In early 2020, COVID-19 hit. In your particular industry, what happened to your staffing? If you were in the healthcare industry, suddenly your organization needed more workers such as ICU nurses and epidemiology specialists. If you were in the personal services industry providing massage/physical therapy and haircutting, overnight your organization was without clients and the difficult decisions of cutting staff was necessary. Could headcount planning have helped your organization over the past two years of uncertainty? Let’s dive in and learn more…

Definition of Headcount Planning

First, let’s define Headcount Planning, also known as Org Charting. It’s a strategic exercise carried out to ensure an organization’s staffing and structure can meet short- and long-term goals within a defined budget. Simply stated, this process assures the right number of people, with relevant skills to execute the strategy, are in the right positions, while staying within the labor budget.

This planning and strategizing isn’t just up to the HR team. It’s an organization-wide challenge that requires representation from many stakeholders.

Team Members Involved Headcount Planning

Typically, a team of departmental leaders, senior executives, talent acquisition professionals, and finance specialists conduct the exercise of headcount planning. The deliverables the team produces include hiring targets, reducing employee turnover, analysis of work environment occupancy and space usage data, organization-specific strategy, and key budget numbers. This team also delivers a complete outlook of hiring goals and strategies which, if the company needs to course change, can be revised quickly.

This planning isn’t easy. It’s resource intensive but it’s critical. And the investment is well worth making because your organization’s success hinges on smart hiring.

Importance of Headcount Planning

One of HR’s priorities is managing headcount and workforce planning. If it’s one of the most important priorities, why do so many HR leaders shy away from it? Maybe it’s because the process is very analytical, which involves financial and budgeting exercises. HR teams typically operate in more of a transactional environment focusing on the fulfillment function of filling a job vacancy. And oftentimes, gathering the appropriate data is a manual process.

As you know, labor is a major budget line item for most businesses. Tying headcount planning to financial planning means your company can align talent acquisition efforts with your business goals. Headcount planning also ensures your organization’s future stability by helping you implement succession plans. And if you’re seeking funding, it summarizes your company’s understanding of its current organization design, labor costs, productivity, and human resources expertise.

“Employee Cycle’s data visualization platform for People Ops & HR is seriously good stuff. They plug right into your HRIS and then presto! Now more wrangling raw data, crunching it, toiling to get into PowerPoint.”

Sharon K., VP of People at Agora

Benefits of Headcount Planning

In addition to supporting short- and long-term business goals, companies that have found success with headcount planning typically also realize the following benefits:

  • Responding quickly to emerging challenges by adjusting staffing levels
  • Realizing a more efficient, productive, and effective staff by having the right people with the right skills in the right positions
  • Controlling costs by linking talent expenses with business objectives
  • Ensuring a full pipeline to fill critical roles, including succession planning
  • Understanding team member profiles so HR policies can maximize talent goals

Based on these benefits, it’s obvious that headcount planning is one of the most powerful ways to ensure your organization’s success. It connects the dots between budget, growth, and talent management strategies. It’s critical to have a clear plan in place that includes real time data so that your organization can course correct and make shifts in strategy smoothly and efficiently.

So, how do you get started?

7 Tips for Headcount Planning

If you’re convinced that headcount planning should be a key piece of your organization’s strategy for 2022, here are 7 tips to get you started.

  1. Review overtime data. What were your overtime costs last year? Compare that number to the previous three to five years. Then, map this data to specific positions. Are the causes of overtime likely to continue? Calculate if it would be more cost-effective to add headcount or continue to pay overtime.
  2. Ensure data accuracy. If your data is inaccurate, it will result in plans and decision not conducive to success. Does your organization have the ability to track metrics? If not, consider an automated HR management system where all employee records are stored. This will make your data audits more effective and accurate.
  3. Research employees with multiple roles. Cross training can be a win/win for your organization and its employees. It allows employees to gain more skills and provides your business with more flexibility. However, if those employees consistently work more hours than you’ve budgeted, or are stretched too thin, or even showing signs of burnout, you may end up with vacancies in these roles. Consider increasing your headcount or using a different staffing model.
  4. Be collaborative. All team leaders should feel that their requirements are being heard and considered. Your headcount planning team should gather feedback from managers and provide feedback to demonstrate your organization is responsive to current and future needs.
  5. Budget for professional development. When employees feel they are being invested in to grow their skillset and knowledge base, oftentimes this improves retention. If your company currently provides – or plans to – training opportunities, you must ensure you’re budgeting for that. Consider more than just the costs of the programs but also the time required for employees.
  6. Stay compliant. If your company is required to have employees with certain certifications, remember to forecast the number of certified employees required during peak, non-peak, and seasonal times. This advanced planning will ensure you don’t get caught short.
  7. Document everything. Your headcount planning team needs to keep detailed records on everything during this process. Have a checklist that ensures consistency across all departments. Record how they assessed whether changes are needed to reach company goals – whether in strategy, budget, or staffing. Good documentation provides a way to analyze results of decisions effectively, and provides a paper trail should your company become the target of a lawsuit.

Choose the Right Solution

Headcount planning can sound like a difficult, complex process, especially if data and metrics are collected manually. However, implementing the right HR technology solution that automates the complexities allows your organization to facilitate alignment among the various departments to ensure a collaborative, manageable process. This alignment and collaboration among teams will be even more important for your 2022 headcount planning. Especially with continuing volatility in the job market.

HR leader utilizing the Employee Cycle dashboard on a laptop while driving coffee
HR leader utilizing the Employee Cycle dashboard software’s Headcount section

Headcount planning software is intended to empower your organization’s leaders and HR professionals to keep a central repository of employee information, quickly and easily onboard new employees, track individual worker performance, track payroll and compensation changes, and help your business manage your employees. It’s important to procure HR software that integrates the tools and features you need, including payroll, productivity analytics, recruiting, staffing, turnover, and performance reviews.

“To see information about turnover and new hires in one click provides perspective to our team. People want to know this type of information, we just haven’t had the capacity to provide it exceptionally easy. With Employee Cycle, we now do.”

Elijah B., VP of HR at Beeline

Selecting the right HR technology solution can provide the answers your organization needs to forecast the appropriate headcounts you need during times of growth or during times of economic instability. If you’re interested in learning more about how Employee Cycle’s HR data platform, which integrates with many HR systems, can help your organization, fill out this form and one of our experts will give you a call.

Leave a Reply