Three features of a good headcount planning process for finance teams

Having a good headcount planning process in place isn’t just important, it’s essential. Especially for growing organizations where operations are maturing and becoming more complex. 

When you’re working with a finite runway, resource allocation is crucial and the workforce represents a growing organization’s biggest expense. Every new hire is an investment in business performance, and any change in headcount has a direct impact on the budget. So finance teams have to get headcount planning right.

There are of course a multitude of factors that contribute to a good headcount planning process. But we’ve identified three quintessential features that finance teams can prioritize to drive better, faster workforce decisions that help organizations meet their strategic objectives:

1. A single source of headcount data truth
2. Efficient workflows that are built to scale
3. Scenario planning and rapid reconciliation

In this article, we’ll take a look at these features, why they’re important and how you can start integrating them right now. For a more detailed workforce framework, you can also download our free step-by-step guide for building a strategic headcount planning process.

How to create a single source of data truth in headcount planning

Your headcount plan has to account for the entire organization, which means your process needs to allow the finance team to collaborate with stakeholders in every other department. For this to be possible, everyone must have shared visibility of consistent headcount planning data.

Here’s how you can do this:

• Create a single source of truth for headcount planning data that’s easily accessible to every stakeholder who needs to be involved. 
• Make sure that every stakeholder has the right level of access so that sensitive data such as salaries is only visible if it’s relevant to their role.
• Ensure that the process goes beyond simple data sharing and creates an environment in which finance teams and budgets holders can align on decisions.

If you’re using Excel or Sheets for headcount planning, this will mean being scrupulous about version control. Your process must give every stakeholder certainty that the spreadsheet they’re looking at is the correct and current version containing complete and accurate data. You’ll need to break up spreadsheets so that the right stakeholders have access to the right information, and take great care when consolidating this data into your final spreadsheet. 

Consider how you’ll align on decision-making, whether that’s getting stakeholders together in the same meeting, or agreeing on a specific communication channel. By doing this, you’ll avoid having disparate conversations across emails, messages, and calls that quickly become difficult to keep track of.

If you’re considering headcount planning software, choose a solution that combines financial, operational, and HR data in a single source of truth. Finance teams, HR business partners, and budget owners should be able to collaborate on headcount planning decisions in a shared space, while having permissions that control their access to sensitive data. 

Remember, finance is one of the only departments that looks holistically at all aspects of the organization. This puts you in a unique position as a strategic business partner who can connect the dots to uncover common objectives, surface emerging opportunities, and align every stakeholder on the same roadmap. 

By building collaboration and a single source of truth into your headcount planning process, finance teams and stakeholders across the organization can agree on expectations, budgets, and resource allocation to make better, more informed decisions.

Why you need efficient and scalable headcount planning workflows

When it comes to headcount planning, your workflows need to be two things: efficient and scalable. With efficient and scalable workflows you can support fast, informed decisions about your organization’s workforce – right now and at every stage of business growth. 

Here are some points to keep in mind:

Think ahead. 

As you put your headcount planning process into place, consider whether it will hold up as your organization grows in both size and complexity. Scalability is essential if you want to avoid having to overhaul your workflows again and again.

What’s the big picture? 

Do you have a holistic view that includes financial performance, operating costs and the full spectrum of workforce data from compensation negotiations to new hire swag? Without access to this data in real time, it’s nearly impossible to forecast accurately or enable fully informed hiring decisions.

Time is money. 

Are your workflows causing slow (and therefore costly) decision-making? Streamline your workflows by automating what you can to speed up the planning process and avoid causing approval delays. The less time you spend on manual headcount planning tasks, the more time you have for contributing to a data-driven headcount planning strategy.

Who’s accountable? 

Build traceability into your headcount planning process, so it’s easy to understand when decisions were made, why, and by whom.

If you’re ready to start streamlining your manual workflows, this headcount planning template is a good place to start. It might also be worth learning more about the scalable workflows built into headcount planning software.

The benefit of scenarios and reconciliation in headcount planning

A good headcount planning process will enable you to do three things:

1. Model a range of different hiring scenarios based on the organization’s strategic goals.
2. Use these insights to build a dynamic headcount plan that drives long-term success.
3. Easily reconcile variances between what was budgeted for and what actually happened.

When you include scenario planning in your headcount planning process – considering a number of possible outcomes instead of a single prediction – your organization is better prepared for uncertainty. This kind of forward-thinking approach allows you to anticipate potential challenges and opportunities, then use that as the basis for a robust and adaptable headcount plan. 

Consider the more basic what-ifs: to hire or not to hire, to backfill or promote from within, increase Sales headcount in the highest performing market or lowest, and so on. Then broaden your thinking to include wider factors such as consumer behavior, upcoming regulatory changes in your industry, market trends, or advances in tech. 

If recent years have taught us anything, it’s that the business landscape is unpredictable, so planning for the best and worst-case scenarios is crucial. Armed with these deep insights, you’re now in a position to build a dynamic headcount plan. 

Here’s how that contributes to long-term success:

• By accurately forecasting the impact of a variety of scenarios, you can pinpoint the number of employees each department needs to meet strategic goals and streamline your workforce. 
• Streamlining your workforce means lowering costs while keeping the level of talent in the business high, maintaining productivity, and improving employee retention.
• When you understand the impact of every eventuality, you can prepare for all of them, taking proactive action to get ahead of challenges or maximize new opportunities. 

Combined, these factors enable the organization to be both agile and resilient, course correcting quickly when needed and weathering both anticipated and unexpected changes.

Headcount planning comes part and parcel with negotiation; there’s always back and forth between finance teams, leadership, and budget holders within each department. So it makes sense to use a combination of top-down and bottom-up budgeting in your headcount planning process. Using these approaches in tandem ensures that your headcount plan is both aspirational and grounded in operational realities. 

Top-down budgeting tends to be more aggressive to align with leadership’s ambitious plans, whereas bottom-up budgeting is often more conservative to ensure expectations can be met. By creating space for conversations that align leadership’s strategic objectives with practical insights from the business teams, your headcount plan becomes more realistic and achievable.

As you well know, headcount planning is never a case of forecast and forget. Headcount plans are constantly changing so you’ll need to continuously reconcile variances to keep workforce budgets up to date. Consider, for example, an unanticipated promotion, a role that’s filled much sooner than you planned, or a missed growth target as a result of hiring delays. 

Make sure you have a view of the variances between your forecast and actuals, or headcount costs can quickly get out of control. Keep in mind that much of this change data will come from HR, so you’ll need to have a close interdepartmental relationship or use headcount planning software that integrates with your HRIS systems. 

When considering your software options, look for a solution that offers automated reconciliation. That way, deviations from the hiring plan won’t cause any additional (and time consuming) manual work for your finance team.

How finance teams can become the heroes of headcount planning

As you get started with improving your headcount planning process, use the three key factors covered here as a foundation to build from:

1. Work closely with stakeholders across the organization, and prioritize access to a single source of truth for headcount data. 
2. Build scalable workflows that enable fast, informed decision-making, with clear accountability long into the future.
3. Model different hiring scenarios for an adaptable headcount plan and keep budgets up-to-date by regularly reconciling variances between forecasts and actuals. 

And don’t forget to download our step-by-step headcount planning guide for support at every stage of the process.

Find out how Abacum headcount planning software can improve your process with consolidated data, easy collaboration, scalable workflows, scenario planning, automated reconciliation, and more. With Abacum, finance teams can be the heroes of headcount planning, supporting better decisions that drive the organization towards its strategic goals.