. A well-structured staffing plan allows your business to adapt quickly to market shifts and new opportunities. This agility is essential for growth, enabling you to scale up or down effortlessly in response to business demands.

Simplifying Headcount Planning: A Six-Step Guide for Businesses

Headcount planning might seem daunting, but it doesn’t have to be. With a structured approach, you can streamline this process, ensuring your team is perfectly poised for both current and future business challenges. Here’s a practical guide to make headcount planning more manageable and effective for your organization.

1. Assess Your Current Workforce

Start by taking a deep dive into your current team. Evaluate your employees’ demographics, skills, and performance. This isn’t just about numbers; it’s about understanding the diverse capabilities and identifying potential gaps or imbalances. By analyzing factors like age, gender, and diversity, you gain insights into your team’s makeup. This step is crucial for recognizing the unique strengths and areas where your workforce may need bolstering or reshaping.

2. Forecast Future Staffing Needs

Look ahead. Analyze your business’s growth projections, market trends, and upcoming projects to predict future labor needs. This foresight helps you anticipate not just how many employees you’ll need, but also the types of skills required. By considering market shifts and technological advancements, you can adjust your staffing strategy to stay ahead of the curve.

3. Determine Staffing Ratios

What’s the right balance of employees to managers or customers? Determining this ratio is key for operational efficiency. Use industry benchmarks and tailor them to your organizational goals. Whether you’re focusing on customer service or employee satisfaction, these ratios will guide you in structuring your team effectively.

4. Identify Skill Gaps

Now, identify areas where your team might be lacking. Are there skills you’re missing that are crucial for future success? Assess your team’s current expertise and pinpoint where training, recruitment, or skill development can bridge these gaps. Addressing these areas proactively ensures you have a well-rounded, capable team ready to tackle upcoming challenges.

5. Create a Strategic Hiring Plan

How will you fill these gaps? Develop a hiring strategy that balances full-time hires with contract workers and outsourcing. Each option has its benefits: full-time employees bring stability, contractors offer flexibility, and outsourcing can be cost-effective. Weigh these benefits against your business needs to create a hiring plan that supports your goals without overextending your resources.

6. Regularly Review and Adjust

Headcount planning is not a set-and-forget task. It demands ongoing attention. Keep an eye on key performance indicators, market trends, and internal changes. This continuous monitoring allows you to adjust your plan in response to new developments, ensuring your team remains aligned with your evolving business objectives.

By following these six steps, you can demystify the headcount planning process. It’s about being proactive, adaptable, and strategic. With this approach, your business is not just filling positions but building a dynamic, skilled team capable of propelling your business forward in a constantly changing corporate landscape.

Wrapping Up: The Strategic Role of Headcount Planning

Headcount planning goes beyond filling roles; it aligns your team with your business strategy, enhancing operational efficiency and preparing your business for market changes. It’s about placing the right people, with the right skills, in the right roles, at the right time. This strategic alignment is key to thriving in today’s dynamic business world.

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The essential guide to startup headcount planning

Published on Nov 28, 2023

Managing headcount is the most impactful thing founders can do to preserve runway while driving growth. With employee compensation being a startup’s single biggest budget item in an operating expense plan, the difference between success and failure comes down to clarity and discipline on how many people to hire, when, and for which role. It’s even more important in the current rocky fundraising environment, where investors favor financial efficiency and resourcing debates dominate board meetings.

In this guide written by SignalFire’s expert talent team, we’ll break down:

• Actionable steps for headcount planning, forecasting, and headcount management
• Role prioritization
• Building an adaptable organization
• Why to use a hybrid top-down/bottom-up headcount strategy
• Which leaders need to be involved in headcount planning cycles
• How to run scenario and skill-based planning
• Where to apply data across the process

You’ll come away with a ‎ headcount plan document that’s the single source of truth for when to hire how many of which roles and on what budget.

‎Headcount planning for high-growth startups 

Strained resources, burned out teammates, and delayed launches are the hallmarks of a company lacking a strategy for headcount planning. I felt these pains while working at a bustling startup that consistently missed opportunities because headcount was managed haphazardly. It's not just about filling roles promptly; it's about curating the right hiring blueprint and assembling a team that can adapt to the company's changing trajectory. That requires staying closely attuned to the business’s metrics and dependencies so you see slowdowns or growth spurts coming and plan accordingly.

The growth at all costs era is over. Now it’s about finding the right balance between agility and sustainable growth, aligning headcount with fluctuating budgets, and ensuring that each new hire delivers value where it counts.

Headcount planning is typically performed annually, with planning starting in Q3, actual workflows in Q4, and finalization ideally before the end of the year. However, it’s also a continuous process that must adapt to business disruptions and employee departures.

The underlying principles of great headcount planning are:

• Evaluate your team's strengths and areas for improvement to identify essential skill gaps. Consider factors like core competencies, domain expertise, and knowledge, as well as performance toward business goals. Regular evaluations are important for promptly replacing underperformers and attracting and retaining top talent that aligns with the business's needs.
• How clear are the dependency ratios based on the business's needs for success? This could include ratios such as product managers to engineers, salespeople to onboarding specialists, and so on. For instance, a traditional industry standard is to have 5–8 engineers per product manager, but what truly matters is establishing the right ratio that suits your specific business.
• Incorporate a straightforward prioritization model into your hiring plan using a model of Priority 0 (essential immediately) to Priority 3 (helpful if possible). Map the tradeoffs of choosing role X over role Y and how these choices will impact overall business performance and success. Lay out the dates by which you need certain hires in place.
• Using compensation benchmarks, determine how much you’ll have to pay to meet your hiring goals, and make sure that aligns with your overall budget determined by your cash burn, R&D strategy, customer acquisition costs, and upcoming fundraise plans.
• Staff your team with recruiters who have the most adaptable skill set—usually technical recruiting efficiency—though they may be required to support hiring in other areas as necessary. By building a team mix of full-time employees and contractors or utilizing an RPO or recruiting on-demand service during periods of high growth, you can better navigate market and business fluctuations.

Hybrid bottom-up/top-down headcount planning

Should leadership tell their teams where they can add headcount that aligns with company strategy, or ask each department who they need most? The best answer is usually a combination.

Top-down planning begins with companywide objectives that leadership uses to assign headcount to individual teams. It enables fast decision-making for fast-growing companies, and leverages perspective on overarching goals. But it can cause overgeneralization and a lack of specificity on each role’s requirements because it ignores ground-level input.

Bottom-up planning involves asking department managers and team leads to assess their specific needs and give input on how many hires are needed to achieve their goals, sometimes within a given budget. It offers detailed understanding of why teams need headcount from those closest to the work and fosters a collaborative culture with ownership and accountability. But it can lead to department silos, inflated requests, and slower decision-making. 

Hybrid planning (recommended) combines the best of both by taking input from individual teams while deeply considering leadership’s birds-eye view of company goals, market conditions, and upcoming growth milestones. It encourages teamwork and transparency without letting decisions get bogged down. To succeed at this approach:

• Establish clear organizational goals: Leadership should communicate goals to each team so their own input is in sync with the larger strategy.
• Gather insights, then move decisively: Run a tight process to collect department owner and line manager input while keeping it clear that leadership makes the final call.
• Keep your datasets organized: To ensure that the functional hiring plans align with the strategic objectives of the overall business, it’s important to consolidate and reconcile all datasets into one primary hiring plan approved by leadership. Create a game plan to maintain the cleanliness and alignment of all this information feeding into the primary headcount ledger. The primary ledger tracks the overall hiring needs and informs the final headcount plan for a specific year.

‎Assembling your headcount planning team 

Effective headcount planning sessions require the concerted effort of various stakeholders including people ops, recruiting, department leads, finance, and the executive team. Each brings a unique perspective, contributing to a more holistic view of the organization's needs. Here are the core people or teams you need represented and their role in the process:

• Finance : Often the owner of annual planning and financial modeling, of which headcount is typically the largest line item. Finance plays a critical role in the process. They are responsible for establishing the overall budget, which serves as the foundation for hiring. Their role is to ensure that the headcount strategy aligns with the broader financial targets and goals of the organization.
• Department leaders : Functional leads provide ground-level insights on their department’s objectives, existing hiring initiatives, and upcoming challenges.
• Executives : In collaboration with finance and people ops, the responsibility of executive management is to present the headcount strategy to project stakeholders and gain their support. They establish the overall direction and goals for the company, ensuring that the headcount strategy aligns with the company's strategic targets and objectives.
• People ops and recruiting : This group, typically comprising HR business partners and recruiting, supports department leads and executives by establishing clear roles, objectives, and KPIs for each position, which are aligned with business priorities. This ensures a strategic approach that considers the span of control and leveling to guide thoughtful submissions for new headcount. Recruiting advises on the hiring sequence using forecasting and staffing models to optimize recruitment and address potential challenges. They also define the level of recruiting support for each hiring priority and coordinate with finance to account for variables that may affect the plan throughout the year.

Once you have your team together, use a RACI -style frame to ensure you know who’s responsible, accountable, consulted, and informed as you build your headcount plan.

Scenario and skill planning

You’ve learned how to assess your needs, assemble your team, and plan headcount for today, but how do you stay ahead of future fluctuations to the business? Scenario and skill planning help you model what comes next and what staff you’ll need to meet those challenges. 

• Scenario planning helps startups visualize potential organizational developments or changes that will impact hiring plans, such as dependent fundraising activities or budgets for hiring in general. Some applicant tracking systems (ATSs), like Ashby, now have built-in modeling capabilities for scenario planning, creating hiring models that can be compared side-by-side to assess the tradeoffs in each model.
• Skill-based planning becomes especially important for companies experiencing significant transitions and growth periods, such as evolving product offerings, entering new markets and verticals, responding to competitive pressures, or navigating regulatory changes. The ultimate goal is to have the appropriate talent and skills to meet or exceed short-term and long-term success. It’s also important to conduct comprehensive intakes at the beginning of each recruitment cycle to ensure that the right talent is hired for your company, with the required skills to support your unique and evolving business objectives.

Executing headcount planning

Once you have assembled your headcount planning team, it is crucial to establish a regular meeting schedule and organizational structure that promotes ongoing alignment and effective communication among team members until the project is complete. Here are the steps to follow:

• Initial kickoff meeting: Begin by conducting a comprehensive kickoff meeting to align everyone on the objectives, timelines, and roles of headcount planning. This meeting should be led by the finance leader and the people/talent leader. It sets the tone for future collaboration and ensures that all team members are on the same page.
• Regular progress check-ins: Schedule regular progress meetings, such as biweekly or monthly, to discuss updates, review progress against goals, and address any challenges. These meetings help keep the team aligned and focused on the headcount planning objectives. It is usually best to have a mix of asynchronous and live updates.
• Executive check-Ins: Schedule quarterly or biannual check-ins with executive management, who are responsible for finalizing the headcount plan and making any changes as needed throughout the year. These meetings are crucial for keeping leadership updated on progress, receiving feedback, and aligning the headcount strategy with the broader organizational goals. Again, a mix of asynchronous and live updates is the best approach.
• Ad-hoc problem-solving meetings: Be ready to hold ad-hoc meetings with functional leaders and the recruiting team to address specific challenges or changes in organizational priorities. These meetings promote agility, responsiveness, and action in your hiring plan. 
• Review and strategy sessions: Hold a comprehensive review session at least once a year to evaluate the effectiveness of the headcount strategy in relation to the organization's performance and goals. This is an opportunity to refine strategies and make adjustments for the upcoming year.
• Dedicated communication channels and feedback loops: Create dedicated communication channels, such as a shared online platform or regular email updates, to keep team members informed and engaged between meetings.
• Documentation and reporting: It is important to ensure that all decisions, strategies, and changes are well-documented and accessible to all team members in the primary ledger. Regularly reporting on key metrics and progress helps maintain transparency and accountability.

By establishing these structures and practices, you can ensure that your headcount planning team remains cohesive, focused, and effective in achieving the organization's staffing and financial objectives.

‎What your headcount plan should look like

So what’s the end product of this process? It’s a headcount plan or primary ledger that can be as simple as a spreadsheet, or a more robust output from dedicated planning software. For example, you can use SignalFire's Headcount Plan Template here . Just go to File → Make a Copy, and get started.

For most early-stage companies, Google Sheets, Excel, or Airtable should be sufficient. This spreadsheet displays all the relevant roles, time-to-hire dates, role priority ranking, and compensation information. Throughout the year, this plan is referred to by the talent team, finance team, department leads, and executive leadership as a mechanism to manage agreements and track progress. It serves as a living document that all parties can refer to.

However, as companies grow, managing access to different parts of the plan can become messy. Not every stakeholder should have access to all the information. For example, a hiring manager may not have access to other teams' compensation information. This is why several companies have developed productized solutions like TeamOhana, Anaplan, and ChartHop with more access control.

With this document in hand, you can confidently hire knowing you’re perfectly in sync with where your business is today and for quarters to come.

Gone are the days of blitz hiring. By adopting an informed approach to headcount planning, utilizing appropriate techniques, and fostering collaborative stakeholder partnerships, startups can position themselves to not only survive but also thrive in this competitive startup landscape.

*Portfolio company founders listed above have not received any compensation for this feedback and did not invest in a SignalFire fund. Please refer to our disclosures page for additional disclosures.

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Headcount planning explained: How to tackle budgeting & forecasting headcount (The right way)

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Senior leadership at every company needs to have confidence in the hiring plan. The hiring plan is vital to achieving a company’s business objectives and goals. This is especially true for fast-growing companies because headcount planning is critical to company growth. Over the last couple of years, the labor market has been very tight, so a renewed emphasis has been placed on companies’ headcount strategy. A well thought-out headcount plan is critical in today’s environment if companies hope to achieve revenue growth goals and future workforce needs.

However, the headcount planning process remains one of the most challenging parts of a company’s budgeting and forecasting process. This strategic exercise often leaves business leaders and hiring managers disappointed in the planning process. I cannot count how many times I have seen a budget or forecast be incorrect due to issues with headcount planning.

Common challenges with headcount planning

Some of the challenges companies face with headcount planning include:

• Current workforce headcount forecasted in the wrong departments/cost centers
• Incorrect hire dates for new employees
• Headcount missing from the forecast
• Failure to forecast overtime or using the wrong rates to forecast overtime
• Poor capacity planning models leading to not having the right number of people required to perform the work
• Using the wrong salary assumptions for new employees
• Using incorrect rates (Mert, Taxes, Benefits ) in the forecast

The above are just some of the many issues companies and business leaders face when building headcount plans. Leaked Amazon documents that appeared in the news recently highlight the challenges HR teams and finance teams experience with headcount planning and the impact a headcount mistake can have on the overall business. Amazon managed to post 24,988 positions in 2022, but according to internal documents, Amazon had only approved 7,798 positions .

This highlights the lack of oversight Amazon had in the planning and hiring process and how difficult it can be to manage hiring targets in a fast-growing company. In the remainder of the article, we will cover:

• What is headcount planning, and how it differs from workforce planning.
• What to include in your compensation costs.
• The common methods used for headcount planning include: Run rate, Name-based, Role-based, Capacity-based, and Project-based.
• Common things to watch out for in the planning process.

What is headcount planning?

When it comes to headcount planning, let’s define what that includes and how it differs from workforce planning. Let’s have a look at this table comparing and contrasting the differences between workforce and headcount planning :

So what’s the difference?

Workforce planning is much broader than headcount planning and includes a holistic strategy to ensure you have the right number of people with the right skills, competencies, and experience on the team to get the work done. On the other hand, headcount planning is primarily focused on ensuring you have the right number of people and all associated costs captured for budgeting and forecasting purposes . When it comes to headcount planning, understanding all the costs that are typically included in the planning process is essential. Without a complete understanding of what needs to be included, one will often miss something, thus causing the entire plan to be wrong.

Compensations costs

Many companies spend up to 70% of all expenses on labor costs . This includes the employee’s salary and all the additional costs related to the employee, such as bonuses, payroll taxes, recruiting costs, etc. Below is a list of the common costs to include in your headcount planning. The below includes a definition of the different types of costs but does not include the methods used to forecast these costs, as we will discuss methods in the next section.

This is the base amount you pay an employee annually. Depending on the employee type, this could be an annual salary amount or an amount per hour.

Merit/Cost of living increases

This is the amount you anticipate increasing employees’ annual salary every year for merit/cost of living.

Most companies have an annual bonus payout where people can earn up to a percentage of their annual salary. The potential bonus earning amount will vary for different job titles and departments. Typically bonuses are forecasted at 100% to start the year and adjusted as necessary by company decision makers.

Incentive payments often involve paying individuals and teams for achieving certain targets and goals throughout the year. Incentives are typically paid to non-sales employees such as customer success teams. They are often paid to employees who are not bonus eligible as a way to attract top talent.

Commissions

Sales commissions are paid to sales reps and sales teams and are based on sales targets and quotas. The forecast for commissions will need to cover the company’s revenue targets in the company budget.

Overtime wages

Overtime wages include wages paid to hourly employees who work more than the average hours in a given week. Overtime wages are often used temporarily to achieve short-term staffing needs without hiring additional employees. When it comes to understanding overtime hours, using historical data from your time-tracking system can be incredibly valuable. This information can provide additional insights that you cannot obtain from the general ledger that just buckets the total cost of overtime into one line.

Benefits include things like healthcare, tuition reimbursement, etc. Benefits will usually be forecasted as a flat fee per employee but, in some cases, might be a percentage of salary.

Payroll taxes

Payroll taxes vary by geographic region but often include unemployment, retirement, and medical costs. These costs are usually a percentage of total compensation (Salary, bonus, commissions, incentives) and, in some cases, might only apply up to a certain dollar amount.

Training/tuition reimbursement

This includes training costs and tuition reimbursement for eligible employees. This is often a very small amount of overall labor costs and can generally be forecasted based on prior year data with adjustments for any known expenses in the new year.

Recruiting/hiring costs

These costs include external recruiting agency costs, relocation costs, and other one-time costs associated with hiring new employees. One should work closely with your HR professionals to understand these costs.

Severance is any costs paid to an employee upon involuntary termination of employment. If the company budget includes any restructuring activity that will reduce the workforce, it is important to ensure all severance costs are forecasted.

Every company has attrition throughout the year as there will be a market demand for your employees.

Common planning methods

The common methods used for headcount planning include run rate, name-based, role-based, capacity-based, and project-based. Below is a brief explanation of each method and each approach’s pros and cons. Many businesses will use multiple approaches to forecast headcount as different methods will work best for different departments.

One of the most simple methods for headcount planning is the run rate method. One way to do this is to take the average cost per employee from the prior year and add it to your anticipated number of employees for the new year. The below table shows a simple example where the per-employee costs each quarter were adjusted by a predetermined growth rate and multiplied by headcount to develop the compensation cost per quarter for the next year.

Pros: The primary benefit of using this method is that it is easy to manage and will be directionally correct.

Cons: The cons include historical averages often having noise in the numbers due to accruals and one-time expenses, and using them often results in inaccurate forecasts. Furthermore, this planning method does not include any reconciliation between employees and departments, which is often a necessary part of the headcount plan to ensure accuracy.

In practice, this method is rarely used as the cons outweigh the pros, and other methods exist that are more accurate and make it easier to provide senior executives with the details they need to manage the business and the hiring plan.

Name-based planning is a widespread approach to headcount planning, especially when the business is small enough that you can reasonably include every name in the plan. This process includes listing every single employee by name and using the actual compensation data for each employee. This method tends to be highly accurate because it uses actual cost assumptions. I would recommend this approach for a small but fast-growing company without a capacity-based business.

The above table shows what a named based annual planning table might look like for employees. Once you filter it down to the monthly level, you would also include the start and end dates and calculate all the monthly costs and add other assumptions such as training, severance, recruitment, and attrition to the data.

Pros: The biggest benefit of name-based planning is that it is highly accurate and helps you understand how many employees you have and the assumptions used for every single employee, both current and new. This approach allows finance to sit down with the business leaders and share the assumptions used for every single employee.

Cons: Difficult to maintain, especially as the number of employees grows. For example, if you are forecasting a headcount of 5,000 people at a name level, it is probably not realistic. Another big concern is that you have data with every employee’s actual salary, which can create privacy concerns and data security risks.

The role-based planning approach focuses on developing an average salary for each role in the company and then forecasting how many employees are required for each role to meet the needs of the business.

Pros: The benefits of a role-based planning approach is it is easier to manage than a named-based planning approach. This is because you only have to develop averages for each role and track the plan at the role level. Another benefit is it does not require obtaining salary data at an employee level.

Cons: The biggest drawback with this approach is it is less accurate than a name-based approach, and it can be difficult to reconcile when discrepancies arise between the plan and actual headcount.

Capacity-based

Capacity-based planning is prevalent in environments like call centers where each employee can manage a certain number of calls. In this type of environment, you will staff the organization with a certain number of people that achieves the capacity required to meet the anticipated needs of the business. Below is a simplified example of a capacity planning model one might use for a call center. In the below example, we have calculated how many calls each rep can handle in a week and how many calls we anticipate to receive in a week and then came up with a number of reps to staff. We would then apply our cost assumptions for each agent to develop our plan.

Pros: The main advantage of a capacity-based model is it allows you to staff your organization based on the anticipated needs throughout the year and adjust up or down your staffing based on the anticipated needs of the business.

Cons: Challenges with this model mostly center on being able to forecast your capacity needs accurately. Suppose you are substantially off in your assumptions. In that case, it can have a major impact on your P&L.

Project-based

Many companies, in particular professional services companies, build their budget based on anticipated projects. A professional services company might base its headcount plan based on the number of projects they anticipate working on during a given year. When building a headcount based on projects, time tracking software can become very helpful as it can provide information about how many people and how many hours have been spent historically on a project. Beebole allows you to track each employee’s time spent working for different clients and on different projects.

Pros: The benefit of this approach is you have built your hiring needs based on specific projects and if the needs for a project change you can update the needs for that project without having to update the rest of the plan.

Cons: Project based planning can be challenging to manage especially if you have a large number of projects. If every employee works on multiple projects and projects are short-term in nature it may not be realistic to use a project-based approach to planning.

How project time tracking software can help

Perfect for what we need it for! Reporting is one feature that we really utilize. We are able to run a report on specific projects and departments, which allows us to make better strategic decisions based on the amount of time that goes into a certain project. We are really able to understand which departments need more support based on hours reported. We are able to also report to our board of directors about specific projects, which allows them to give valuable insight.

Operations Manager at Family Reach Foundation

I can’t say enough about how easy and effective Beebole is for tracking time on projects. It is incredibly powerful yet simple to use. No one wants a “solution” that takes more time than the time-saving it is supposed to provide. For tracking projects and different scopes within a project, this is the easiest and most efficient use of my time. It gives us accurate and detailed information to include with client billing.

Owner of Philip Neumann Energy Design

As a manager, we use BeeBole to capture and report time for over 150 projects. We monitor billable and non-billable project time logged by a team member. We use reports to evaluate how to increase our billable project time. We also use BeeBole to view who is under- and over- utilized throughout the year. BeeBole reporting has become an integral part of resource discussions with upper management. Overall, BeeBole is easy to use by both an individual team member and those needing to extract data for management reports.

Manager at RR Donnelley

Common watch-outs

No headcount plan, especially for a fast-growing company, is going to be perfect. The reality is some roles will be hired earlier than planned, some roles will be hired later, and some might never be hired. That being said, just because your plan will be wrong does not mean you should not strive to be accurate with all known assumptions (Current salary, bonus, rate, taxes, etc.) and make reasonable assumptions for all other parts of the plan.

As you build the plan, a few common things to watch for include:

Special bonuses

It is not uncommon, especially in a fast-growing company with immature processes, for someone to have a special employment agreement that includes a bonus that finance has not been informed exists. Make sure to validate this with the HR team.

Calendarization

For simplicity, it is common to take all the salary assumptions and divide them by 12, but in reality, there is often seasonality in headcount planning. Make sure you consider how seasonality might impact the monthly and quarterly forecasts before just taking each number and dividing it by 12.

Lack of collaboration

Make sure you do not just rely on HR for current workforce data but coordinate it with the department heads as it is not uncommon for the department head to be aware of mistakes in the data or changes that will be happening that the HR team does not have.

Hiring assumptions

Make sure the hiring assumptions are realistic for the organization as a whole. I have seen departments plan to hire more people in a month or a short time period than is possible given the resources of the organization. The business often wants to hire everyone tomorrow; it is your job to ensure reasonable assumptions are made for how fast the hires can be made.

As one builds the headcount plan, watch out for common mistakes that can derail the plan and create frustration and challenges later in the year when the budget is off track due to poor headcount planning.

Final thoughts on budgeting for and forecasting an accurate headcount

Headcount planning can be a real challenge and especially painful when you are trying to reconcile your data. But if you don’t get it right, the pain of explaining every moment that the variance is due to a headcount error is a lot more painful. I had a manager once who made a mistake on headcount, and every month the head of the department would remind us of that when we reviewed the budget.

For this and the many other reasons mentioned in the article, every company should be doing headcount planning annually to ensure the current and future needs of the company are met. What method a company uses for the hiring plan will vary by company and will often include a mix of approaches, depending on what is best for the different departments within the company.

The key to headcount planning is ensuring the right conversations are happening between finance, HR, and business leaders. Nothing is more gratifying for a company than realizing the effort spent on building a well thought-out and planned headcount is worth it. And that happens when it comes to fruition and helps the company achieve its strategic goals and its revenue plan. At the end of the day, nothing is more important than people—it’s the people that make or break a business. Spending time to ensure that you have the right hiring plan is a big part of any hyper-growth company achieving its targets.

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The ultimate headcount planning checklist for finance leaders

Nowadays, headcount planning is a non-negotiable priority in fast-growing companies. As a finance leader, headcount planning not only helps you make smart financial decisions but also allows you to ensure that the organization has the right headcount to meet its long-term goals. 

However, poor headcount planning could lead to several challenges , namely: 

• Inconsistency between headcount strategy and business objectives
• Budget misallocation due to inaccurate forecasting

The truth is that headcount planning should be based on clear processes and best practices . And that’s what we'll go over in this article.

In today's post, we'll share:

• What headcount planning is
• Why headcount planning matters for fast-growing companies
• Our headcount planning checklist for finance leaders

Without further ado, let's dive in.

What is headcount planning? A quick overview

As a finance leader, you’re likely familiar with what headcount planning is. But just to make sure everyone is on the same page, let's define it briefly.

Headcount planning is the management of the number, profile, and cost of employees to achieve your company’s goals within a defined budget. Simply put, it’s about assigning the right people to the right roles to achieve your organization's mission, considering current and future circumstances.

Comprehensive headcount planning typically involves:

• Collaboration between HR , Finance specialists , Talent leaders, and hiring managers.
• A scalable, holistic, and iterative strategy to determine the optimal org design without overspending or underspending.
• Headcount planning tools to analyze real-time headcount data, update budget forecasts and keep all stakeholders in the loop.

All in all, good headcount planning allows your company to maximize the productivity and performance of your workforce. 

Why headcount planning is important for fast-growing companies

You might be wondering, "Why should I invest time and resources into headcount planning?" Well, there are several reasons. Proper headcount planning will help you:

• Allocate resources strategically

Facilitate revenue growth

• Properly forecast headcount expenses

Let’s briefly explore each benefit. 

Better resource allocation

A company’s headcount could represent 70-80% of the P&L . However, poor headcount planning can result in significant cost increases and wasted resources.

Designing a proper headcount strategy requires understanding HR’s priorities and Talent’s resource needs. With those teams’ input, you can allocate resources strategically to meet your headcount goals without compromising your company’s financial strategy. 

As headcount planning plays an essential role in developing your budget, it can also affect whether you’re equipped to achieve your goals. Proper headcount planning will help you facilitate revenue growth.

As Somrat Niyogi, Head of Business at Gusto, said in The Headcount People podcast : ‍

"Leaders should constantly be asking themselves, ‘What type of organization am I really trying to build?’ Planning around this question can really dictate the success of your business.”

With a well-aligned headcount approach, stakeholders can:

• Invest in employee development and assign hiring priorities according to key insights
• Identify skill gaps and good fits for specific job positions
• Recruit top talent to achieve specific financial goals

Ultimately, good headcount planning can help companies develop accurate workforce plans to meet key business objectives and revenue goals. 

Better forecasting

Headcount planning isn’t just about preparing to recruit. It’s an ongoing effort to effectively track and forecast your company’s spending. The longer you’re committed to it, the more information you’ll have to make better headcount decisions in the future.

The key to smart, efficient company growth is accurate forecasting, which is impossible to do without accurate headcount planning and management. 

Our 5-step headcount planning checklist 

Now you know what headcount planning is and why it matters for fast-growing organizations. So, let’s move on to how to do headcount planning with our step-by-step checklist. 

To build an effective headcount planning strategy we suggest you: 

• Align with HR & Talent around a joint plan
• Gather data in a single source of truth
• Make plan reconciliation part of your routine
• Update the headcount model based on internal changes
• Analyze your headcount forecasts

1: Align with HR & Talent around a joint plan

For starters, it’s imperative that headcount planning considers and aligns with:

• Organizational goals
• Department needs
• Your annual budget

And to do so, you’ll need to combine both top-down and bottom-up collaborative approaches. Simply put, this involves incorporating input from senior management, who set strategic targets, and team leaders, who understand daily operational needs.

By integrating both perspectives, you can develop a comprehensive headcount plan that effectively addresses your organization's needs.

Additionally, it bears repeating that proper headcount planning isn’t just about Finance. Talent and HR will be your best allies. 

For instance, to determine your total envelope , you should collaborate with HR and hiring managers by answering pertinent questions and setting strategy points.

These questions may include:

• What are our investors' expectations?
• What’s the existing headcount structure? 
• What kind of talent do we need to address each department’s needs?
• Can we swap current employees between departments to fill gaps?
• What new roles do we require to meet business objectives?
• How many recruiters will we need to carry out the hiring process? 

Additionally, it's key to determine new hires' compensations, benefits packages, and proposed starting dates. 

2: Ensure governance with a single source of data and standard workflows

A collaborative workflow among relevant stakeholders is essential for headcount planning. But, who is involved in headcount planning?

Relevant headcount stakeholders include:

• Finance leaders
• The HR team
• Hiring managers
• The Talent team

And why is a collaborative workflow important? Well, you need to ensure that: 

• All stakeholders are on the same page.
• They follow the right steps during the headcount planning process. 

And to make this possible, everyone needs to have access to a single source of truth for decision-making. Luckily, many fast-growing organizations are investing in headcount management tools that provide a single source of data and streamline these workflows. 

This is not only about seeking the right approvals but also communicating effectively and ensuring that everyone has visibility into the progress of the plan. Ultimately, coordinated planning is essential to your company’s success.

3: Make plan reconciliation part of your routine

Your headcount planning efforts aren’t done after you’ve set up a strategy. Connect with Talent and HR leaders on a regular basis to follow up and reconcile your plan. 

Are you at risk of going over budget? Is the recruiting progress going as planned?

This should be done on a regular basis, depending on your headcount plan. Some companies run a headcount reconciliation process weekly, others can survive doing it monthly. If you’re reconciling headcount any less frequently than quarterly, it will be really difficult to forecast with any level of accuracy or to keep budget variance under control.

4: Update the headcount model based on internal changes

An effective headcount planning process should not only focus on the hiring process but also on how internal changes affect your hiring model.

For instance, maybe you’ve approved the budget to hire for a leadership position, but team leadership decides to promote internally instead. You’ll want to take notice of that and modify your plan accordingly.

To this end, having open lines of communication with Talent and HR is key. 

5: Analyze your past headcount forecasts

Analyze previous headcount forecasting models. Your past forecasts can provide valuable insights and help you learn from past inaccuracies.

By evaluating the accuracy of your past headcount forecasts, you can assess the effectiveness of your forecasting methodology. Comparing forecasted numbers with actual results will allow you to identify discrepancies and understand the factors that influenced the variances. 

Additionally, understanding how headcount has changed over time (including the impact of internal transfers, promotions, or seasonal variations) will enable you to make better decisions regarding resource allocation.

Furthermore, examining historical data helps you:

• Identify trends and patterns within your organization
• Pinpoint areas where projections fell short or exceeded expectations
• Mitigate financial risks associated with inaccurate projections

Take control of your headcount planning and forecasting with TeamOhana 

In this post, we provided a step-by-step checklist for creating a solid headcount plan as a Finance leader. And it’s fair to say that the key to effective headcount planning is keeping stakeholders aligned through accurate data and forecasts. And here’s where TeamOhana can help.

With TeamOhana, you can plan your headcount based on:

• Unified data . Reconcile ATS and HRIS systems and other data sources and avoid data silos .
• Collaboration . Notify stakeholders promptly of any changes in headcount planning.
• Governance. Make sure that the correct workflows are followed.
• Scenarios . Create case scenarios through real-time headcount insights and predictive analytics so you can anticipate budget variances.
• KPIs . Track key headcount planning metrics, such as turnover rate, attribution rate, ramp time, and time-to-hire.
• Real-time updates . Track expenses against the headcount budget, and anticipate budget variances.

Curious? Book a TeamOhana demo today →

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Painless headcount planning for modern companies.

Mosaic’s Guide to Headcount Planning & Key Strategies

Brian Campbell

Founder and CPO

Download Our Strategic Financial Planning Blueprint

There are three Cs that define the best headcount planning processes — continuous, collaboration, and consistency. 

While the bulk of your headcount planning effort might come in the traditional annual planning process , high-growth companies can’t rely on that plan for the long term. Circumstances are constantly changing, and the most strategic finance functions partner closely with department heads to keep plans updated at least on a monthly and quarterly basis throughout the year.

But if it were so easy to make headcount planning a collaborative, consistent, and continuous effort, every team would do it. If you want to take the pain and frustration out of headcount planning , this guide will help.

Table of Contents

Get the blueprint for your best planning cycle yet

What Is Headcount Planning?

Headcount planning (and future workforce planning more broadly) is the process of assessing your current workforce and determining the best path forward for staffing future needs that will scale the organization.

But traditional finance education and experience don’t prepare you to understand the ins and outs and other departments. You don’t necessarily know how different parts of the engineering department work together to execute on the product roadmap. And you don’t necessarily know the nuances of the company’s sales team. All the more reason to nail down a collaborative headcount planning process.

Why Is Headcount Planning Important?

Headcount planning is important because workforce-related costs are typically the single largest expense for a business — especially in SaaS, where headcount can comprise upwards of 70% of total spend. 

Because workforce expenses make up so much of your total spend, getting headcount planning processes right can make or break the overall efficiency of your business.

A continuous, collaborative, and consistent headcount planning process will help you overcome many of the common frustrations that come with the exercise. Getting it right means:

Aligning Your Business on a Single Source of Truth

Building your headcount plans in a way that everyone in the business — not just finance — can consume and understand is critical. A strong process creates a single source of truth that eliminates any confusion around open heads and forecasted new hires .

Refreshing H eadcount Plans According to the Latest Information

A strong headcount planning process means developing and maintaining the forecast continuously. Don’t just wait for annual planning or quarterly board meetings to make incremental budgeting changes.

Keeping Your Ratios in Order

Inconsistent headcount planning can lead to mismanagement of workforce ratios and succession planning. An effective process accounts for those critical ratios to ensure you’re hiring the right number of people in the right roles while also safeguarding against attrition.

The 6 Essential Steps of Headcount Planning

Every company’s specific headcount planning process is unique. However, the following essential steps will put you on the right track to maximizing forecast accuracy and efficiency.

1. Start with Top-Down and Bottom-Up Backcasting

Every headcount planning process should start with backcasting — working backward from business goals to come up with the requirements to reach them.

There are two angles you can take:

• Top-down. Start with business objectives that come from leadership. What are the company’s growth goals and initiatives for the next year or three years? What are the current constraints for getting there and how do you fill skills gaps ?
• Bottom-up. Approach headcount plans at the department level first. For example, what assumptions do you have around sales rep quota attainment and ramp rate? Given those assumptions, how many sales reps do you need to hit revenue targets? And how many customer success managers will you need to handle the increased customer count ?

Combine these two angles to create a strong foundation for the headcount planning process . Knowing how department-level growth plans and goals map to company-level goals will give you a common language with everyone in the business to get this process right.

2. Understand the Workforce Planning Ratios in Your Business

Proactivity and curiosity go a long way toward building the trust and understanding needed for collaboration and determining what the necessary steps in strategic workforce planning for your organization are.

Once you have established a first-class understanding of how different teams and departments work together, you can begin to assess headcount-driven dependencies and focus more on strategic resource planning. This is where partnering with human resources can help. Because HR teams are so close to the org chart side of headcount planning , they’ll be able to help you understand the organizational structure and the relationships between different roles in the org. Here are a few examples.

• Customer Success Employees to Customer Count 
• Customer Success Employees to Revenue 
• Managers to Employees
• QA Engineers to Developers 
• G&A/Operational Support to the Rest of the Business 
• SDRs to Account Executives
• Sales Team to Revenue
• R&D/S&M/G&A Staff to Total Employees

3. Build Out Your Headcount Planning Template

Once you have determined the interplay between different departments across the org, leverage a headcount planning template and establish baselines around what efficient teams look like at scale.

Carry those baselines forward using the hiring plans you receive from your business partners. Push back when ratios start breaking the mold. Be proactive by recommending solutions that scale non-linearly with headcount.

Here are a few examples that CFOs and their teams can offer to business partners:

• Encourage business leaders to implement software that gives their people a force multiplier. Some examples are customer success ticketing software, headcount planning software , sales automation tools, and marketing aggregators .
• When ramping engineering teams for a new product launch, consider contract-to-hire models that ensure you are not left with unallocated resources once the surge is over.
• Ensure new employees in engineering are not spinning up cloud instances unnecessarily. If you need to surge, ensure you are buying reserved instances vs paying based solely on usage.

4. Account for Employee Ramp Time

Your headcount model should reflect both short and long-term goals that are challenging but attainable. Make sure hiring plans are realistic with what your company has been able to do historically. Setting goals that are not realistic will leave you with a bloated model that is not reflective of what is happening across the business.

If you have an applicant tracking system, leverage the data from this tool to understand the number of resumes in the queue, historical pass-through rates, and time to hire. Fact check these metrics against hiring assumptions and timelines to ensure they make sense.

If meeting your top-line goal is dependent on new sales reps, make sure onboarding and rep ramp times are factored into your model. To calculate rep ramp, you will need data from your CRM as well as data from your HR system. Figure out how long it has taken for your reps to contribute meaningfully to the pipeline from their start date. Bake these timelines into your projections.

You’ll find that you should often hire sooner than you thought to meet your near-term goals. 

5. Prioritize Hires and Understand the Fully-Loaded Costs

Because your business and external factors can change so quickly, it’s important to keep a prioritized list of forecasted hires as part of your headcount plans . 

When you stack rank your open roles, you know that you’re dedicating talent acquisition and recruiting team efforts to candidates with the right skill sets. And if you have to reduce headcount plans for whatever reason, you won’t be in a situation where you hired a handful of low-priority roles and have to cut the most critical ones.

Any process of mapping out and prioritizing forecasted hires should include the fully-loaded costs of future and current employees. Salary and benefits are not the only costs to consider when adding new folks to the team. There are several other direct and indirect costs that need to be factored into your model.

These costs contribute to the fully loaded cost per employee, the metric you should track as you scale.

Here are additional costs contributing to the fully loaded cost per employee:

• Employer Payroll Taxes 
• Dependents Benefit Expenses 
• Signing Bonuses 
• Relocation Fees 
• Computers & Equipment 
• Software Licenses 
• Recruiting placement fees & job postings 
• Rent and Space Requirements 
• Performance Bonuses
• Salary Adjustments
• Office meals and supplies

Additionally, keeping an eye on the revenue per employee metric is crucial, as it provides insight into the overall financial efficiency of your workforce.

6. Get the Plans Approved and Reassess Often

One critical part of the headcount planning process is getting approval from both your executive team members and the board. But the approval chain can be nuanced.

If you’re riding the wave of a strong market and have plenty of VC funding, headcount plan approval is more like a formality — you’re expected to grow rapidly. But in the case of a market downturn, extending runway is key. And that means having deeper conversations with executives and investors about the priorities in your hiring plan and making sure that you align the priorities of different stakeholders.

This is another reason why it’s so important to make your headcount planning process continuous. You don’t want to have to go through the complex process of building a hiring plan from scratch every time a board meeting comes along. If you’re having consistent conversations with department leaders, you’ll be able to keep the hiring plans fresh and go into executive and investor meetings with confidence.

Get Powerful Insights Into Workforce Management & Unlock a Smarter People Strategy

Requirements needed for headcount planning success.

Traditionally, headcount planning (like all financial planning ) has been a spreadsheet -based process — and a frustratingly difficult one at that. Like most processes in finance, spreadsheets get the job done. They just might not be the tool that will get you from building passable headcount plans to nailing down the consistent, collaborative, and continuous process high-growth companies need.

If you want to improve your headcount planning workflows , you need to satisfy three requirements.

Build a Single Source of Truth

Headcount planning goes wrong when new forecasting cycles come with a brand-new version. Eventually, you have multiple spreadsheets all formatted slightly differently, causing stakeholders to lose trust in the process. Building out a single source of truth is critical to success.

Use a Collaborative Process

How much agency do your business partners have in the headcount planning process ? Because spreadsheets aren’t inherently collaborative tools, it can be difficult to get leaders from across the department to work with you on headcount plans . Finding different tools that speak the same language as business partners can make a difference in headcount planning .

Interconnectivity is Key  

Manually updating your headcount plans with real-time actuals from your different workforce planning-related systems is tedious, time-consuming, and error-prone. Integrating data from your HRIS, ATS, CRM, and other source systems will help you focus more on strategic planning and less on data collection and aggregation.

Spreadsheets no longer have to be the de facto tool for headcount planning . Find out how Mosaic can help you create more dynamic headcount plans complete with multiple scenarios (without the usual headaches).

Smart, sustainable headcount planning will help you avoid or at least minimize worst-case scenarios.

Implementing these practices will give you a more data-driven approach to headcount planning , ensuring that you hire the right people, at the right time, for the right business reasons.

Headcount Planning FAQs

How does mosaic help facilitate headcount planning.

Mosaic’s Strategic Finance Platform integrates seamlessly with HRIS systems as well as your ERP, CRM, and billing systems to give a holistic view of your workforce. You can easily visualize headcount by department, role, or location while making real-time adjustments as needed and forecast future hiring needs.

How does headcount affect budgeting and forecasting at my organization?

Headcount has an immediate and dramatic effect on a company’s expenses and future budgeting, from payroll costs and employee benefits to taxes and overhead expenses. This makes headcount planning one of the key components in financial forecasting and planning processes.

What are the differences between headcount and full-time equivalents?

Headcount is the total number of employees within an organization. FTE stands for Full-Time Equivalent: it measures an employee’s workload in such a way as to be comparable across contexts for both part-time and full-time employees. An FTE value of one equates with full-time work while half-time work would only qualify as half FTE status.

Related Content

• How to Build a Workforce Planning Process that Boosts Growth (+ Examples)
• The Unpainful Budgeting Process: How to Plan with More Collaboration and Agility
• Recession-Proof Your Business in 5 Steps

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Smart Tips on Getting Headcount Added To Your Team

That’s why it doesn’t help to get emotional when asking for headcount. It doesn’t help to say your people are tired or that they are too busy or frustrated. None of these “softer” reasons help much because by the time they get translated to the exec team who’s actually making the decision, they lose all weight. 

Better to make your business case with data . Speak in terms of managing talent risk – showing data that proves you have insufficient people lined up to execute the business strategy. And, that you know this because you can also prove that all of your current resources are fully and efficiently deployed.

You can drive the talent risk management conversations starting with risk assessment followed by prioritization and ultimately mitigation. Adding talent is only one of many risk mitigation strategies so be sure you’ve explored all the options before asking for the one that is likely the most expensive – more people.

Here are some ways you can structure your case using the Knowledge Silo Matrix: 

• List the silos of knowledge and expertise required to maintain current systems as well as any new ones that may be needed to meet the new strategy.
• Show where your people are currently deployed.
• Explore and explain all options for cross training, leveling workloads, reducing complexity, and clarifying roles so you can prove you’re using your current headcount to its highest advantage.
• Show how you’re borrowing resources from outside your existing team to manage spikes in demand.
• Show how you stopped doing work in some silos to further clean house and ensure no time is wasted.
• Calculate the “Cost of a Mistake” and/or “Cost of Missed Opportunity” for insufficient staffing in any given silo.
• Identify opportunities to outsource or insource work, ensuring that the right mix of employees and contractors is always in play.

With that analysis done, you can then show where you would deploy new headcount, not by talking about adding, for an example, a “software engineer” but instead, by talking about adding capacity in a silo or series of silos. You can say things like:

• “We have a new silo and lack expertise in that area. Hiring one critical expert and then using that expert to cross train existing employees using knowledge transfer is going to expedite how quickly and effectively we can execute your strategy.”
• “We can train up the headcount in these three silos and cut our response time by 10%.”
• “We can reduce reliance on a single point of failure in this silo so that expert can do something more important.”
• “We can reduce rework in three silos by hiring an expert from outside and having them stand up a new standard. This will save us costly cycle time.”
• “We can prepare for increased demand just-in-time (rather than too late or too early) because we know exactly which silos will be affected and have a plan to prepare for growth.”
• “We can replace an expensive contractor in a high risk, high priority silo with an employee and save money doing it.” 

A disciplined, data driven approach to “managing up” will not always net additional help but when an executive has a choice between adding headcount to the leader with a plan or someone else, the outcome is fairly predictable.

Steve Trautman

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How to Write a Proposal on Additional Staff Required

by Ruth Mayhew

Published on 25 Oct 2018

Human resource planning begins with determining workforce needs: the levels, positions and numbers of people the organization needs to carry out its mission and objectives. This type of planning generally occurs before the company opens its doors for business. Factors such as company growth, increased revenue, expansion into new markets and employee attrition also can require additional staff. When you're sitting at the table with executive leadership, it's wise to have a written proposal that justifies your request for additional manpower.

1. Start With the Essentials

Depending on the size of your organization and the complexity of your staffing plan, your request for additional staff proposal should have at least four basic sections:

• Executive Summary
• Needs Assessment
• Methodology

Some proposals may require additional sections, such as Project Evaluation and Communication Strategy, but a human resources planning proposal may not need more than the basic four. The proposal requires input from your entire human resources team because staffing involves recruiting, employee training and development, and compensation.

2. Write an Executive Summary

State the purpose of your proposal and identify who provided input. Summarize the contents and provide information about how you intend to carry out the plan for additional staffing. Readers with access only to the executive summary should fully understand the underlying reasons for the request for additional staffing. Also make clear how you arrived at the conclusion that you need more employees and how the budget will cover the costs to recruit, train, onboard and pay them.

The ABC Company Human Resource Manager, [insert name], submits this proposal, dated [insert date] to justify the addition of five additional staff across two departments: Corporate Sales and Accounting. The HR team researched the company's needs, assessed the current labor market and estimated the overall cost for the additional employees. The details are set forth in this proposal approval by the ABC Company executive leadership team.

3. Describe Your Additional Manpower Proposal

Describe the reasons why the company needs additional staff and explain the methodology you used to determine how many staff are required to sustain the organization's operations. The needs assessment is likely to include a review of the company's current staffing plan and when it was implemented. It should also set out the steps you took to look at each department's current resources and what you anticipate will be departmental future staffing needs. For example, your needs assessment might include descriptions of average employee tenure, succession planning, employee training and development, and attrition and turnover.

4. Describe Your Methodology

This is the process used to conclude that the organization or department needs additional staff. For each one of the components of your needs assessment, describe the sources for your information and how you used that information. For example, averaging employee tenure is a simple calculation:

•  Review employee personnel files for hire dates
•  Calculate the number of years employed
•  Total the years worked
•  Divide the total by the number of employees 

For some departments, you might want to examine individual employee tenure to estimate attrition numbers. The methodology should also include the availability of workers, because there's no sense in petitioning for additional staff if the labor market is such that you don't stand a chance in attracting qualified applicants. Labor market availability determines whether you have access to human resources, such as nearby schools that produce graduates or a general labor market within commuting range. You might also include in this methodology what could happen if the company is unable to hire qualified additional staff. For example, increased overtime for current employees, loss of productivity or sales, or low employee morale because the current workforce is carrying the burden of excessive workloads could result.

5. Propose a Budget

The budget for additional staff is more than just what employees earn. Compensation for each employee includes annual wages or salaries, plus the cost of benefits. As of December 2017, the U.S. Department of Labor's Bureau of Labor Statistics indicated the cost for private sector employee compensation was 31.7 percent of wages. For example, the cost to employ someone who earns $50,000 a year is approximately $15,850, making the total cost for that employee $65,850 year. Benefits include paid time off, insurance and retirement savings contributions. There are also costs to recruit, train and onboard employees, which depend on the time and wages of human resources team members engaged in the hiring process. Many organizations base hiring decisions on cost, so your proposal's budget section should describe the costs and the basis for your projections.

6. Sum It All Up

The conclusion of your proposal for additional staff should indicate the timeline, based on when you receive approval, because you can't usually pinpoint the exact date when you can actually bring people on board. Contingencies, such as background checks and candidates who need additional time for providing notice to current employers may cause delays. Don't rush the time frame within which you can bring on additional staff.

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4 Headcount Planning Strategies for Fast-Growing Teams

BY Sharon Rusinowitz

For rapidly scaling companies, the pressure is on to hire quickly. But, too often, in this rush to fill roles, organizations end up making expensive staffing mistakes : hiring the wrong candidate or losing top talent because of a failing employee experience .

With effective headcount planning strategies in place, HR can support the organization to build a workforce plan that brings the right skills into the business—at the right time, throughout the company’s growth.

Put your best plan forward: Your guide to intentional team and company growth DOWNLOAD THE GUIDE

1. Develop a strategic workforce plan that focuses on quality, not numbers

Hiring under pressure to achieve a certain number of employees may result in bringing the wrong candidate on board.

Thirty percent of companies that made a hiring mistake said they felt they needed to fill the role quickly, according to a CareerBuilder survey . A “bad hire” occurs when an employee doesn’t have the hard or soft skills to succeed in the role, or when the new hire feels a mismatch between the expectations and reality of the job. The cost of a bad hire ranges from additional recruitment costs to decreased productivity and increased stress—particularly on managers—according to a survey by staffing consultancy Robert Half .

To avoid rushing hiring decisions, companies should move from chasing staffing targets to finding the right fit—even if it means slowing down the recruitment process. In an episode of Recruiting Brainfood , Matthias Schmeißer, the director of talent at analytics firm Beamery, contends that a sustainable approach to headcount planning reduces focus on hiring targets. Instead, talent teams should empower hiring managers to make decisions.

The cost of a bad hire ranges from additional recruitment costs to decreased productivity and increased stress.

“My lesson learned [is to] never push hiring managers to hire a candidate if they are not 100% convinced because I don’t want to hit my numbers, I want to grow in a sustainable manner even if it takes sometimes a bit longer,” said Schmeißer.

In Mastering the Hire: 12 Strategies to Improve Your Odds of Finding the Best Hire , Chaka Booker writes that hiring managers should be coached to evaluate the candidate’s suitability for the role, not their performance in the interview. Booker recommends that hiring managers immediately write down their first impressions of the candidate to call out and minimize bias in the hiring process.

2. Create and visualize a clear organizational structure

A clear organizational structure enables HR to develop better headcount plans, identify skills gaps, improve the employee experience, and determine the ideal span of control through the company’s growth.

A clear organizational structure—a system that outlines roles, workflows, and reporting structures—shows how work is done and decisions are made in the company. An org chart represents this information visually, depicting relationships, processes, and responsibilities throughout the organization so everyone can understand them.

Creating and visualizing such an organizational structure gives the entire team clarity about talent shortages, urgent hiring needs, and budgeting implications.

Without a clear organizational structure to guide the headcount plan, teams may end up with too few managers to support employees. Your workforce could find themselves doing extra work far outside the scope of their roles—exposing your people to burnout and the company to attrition. Different departments risk duplicating work because responsibilities haven’t been defined.

Dave Koslow, chief operating officer at DocSend, says companies often ended up growing without updating the org structure .

“You’re a 10-person company. You’re trying to move as quickly as possible . . . Then you get a little bit bigger, and the organization needs more structure, but your inertia can just continue to carry you forward operating in the same way. [You need to say], ‘Okay, we need to slow down a little and be methodical, because things have changed.’”

To create a clear organizational structure, consider how work will be managed throughout the company. This clarity allows you to choose the appropriate organizational structure for your company.

Common organizational structure types include:

• Functional: Group employees into teams based on specific functions
• Flat: Reduce or remove layers of management so the entire workforce is on the same level
• Matrix: Employees report to multiple managers
• Team: Group people together based on specific goals

Factors like your company culture and stage of growth might influence your selection. Once you’ve chosen an organizational structure, find an org chart software that will help to visualize that structure. Your org chart software should also serve as a headcount planning tool, allowing you to view open roles and create scenarios to inform financial planning.

3. Eliminate a one-size-fits-all approach to workforce planning

Your organization is hiring for multiple roles, and each may require a longer interview process or tailored recruitment strategy.

Frequently, organizations make broad decisions about headcount plans that don’t account for individual departments. For example, if an organization is ramping up to launch a new product, it may be important to hire more developers to help build it or more sales people to support the new sales stream. Depending on the role, the time to hire for certain positions might be longer. At 43 days, the time to hire for technical roles is higher than the U.S. average, while some roles have slower interview processes, according to a Glassdoor analysis .

Higher-priority roles may also require specialized recruitment programs. According to research by LinkedIn , recruiters recommend using customized employer branding content to attract candidates in sales, engineering, and operations. Planning ahead for these types of specialized programs is critical to fulfilling growth plans.

Eliminate a one-size-fits-all approach to workforce planning by reviewing hiring needs by department . You’ll want to evaluate metrics like time to fill and diversity, equity, and inclusion (DEI) indicators, and ensure they’re adjusted for specific roles. Then, to further customize your approach, build a talent acquisition strategy that’s based on that data.

Andrew Chen, a general partner at Andreessen Horowitz, suggests finding communities where your ideal candidates are active and engaging them in conversation right away. “This may be Newgrounds for Flash people, or the Firefox extensions directory for browser folks.”

Ragini Holloway, the head of talent at fintech company Affirm, said the company conducts tech tours at universities to connect with more women in tech in an effort to put action behind its DEI goals.

The headcount planning process must account for these role-specific recruiting initiatives because they will impact hiring timelines and headcount forecasting.

4. Build an alumni program for departing employees

Building an alumni program helps you create a network of ex-employees who remain connected to the company and may eventually rejoin the organization.

In the technology sector, talented employees constantly leave to pursue new opportunities, but that doesn’t mean they have to be gone for good. An alumni program is a structured program for maintaining relationships with those former employees and a way for you to extend your talent pool.

According to data from LinkedIn , software companies have a higher turnover rate than companies in other sectors. Part of this is due to increased competition for tech talent. Peter Cappelli, a professor at Wharton School and the director of its Center for Human Resources, says turnover directly affects headcount planning : “Companies hire from their competitors and vice versa, so they have to keep replacing people who leave.”

Through an alumni program, you may be able to encourage some of those employees to return, perhaps when the company is at a different stage of growth. An employee who left after your company secured its seed round may be able to bring a new perspective after you’ve secured your Series B.

To establish an alumni program, stay connected to departing employees. This can be as simple as asking if they’d like to be added to your company newsletter and invited to future company events.

Heather Kinzie, the chief operating officer of Strive Group, a consulting firm that also deals with recruitment, told Recruiters Network that exit interviews play an important role in employee alumni programs. During the exit interview, ask whether an employee is open to coming back to your organization, make a note of their response, and add it to the person’s profile in your applicant tracking system.

One caveat is that a rehired employee’s performance and engagement may depend on why they left the company. A Journal of Management study found that rehired employees tended to leave the company a second time for the same reason they initially left.

Establish a Successful Headcount Plan to Guide the Org Through Growth

Successful headcount planning ensures the business has the right number of people with the right skills to help achieve growth goals. As the company scales, the HR team can adjust hiring plans and anticipate talent needs to align the workforce strategy around business goals, whether it’s putting action behind DEI commitments or expanding into new markets.

Ready to expand your team to support fast-paced business growth? Download our Startup’s Guide to Intentional Growth to learn more about what it takes.

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How to Convince Senior Leaders to Add HR Headcount

​Although senior leaders increasingly recognize the value of HR, they often are reluctant to add resources and headcount to their HR budgets, according to the State of the Workplace Report issued by SHRM Research last year. As a result, HR professionals are increasingly burning out from overwork and stress.

However, some HR professionals are finding that they can make a convincing case for more headcount by showing senior leaders how additional resources can be used effectively to drive business results. But before you approach leadership to request headcount, you need to be ready to clearly show the business need.

"Many CEOs still view HR as an expense rather than looking at the whole picture," said Maggie Smith, vice president of human resources at Traliant, a compliance training company headquartered in Manhattan Beach, Calif. "HR may need to educate senior leaders about the HR function." She explained that some in the C-suite may not know what HR does to attract, engage and retain employees, or they may not understand the high cost of turnover.

"HR is often considered a soft [field] because many HR initiatives don't translate directly into revenue. That makes it harder to quantify the value," said Dominique Andrews, chief people officer at Logically, an IT services company based in Portland, Maine. She encourages HR professionals to better understand business needs and priorities and learn to think and talk like the company executives they report to.

The Pandemic Changed Things

A key challenge when seeking approval to add staff is educating senior leaders about how the HR function has evolved over the past three years.

"Since the onset of the pandemic, HR has been the tip of the spear in contending with the complexity of how we work," said Bernard Coleman, chief diversity and engagement officer at Gusto, a San Francisco HR-tech platform. "HR professionals are on the forefront of the employee experience of attracting, hiring, onboarding, engaging, developing, progressing and retaining talent, and [HR] is both the architect and the steward of the employee journey."

But HR also has been stretched to the limit and, in some cases, has become a dumping ground for a wide range of nonessential activities.

"HR professionals need to distinguish between busy-ness and impact. They spend a lot of time doing things that don't deliver or make enough of an impact," said Megan Gregorczyk, vice president of employee experience at G-P (Globalization Partners), a software-as-a-service-based employment platform in the San Francisco Bay Area.

As the former head of staffing operations at Google, Gregorczyk recalled working for a boss who advised her to focus on "landings, not launches." 

"Ask yourself, 'What outcomes do we need to deliver?' and 'What resources do we need to deliver them?' Then ask for the resources you need to deliver those outcomes," she said.

The Leadership Challenge

"Many of the issues that HR is responsible for are not just HR functions, they are leadership issues," said Kristin Turner, who is based in Denver and is head of people at CoachHub, a global digital coaching platform.

This can be problematic for HR professionals who don't view themselves as business leaders.

"HR has an identity problem. They haven't been able to see themselves as crucial leaders in the organization," said Cindy Adams, global president of Cornerstone, a leadership services and products company in Draper, Utah. "HR needs to be more courageous and put forward more ideas. They need to bring a business case to senior leaders about why they need more headcount and show how HR made a difference in the business."

When Turner joined CoachHub in 2021, HR was viewed primarily as a resource for recruitment, compensation and employee exits. She wanted to prove to the senior leadership team that she could be a true strategic partner who could help them solve real business problems. So, she partnered with company leaders in finance, legal and IT, and over time, she was able to show them the value of what HR could do to support their business needs if given the right resources.

The results spoke for themselves. As revenue rose, she was able to grow her HR team from one person to six in a single year. But she admits it took patience, persistence and a bit of creativity.

Align People Goals with Business Strategy

At the beginning of 2022, Payscale's HR team consisted of 10 people supporting a population of about 500 employees. Through 2022, HR grew by seven hires alongside the company's aggressive growth strategy. Lexi Clarke, HR vice president for the Seattle-based compensation company, credited her ability to add HR headcount to her strong working relationship with the company's CFO.

"It was important to tie together people problems with number problems that the CFO was thinking about to determine how our people strategies can support business goals," said Clarke. "We looked at the company's plans for growth to figure out how many recruiters we needed and what kind of specialized expertise was required."     

For HR professionals seeking to convince senior leaders to prioritize people-related resources, it's critical to show how HR efforts support key company objectives, said Neha Mirchandani, CMO and head of people at BrightPlan, a financial wellness company.

"It's also important to back this up with tangible data and metrics related to the positive impact on the business, such as reduced turnover and increased employee engagement," she said.

Be Ready to Do Your Homework

"Don't be lazy. Do your homework before asking for more headcount," advised Debora Roland, vice president of HR at CareerArc, a social recruiting software firm in Burbank, Calif. She recommended using the Scope Triangle to prepare for the kinds of questions senior leaders are likely to ask when considering the cost of additional headcount. The Scope Triangle is a project management tool that shows the inherent trade-offs between three main elements of any project: time, cost and quality.

"Ask senior leaders what they're willing to sacrifice if they don't want to incur additional costs. Are they willing to sacrifice quality or time to save money? Show them how the additional resources can improve quality and/or efficiency," Roland said.

"Choice is a powerful tool," added Gregorczyk. Let leaders decide what they want HR to prioritize. Make it clear what they want you to prioritize and what will need to be delayed. Then, she said, if there's something that senior leaders want to move from the back burner to the front, that's the point at which they need to make a decision about whether to add more headcount.

"That can be a hard conversation for HR because they don't like to disappoint anyone," Gregorczyk said. "But it's just a math equation. There's only so much you can do with the resources you have been given."

Take Purposeful Action

When Andrews decided to transform Logically's HR function into less of an administrative role and more of a value-added strategic partner, she initially turned to training and technology to build internal capability before making the business case for additional headcount.

Andrews recommended using HR technology for repetitive administrative tasks in order to free up members of the HR team for other responsibilities. Then she evaluated her team's existing skill sets to identify whether they had the skills to meet the evolving business needs and whether there were team members who could be trained to fill in the missing pieces.

As Andrews implemented these changes, she was able to convince senior leaders to add an HRIS specialist to the team to deal with more complex technology systems, as well as a compensation analyst.

"Whenever you're adding headcount, it needs to be purposeful," Andrews said. "If there are business needs that require specialized skill sets, that's where you need to focus."

As the HR function becomes increasingly complex, the need for HR specialists is likely to grow, as well. But it's up to HR to make sure that senior leaders understand the value and importance of growing the HR team in very deliberate and meaningful ways. Coleman calls this "the moment when preparation meets opportunity. HR professionals have the skills to navigate building our teams to support the business and to give guidance that minimizes risk and maximizes performance," he said.

"The see-through line is clear," Clarke added. "Better HR equals better retention and recruitment equals better business results."

When HR professionals are able to develop the leadership skills and deliver the kind of outcomes that senior leaders care about, their value and importance to the organization increases exponentially. 

"So, when leaders consider whether to incur the additional expense of adding HR headcount, they will also be looking at the high cost of losing key HR talent," said Clarke. 

Arlene Hirsch is a career counselor and author based in Chicago.

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Give your managers the one tool they need to Justify Additional Staff

IN THIS ARTICLE

• Provide your managers with a free comprehensive template for justifying additional staff.  It'll create a mini business case and increase their business acumen & critical thinking when justifying additional staff.  
• Find out why it's important, and why small business doesn't do it well.
• Get prepared for the resistance you'll encounter from your managers.

Bottom Line

Bottom line, there are only 3 ways for justifying additional staff in a small business:

• Reduce other expenses
• Increase productivity or efficiencies
• Increase revenue.

No magic formula or hocus pocus. It’s really that straightforward. 

The Position Justification Form

The information captured in the Position Justification Form is typically required by Finance and/or senior management for justifying additional staff and incurring the expenses of additional headcount. It’s used by managers to:

• Create a business case for opening a new position that does not currently exist – or was not included in the current year’s budget
• Justify additional staff for the next fiscal period, during budget reviews

A good Position Justification Form includes exploration of each of the 3 justification options we discuss above.  It provides the framework so you know exactly what questions to ask.  The end result will be a mini business case that will defend the decision for adding a new employee. It's very likely that you'll never see the ones that don't! 

Sample Justification Form to hire new employee

• Take a peak at a good  Position Justification Form  with an accompanying instructions document for your managers.  Both can be previewed, downloaded and edited using Microsoft Word.  It gives you all the tools you need to ensure your managers put their business hats on when contemplating adding headcount.
• Customize the documents to include your company's due diligence requirements when adding additional headcount.  
• If you're looking for other documents to support opening a new position, check out the  Opening & Advertising a Position  kit, or other related kits for the  Hiring Process . 
• Also available is a full solution for Setting up a Department of Human Resources using editable documents. 

Why Justify a New Employee?

Think about the last time a new position was approved in your small business.  How much time was spent on the justification to hire a new employee?  Did you ask for a business case to validate a reoccurring expense of $100,000 per year? 

Small business owners and CEOs often don't have the time or know what questions to ask to ensure that proper position due diligence is done up front before the recruitment process begins. Here are a few reasons why you’ll want to implement a Position Justification Form soon:

• Ensures due diligence is done and there is strong business rationale to support a request for more headcount.
• Provides food for thought for the manager to look at alternatives to opening a new full time position. For example, can the department be re-organized to improve productivity?  Can the use of technology improve efficiencies?  Does the position have to be full time?  Does it have to be filled by an employee?  Can the additional headcount be a temporary expense?
• Ensures that the process around incurring additional staffing costs are just as rigorous as incurring any significant capital expense.
• Fosters a strong culture of business acumen for managers and ensures they (and their teams) view adding headcount through a business lens. 

Here are 2 common consequences of not having a rigorous process for justifying adding a new employee:

•  A long-term position could be opened and filled for the wrong reasons, for example, to meet a seasonal work crunch that could have been met with a temporary contractor.
• The costs associated with an unnecessary hire go well beyond the salary of the new hire--they include recruiting costs, learning curve, and staff time to interview and train. Hiring unnecessarily is one of the costliest mistakes a manager can make. 

Justifying Additional Staff - an example close to home

Let’s say my family and I decide to hire someone to help with housekeeping.  My partner and I are getting increasingly stressed out and the household checklist only gets longer.  Stuff is falling through the cracks. We find ourselves getting to bed later each night to get things done and it just doesn't seem doable anymore. 

Q:   Are those good enough reasons to bring in the help?     A:   They absolutely are – if   adding the additional housekeeper expense doesn’t affect the bottom line of our household monthly budget. 

Let’s consider the options:

• Reduce other discretionary expenses:   I could eliminate the Starbucks and the lunch expenses.  Reduce the number of times we eat out.  Ditch the monthly salon expense and use hairdresser-in-a-box to dye my roots. Bonjour Loreal Paris?  Decrease the number of empty wine bottles that end up in the recycling bin. Hunt for coupons.
• Increase productivity or efficiencies: I could reduce the amount of time spent on Netflix, or Facebook.  Get a Roomba to do my vacuuming.  Ask my kids to get a part time job or learn to take the bus or carpool.  I could maximize efficiency by re-jigging family member responsibilities to leverage everyone's skill sets. 
• Increase revenue. I could ask for a raise. Get promoted.  Upgrade my skills to make myself more marketable. Change jobs.  Draw on my home equity line of credit. Clean out the garage and sell stuff on Craigslist. Buy lottery tickets. 

The take away is that there are some tough decisions and sacrifices to be made because my monthly household budget has a bottom line.  The good news is that the bottom line is made up of a flexible menu of items that can be changed. Both the revenue and expense line can be modified,  (10-3) = 7.  (8-1) = 7, as long as the end result is 7.  

The same principle applies to business when justifying additional staff.  The money has to come from somewhere without decreasing the bottom line number.  An exception to this is when it can be shown that there's a high probability of future return on investment in human capital.   

The engine for this analysis is called a business case.

Resistance to New Hire Justification

• Be prepared. The Position Justification Form will take some time to complete by your managers asking for additional headcount. It requires some calculations and work up front, but is well worth the effort. You will encounter fierce resistance and push back from managers when asked to justify a new position and do the homework, particularly if your small business managers aren't accustomed to robust hiring processes or controls . 
• Managers may even threaten to quit! You may hear words like, ‘bureaucratic’, ‘unnecessary’, or ‘HR make-work project’.   And you'll definitely hear, ‘I’m too busy to fill out this form’! Be friendly but firm. Follow through with your request and insist that this be done. Managers are paid to manage, plan, and justify resources. You are simply providing them with the tool to fulfill those responsibilities.

Use your ‘red tape chips’ wisely when requesting staff to complete time-intensive processes. It is highly recommended that you insist your managers follow  this process.

And if you’re really bold

• Ask a stakeholder with a healthy respect for the bottom line (for example, an investor) to vet all requests for new hires outside of the budgeting process.  A face to face interview is conducted with the hiring manager to present his business case.  This scenario transfers the 'bad cop' label to an external entity. 
• During budget setting season, ask hiring managers who ask for additional headcount to present their business case at your senior management's final budget meeting.

Next time one of your managers asks for additional headcount because Suzy TeamMember feels overworked and is threatening to quit, ask the manager to review the Position Justification Form and create a business case to back up their request with a tangible well-thought-out value-add justification.  If they threaten to quit or stomp their feet, perhaps ask them how they would handle their significant other insisting on <insert: hiring a housekeeper, buying a new boat, getting plastic surgery>.   You could also send them this article!    

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Introducing the all-in-one headcount platform for enterprises to accelerate headcount decision-making.

SAN FRANCISCO , April 18, 2024 /PRNewswire/ -- TeamOhana was founded on the idea that headcount is a team sport – but most "teams" aren't set up to win.

While many systems store people and budget data (HCM, ATS, ERP, etc.), none of these systems are integrated. This leaves business teams with no choice but to use spreadsheets to track headcount plans and budgets. The problem is that spreadsheets require manual updates and lack access controls, which lead to more serious issues like delayed decisions and overspending.

We set out to fix that by synchronizing headcount data from the fragmented systems of record into a single source of truth for headcount: Phase 1 of TeamOhana ( read more ).

Today, we are thrilled to unveil Phase II: the All-in-One Headcount Platform. It is the next generation of enterprise headcount management, designed to accelerate decision-making and unlock operational excellence around the largest company expense and most important resource: headcount.

Enterprise headcount management: All in one

Enterprise headcount management is complex, yet crucial. The consequences of getting headcount wrong are all around us: missed revenue targets, shrinking margins, layoffs, and more. On the other hand, getting headcount right is often the precursor to profitable growth, reduced budget risk, and a thriving workforce.

With TeamOhana's All-in-One Headcount Platform, enterprises have everything they need to "get headcount right." The platform consists of five integrated modules to optimize headcount costs and drive operational efficiency.

Headcount Management : Unifies fragmented data, automates headcount reconciliation, and helps companies track the headcount plan and forecast in real time.

Scenario Planning : Accelerates headcount decisions with self-service headcount modeling so companies can adapt to changing market conditions.

Dynamic Org Charts : Eliminates manual org charts and enables users to visualize both current workforce and new hires in a single org chart.

[NEW] Compensation Planning : Simplifies merit cycles to run in a fraction of the time, enabling managers to promote and retain top performers.

[NEW] People Analytics : Provides instant headcount insights with the AI Copilot.

Enterprises can now rely on TeamOhana's platform for the entire headcount lifecycle – to plan, hire, promote, and retain the workforce.

Compensation as an extension of headcount management

Customers continually told us that promotion/merit cycles were just as painful and spreadsheet-heavy as headcount management. By adding our new compensation planning module, TeamOhana customers now can save dozens more hours on merit cycle management.

Here's why adding compensation planning to the TeamOhana platform makes so much sense for our customers:

One less procurement process for another piece of software.

Integrations are connected and working.

Compensation data, salary bands, and leveling are already set up.

Execs and frontline managers prefer the TeamOhana interface and functionality.

"Our previous method of conducting compensation reviews was difficult to manage and didn't allow us to give the transparency to leaders that we wanted. TeamOhana has enabled us to set up one cycle that we can configure to include everyone in a way that provides a clear timeline of each milestone, allows the business leader to review their direct reports and provide recommendations, and allows our HR business partners to provide support all along the way. No more updating spreadsheets and struggling to keep everything organized. It's all right there in the system that's familiar to us." – Megan Wood , Strategic HR Operations Manager, Newsela

AI-first headcount insights

Last year, global HR analyst Josh Bersin described a world where generative AI is integrated into HR technology, saying, "I should just be able to chat with my HR system." Imagine no more – TeamOhana built it.

As every HR and finance business partner knows, even the most innocuous workforce questions can take hours to answer. Each new request sends you down a rabbit hole of data exports, spreadsheet formulas, and manual work. With the new AI Copilot, our customers can generate real-time workforce reports instantly.

"Copilot allows me to answer workforce questions in 30 seconds versus taking an hour before. I can deliver insights to my executive team faster than ever." – Shira Gavriel, Sr. People Analyst, SeatGeek

Over the next 6-12 months, we will continue to advance our AI capabilities to provide proactive insights and recommendations about the workforce. Our ultimate goal is to 10X the productivity of the G&A function with AI-first headcount management. More to come later this year!

Next-gen headcount management for the enterprise

Today's announcement is more than a product launch; it's the start of a journey.

With the introduction of TeamOhana's All-in-One Headcount Platform , companies can look to TeamOhana as an enterprise solution to accelerate decision-making and optimize costs.

Join us live: Unveiling the All-in-One Headcount Platform

Please join us on April 30th as we deep dive into how TeamOhana provides visibility and automation in headcount management.

In this live event, you'll learn how:

TeamOhana accelerates headcount decision-making by unifying real-time data and key stakeholders in a single source of truth

Enterprises use TeamOhana to hit revenue targets, optimize margins, and avoid layoffs

Finance and Talent business partners use TeamOhana to collaborate with each other, as well as execs and frontline managers

Date : Tuesday, April 30th

Time : 12PM PT / 3PM ET

Tushar Makhija , Founder & CEO, TeamOhana

Charlie Schrier, Head of Marketing, TeamOhana

With special guest appearances from our customers and advisors!

Reserve your spot today!

Can't attend live? Register anyway to receive the webinar recording.

View original content to download multimedia: https://www.prnewswire.com/news-releases/introducing-the-all-in-one-headcount-platform-for-enterprises-to-accelerate-headcount-decision-making-302118588.html

SOURCE TeamOhana

Plan Projections

ideas to numbers .. simple financial projections

Home > Calculators > Business Plan Headcount and Staff Costs Calculator

Business Plan Headcount and Staff Costs Calculator

This business plan headcount and staff costs calculator will help you to calculate staff related costs for use in the Financial Projections Template and your business plan.

Staff costs relate to the costs of having employees, they include the basic payroll expenses such as wages and salaries, but also fringe benefits and perks such as holiday pay, subsidized meals, cars, pension schemes, life insurance, childcare assistance, and employee discounts together with employer taxes.

The calculator is used by entering details of each employee such as job title, basic annual salary cost, whether part time or full time, and start month. The start month can range from 1 to 60 months and the calculator will calculate the relevant cost for a particular year.

Additional on-costs such as benefits, perks, taxes are allowed for by applying a mark up percentage to the basic salary costs.

Headcount and Staff Costs Calculator Download

The staffing projection template is available for download in Excel format by following the link below.

About the Author

Chartered accountant Michael Brown is the founder and CEO of Plan Projections. He has worked as an accountant and consultant for more than 25 years and has built financial models for all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a degree from Loughborough University.

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OpenAI speeds up growth with plans to open NYC office, more hiring and new products

• OpenAI plans to open a New York City office likely next year, sources told Business Insider.
• The company also doubled headcount in the last year and more growth is expected.
• OpenAI is developing new products, too, including GPT-5 and a search product.

OpenAI is evolving from a scrappy startup into a larger tech company.

The generative artificial intelligence company, best-known as the creator of ChatGPT, is looking to open next year an office in New York City, according to two people familiar with the plans. This would be the company's fifth office, added to its current headquarters in San Francisco, a just-opened office in Tokyo, and offices opened last year in London, and Dublin.

OpenAI has yet to settle on a space in New York or sign a lease, one of the people familiar said, but Manhattan and Brooklyn are being considered as options.

New offices are a clear sign of expansion for the company, which rose to public prominence only 18 months ago with the release of ChatGPT-3, a consumer-facing chatbot that can answer user queries and solve certain problems while mimicking human speech patterns and style.

It sparked an AI frenzy in Big Tech, with companies like Meta , Google and Amazon rushing to release their own generative AI products. Microsoft decided to make a massive investment in OpenAI that put ChatGPT in products like Bing and Copilot. After the dramatic ouster and return in November of cofounder and CEO Sam Altman, the company appears to be again on a steady growth trajectory.

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Early last year, OpenAI had only about 400 employees all working out of one San Francisco office. It's now looking for a second office in San Francisco, according to a report in the San Francisco Chronicle. This is in part because OpenAI's head count has grown to over 1,000 people, according to one of the people familiar with the company.

OpenAI has taken a selective approach to hiring, the person added, relative to how much interest the company receives for its job postings. Engineering jobs can receive over 1,000 applications for a single role, the person noted. Still, OpenAI is looking to grow even more this year, likely adding at least 500 people in the US and in still-new international offices, the person said.

While OpenAI is looking for technical talent and engineers, it's also looking to hire more enterprise salespeople to sell ChatGPT to large-scale customers, one of the people familiar said. The current sales team is considered small at around 150 people. Selling ChatGPT to large businesses is the core source of revenue for OpenAI and will remain as such going forward, the person noted, as OpenAI executives do not see a meaningful amount of revenue from individual user subscriptions to ChatGPT.

And new potential products to sell are on the horizon. There are two projects at the company right now among the core focus for OpenAI's tech engineers and employees. One is GPT-5, a new version of the large language model that underpins its popular chatbot and is poised to be released mid-year, as Business Insider reported . The other is a search product likely to incorporate Microsoft's Bing search engine, according to a report from The Information. That search product is still in development, according to one of the people familiar, and there is currently a significant push for workers on the project to deliver a search product, possibly by later this year.

With new offices and adding more workers, OpenAI is now one of the largest companies dedicated to generative AI. At around 1,000 employees, it's roughly the same size as Google DeepMind . Other generative AI startups like Mistral, Anthropic and Stability have between several dozen and a couple of hundred employees, according to LinkedIn.

A spokesperson for OpenAI did not respond to emails seeking comment.

Are you an OpenAI employee or someone with a tip or insight to share? Contact Kali Hays at [email protected] or on secure messaging app Signal at 949-280-0267. Reach out using a non-work device.

Axel Springer, Business Insider's parent company, has a global deal to allow OpenAI to train its models on its media brands' reporting.

Watch: Sam Altman moves to Microsoft after OpenAI fires him as CEO

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Tesla's 2023 report shows number of employees. It is now Austin's biggest private employer.

You might know Tesla's gigafactory as the place that makes Cybertrucks or the sprawling property you see when you drive past on Texas 71.

But while Austin-based Tesla is one of the region's best-known names, it is now also one of its largest private employers, according to a new report filed by the company with Travis County.

The report is tied to a $14 million incentive deal the company signed with the county before building its gigafactory. As part of the deal, the company is required to report certain updates, including employment numbers, contracts, injuries and more annually, one of the few reports that provide a glimpse into the company.

Here's what the latest report says:

Tesla's Austin employment numbers are continuing to climb

Tesla's Austin facility has now grown to 22,777 employees, up from 12,277 the year before.

This makes Tesla the largest private employer in Austin, just ahead of H-E-B, which has about 19,000 employees, according to employment data tracked by Opportunity Austin.

Tesla is only outranked by two public sector employers: the state of Texas, which employs 63,850 people in the region, and the University of Texas, which employs 23,925. Tesla also outranks the city of Austin's 15,427 employees.

In the tech sector, Telsa beat out the next biggest regional employer, Round Rock-based Dell, which has about 12,000 employees, a number that now might be smaller after the company reduced its employees globally by nearly 10% in the past year. Dell has not shared an updated regional headcount.

About 50% of Tesla employees live in Travis County, a slight drop from the year prior when 55% of workers lived in Travis County. Under the incentive agreement with the county, at least 50% of Tesla employees must be residents.

How much do Tesla employees make?

On average, Tesla's Austin-area employees make $35.75 per hour, while the newest employees make $30.14 per hour, according to the report.

The Bureau of Labor Statistics reported that workers in the Austin-Round Rock metropolitan area had an average wage of $30.72 per hour in May 2022.

How much land does Tesla own?

The company owns about 2,500 acres of land locally, a figure that largely remains unchanged since Tesla's last report.

But it does list two changes to the company's total parcels. This includes the addition of a 2-acre parcel, worth about $3,000 that was sold to Tesla by Travis County, according to Travis Central Appraisal District records.

Tesla also appears to have sold about 3 acres of land, worth about $60,000, on nearby Platt Lane, to the state of Texas.

Contracts with historically underutilized businesses

The report also includes the company's HUB awards, or contracts with historically underutilized businesses. To qualify for the awards, suppliers must have certificates from the state, city of Austin, or certain qualified organizations.

Tesla meets 100% of its participation requirements, according to the report. In total, the company lists 757 HUB awards. Of the contracts, 51% went to women, 41% to Hispanic suppliers, 3.6% to Asian suppliers, 2% to small businesses, 1.9% to Native American suppliers, 0.5% to Black suppliers, and 0.1% to service-disabled veterans.

How many workers were injured last year?

According to the report, Tesla had 1,082 Occupational Safety and Health Administration-recordable incidents, or any incident that results in a loss of consciousness, days away from work, restricted work, transfer to another job or medical treatment beyond first aid. The employees worked 38.7 million work hours total. Construction contractors also had an additional 78 recordable incidents over 4.3 million hours of work.

Tesla's injury rate is on par with other automakers. According to the Bureau of Labor, Tesla's total recordable incident rate, which tracks the rate of such incidents per 100 full-time workers, is right around average for automotive manufacturing, which is a bit high in general compared with other industries. Automotive manufacturing averages a rate of 5.7, compared to Tesla's rate in 2023 of 5.6.

Tesla's work with schools and educational institutions

According to the report, the company works with many educational institutes and government organizations for recruitment and job training. The company noted its work to implement training and apprenticeship programs at Austin Community College, including an entry-level manufacturing program.

In total, the company said it engaged with student organizations and faculty at 12 Texas universities, leading to the collection of over 5,400 applications. The company also said it hired over 250 interns from Texas schools into Texas-based Tesla operations last year and hired an additional 350 interns from Texas schools into non-Texas operations.

Tesla also said it partnered with Huston-Tillotson University to provide curriculum consultants and sponsored two $7,500 scholarships to incoming freshmen at the school's mechanical engineering program. Tesla also lists a similar sized investment of $8,4000 for the University of Texas, but the company did not note what that money is for.

Tesla made several donations to the Del Valle school district, where it set up a manufacturing program last year with Del Valle's Pathways in Technology Early College High School designed to help students learn manufacturing skills needed to work at Tesla. The company noted it paid $376,880 to the staff and $100,000 toward equipment for the P-Tech program. It also noted that its 2022 class had 40 students, with plans to add 40 to 60 each year, for a total of 300 students by the fifth year.

Tesla also launched a program in 2021 at Del Valle and Austin Community College that has led to 22 students hired full-time by Tesla. The company said it expanded the program in 2023 to include multiple school districts, with over 170 students enrolled total, and it plans to target 300 students in the greater Austin area for this summer.

Outside of schools, the company also made donations totaling $374,000 to groups including EcoRise, American Youthworks, the Colorado River Alliance, Black Leaders' Collective, the Austin Area Urban League, Partners For Education Agriculture and Sustainability and Workforce Solutions' teacher externships, according to the report.

Tesla laying off more than 10% of staff globally as sales fall

• Medium Text
• Staff notified of layoffs effective immediately -source
• Tesla looking to cut costs, boost productivity -memo
• Q1 deliveries fell for first time in nearly four years
• Battery development chief, public policy chief announce departure on X

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Reporting by Yuvraj Malik in Bengaluru, Victoria Waldersee in Berlin, Zhang Yan in Shanghai and Hyunjoo Jin in San Francisco; Additional reporting by Zaheer Kachwala and Akash Sriram Editing by Peter Henderson, David Holmes, Chizu Nomiyama and Matthew Lewis

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Thomson Reuters

Autos correspondent in Germany, covering the industry's transition to electric vehicles. Previously reported on the impact of the COVID-19 pandemic on the retail sector in South Asia, China and Europe, and wider general news. Formerly at YouGov and Economy, a charity working to produce accessible economics coverage.

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Tesla tries legal 'band-aid' to revive musk's huge pay deal.

Tesla and Elon Musk are seizing upon an obscure provision in corporate law to attempt to restore Musk's $56 billion pay package, in an untested move that could again mire the company in litigation, legal experts said.