How to do headcount planning

Most companies spend 70-90% of their budget on headcount. This article outlines why finance teams should build a feadcount plan and how to build one.
FP&A TIPS
Jamie-Lee Salazar
Co-founder & CEO of Cobbler
A headcount plan is a forecasting tool that helps companies determine the number of employees they will need in the future to meet their business goals. Building a headcount plan can be beneficial for a number of reasons, and companies that take the time to do so can put themselves in a better position to succeed.

    Why build a headcount plan?

    There are several reasons why building a headcount plan can be beneficial for a company:

    1. Ensures the right number of employees: A headcount plan helps a company ensure that it has the right number of employees to meet its business goals. By forecasting future staffing needs, a company can avoid over- or under-staffing, which can lead to inefficiencies and reduced productivity.

    2. Facilitates budget planning: A headcount plan allows a company to allocate its budget more effectively. By forecasting future staffing needs, a company can determine how much it will need to spend on salaries, benefits, and other employee-related expenses.

    3. Helps with succession planning: Building a headcount plan can also help a company with succession planning, as it allows them to anticipate future staffing needs and identify potential candidates for leadership roles.

    4. Improves efficiency: By having the right number of employees in the right roles, a company can operate more efficiently and effectively. A headcount plan can help a company identify areas where it is understaffed and take action to address those shortages.

    5. Attracts top talent: A well-developed headcount plan can also help a company attract top talent by demonstrating that it has a clear vision and strategy for growth.

    Overall, building a headcount plan can be an important tool for a company to ensure that it has the right team in place to meet its business goals and succeed in the market.


      How to build a headcount plan.

      Here are some steps finance teams can follow to build an effective headcount plan:

      1. Define your business goals: It's important to have a clear understanding of the company's goals and objectives before you can start building a headcount plan. What are you trying to achieve? How will new hires help you get there?

      2. Analyze your current workforce: Take a close look at your current team to see where you have strengths and weaknesses. Are there certain areas where you are understaffed or where you have a surplus of employees? This will help you identify areas where you need to focus your hiring efforts.

      3. Forecast future staffing needs: Based on your business goals and your analysis of your current workforce, you can start to forecast how many employees you will need in the future. Consider factors such as anticipated business growth, new projects or initiatives, and changes in the market.

      4. Determine budget and resources: Building a headcount plan is not just about forecasting the number of employees you will need, but also about determining the resources and budget you have available to hire and support them. Consider things like salary and benefits, training and development, and other costs associated with bringing new employees on board.

      5. Develop a hiring strategy: Once you have a clear understanding of your staffing needs and budget, you can start to develop a strategy for how you will attract and hire top talent. This may involve working with recruiters, developing employer branding initiatives, or using social media and other online platforms to reach potential candidates.

      6. Monitor and adjust: Building a headcount plan is an ongoing process, and it's important to continually monitor and adjust your plan as needed. Keep an eye on changes in your business, market conditions, and other factors that could impact your staffing needs. This will help you stay agile and ensure that you have the right number of employees in the right roles at the right time.

      By following these steps, finance teams can build a headcount plan that helps their companies grow and thrive. With a clear understanding of their staffing needs, budget, and hiring strategy, they can ensure that they have the right team in place to support the company's goals and objectives.

      Many companies build headcount plans using Excel or by piecing together reports. They often struggle to get the right information to the right people and to maintain accurate workforce data. Cobbler helps finance teams automate headcount tracking by syncing directly to the HR system. Learn how your organization can keep headcount plans in sync with your financial forecast by reaching out to the Cobbler sales team.
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