Mapping out your company’s talent needs for the year ahead is a prime opportunity to show up as a true partner to the business. But talent teams often find themselves struggling to collaborate with the C-suite on what roles need to be hired and when, despite best intentions.
That’s why we made headcount planning the focus of our recent webinar, Headcount Planning, Reporting, and Budgeting. The final installment in our “A New Decade of Talent” series, we brought together three amazing leaders across different functions and perspectives for an engaging session on how to build strong relationships for successful headcount planning.
We received so many great questions from the audience throughout the webinar and while our panel had time to answer most, we had a few outstanding that we wanted to make sure got addressed.
Meet the experts:
- Mike Bailen, VP of People at Lever
- Dr. Jeff Smith, Director of L&D at 15Five
- Ed Schaffer, CFO at Hired
Here are the top nine headcount planning questions from our session, answered!
1. What teams should be involved in headcount planning meetings?
The big three are finance, talent, and the business function, says the panel. “Finance, because they assemble the picture and understanding,” adds Schaffer. “The business group, because they bring more definition to the need and benefit. And talent, because they bring knowledge of time-to-hire, market demands, competition, etc.”
Under the talent bucket, Bailen suggests adding the HR business partner. “VPs of HR play such a critical role, because they’re on the front lines,” he says. “Often, HR or recruiting groups can be a little siloed themselves, so there’s an opportunity for these roles to come together to understand what’s needed for the next iteration of the company.”
Lastly, Smith calls out the importance of early talks at this stage. “It’s important to have conversations that are non-binding about what the business wants to accomplish in advance of all these planning conversations,” he says. “During the actual discussion, you can go back to the fundamentals of hiring and ramping people. It’s good to have someone there who can ask questions like, is this possible? What is the data telling us?”
2.What is the ideal timeline for headcount planning for an early, mid to enterprise size company?
There’s no one-size-fits-all-answer to this question, says the panel. It will really depend on your company and when you conduct your organizational planning, which is usually done in tandem. Another way to look at it is by working backwards from when you want to have objectives and key results finalized by every employee in your company and other major milestones in your planning.
“By identifying these key milestones early,” says Bailen, “you can build a planning schedule that allows for ample company and departmental planning, trade offs, and any corrections or improvements you want to make in your plan. On the headcount side, many organizations make the mistake of unrealistic expectations on their goals and tie very important organizational goals to their ambitious headcount targets. The more time you build in for planning, the more opportunities you have to prevent critical errors.”
3.What kind of structures should be utilized to address changes in real-time as you move through budget and the hiring season? Are there certain templates, roadmaps, spreadsheets to use?
The panel cautions against getting caught up in the idea of a template or roadmap that can help you adjust to changes. Rather, focus on process so that when things need to change, you have a regular check-in process that allows for your team and company to make things happen.
“From a process standpoint, we’re constantly looking at the feedback mechanisms that we have [at Hired], in terms of what’s working and what’s not working, and modifying the picture,” says Schaffer. “We’re really going through it on a regular basis.”
“That’s where taking that partnership mindset is so important,” adds Bailen. “So making sure people like your business partners are constantly outward-facing and connecting with the business. Knowing what’s going well, what’s not, making adjustments in real time. It’s really important that these groups are in lockstep together to make those adjustments.”
4. Any experience on pushing back on scaling without jeopardizing your role?
This comes down to building strong relationships with your business partners and knowing who to tap in for productive conversations, says the panel. To help you navigate these types of moments without negative repercussions, they offered the following three recommendations.
#1: Use data to get everyone on the same page
“Sometimes it’s easy to get caught up in the effort of recruitment and scale out teams,” says Bailen, “but it’s important to look objectively at how a team is ramping. Looking at objective data, like employee lifetime value (ELTV), is an opportunity to ground everyone in the same reality. Look at objective criteria ahead of time, so you’re not jeopardizing your position.”
#2: Shift the focus from recommendation to observation
“This is the type of conversation to have directly with the individual you’re challenging,” recommends Smith. “One way to do that is to focus on observations, not recommendations. Objective data, triangulation, and benchmarking really come into this. Have a conversation where you establish positive intention — we’re in this together, I want to share some observations with you, etc. — can lead to a more productive conversation.”
#3: Tap your CFO for help navigating hard conversations
“One of the hardest things to do is push back on an executive on how fast they want to move and push the business,” says Schaffer. “That’s where going and enlisting the help of the CFO, who knows how to have that kind of conversation, can be really helpful rather than driving full speed.”
5. How do you align corporate real estate (CRE) planning with headcount planning?
It’s about supply and demand. If you jump into an office that is too large for the team you’re recruiting in a new location, you’re wasting money on a space that can also have an adverse effect on the productivity and engagement of your people. So the answer here is two-fold.
First, do your research on what the talent market in a given area of proposed expansion is. Will it be easy to recruit the engineering/marketing/sales talent, etc. that your new office needs to be successful? Or will it be challenging, with the bulk of people working remotely to start?
Second, collaborate with your facilities or workplace leaders to ensure you’re aligned on the types of office space realistically needed. And that all four functions — workplace, talent, finance, and business — can come together to set up the new location for success.
6. How do you advocate for the value of employee contribution at the leadership level? Is there a figure that you look at per role? How are rewards handled and factored in?
There are different comp strategies and philosophies, so what might work for one company might not for another. But as an example, you could offer everyone in the same role the same pay and use a bonus structure around goal achievement. Or, you could identify the top five percent of performers and disproportionately reward those top performers.
“It’s about objective goal setting aligned on key results early,” says Bailen. “Then, rewarding for achieving those targets. Of course, only if the business is successful. Remember, budget allocation is about knowing there’s some event in six months down the road.”
7. What is the workflow for headcount planning by department? (i.e. product team has a product roadmap.)
A quick scan on Wikipedia will show you that applying an objectives and key results framework can help structure and align departments around business goals. Objectives and key results (or OKRs as they are commonly referred to) are about defining and tracking objectives and their outcomes. The development of OKRs is generally attributed to Andy Grove, the “Father of OKRs,” who introduced the approach to Intel during his tenure there and documented it in his 1983 book High Output Management.
“From a planning perspective, we just went through planning over here at Lever,” says Bailen. “Ed Tang, our new CFO, just introduced an awesome structure called Super Days where he handed out some templates where teams had an opportunity to share what went well over the past year, what strategic initiatives are, folding in things like OKRs and really being able to demonstrate the value provided to the business by each function. Then having discussions around resourcing. Our executive team had the chance to invest and have healthy dialogue on where we want to invest our dollars.”
8. How do you factor in attrition to the headcount plan?
First, make sure you know your own data. And, how that internal data compares to industry benchmarks for specific roles. It helps to start with the numbers before you try to factor in attrition, so you have more context around what it means for your company’s retention.
“At Lever, we look at historical attrition rates to guide our logic on forward-facing attrition,” says Bailen. “We also factor in our Employee Success (HR) roadmap to get more dialed in on any improvements we expect to see from our historical attrition averages. Although we don’t literally put attrition in the headcount plan, we use these forecasts to right-size our recruiting team and capacity, along with adjusting company performance expectations.”
9. What are the top metrics that you look to measure Employee Lifetime Value?
Employee lifetime value (ELTV) is an estimation of an employee’s potential or actual contribution to your organization. ELTV can also be used to measure the contributions made by specific roles, teams, or even locations. But what determines a role’s ELTV isn’t always quantifiable, with some roles easier to measure than others.
Usually, ELTV is determined by an employee’s contributions to your organization in terms of revenue, productivity, or a unit of your own creation. Both value and time may be real or projected. So, for example, a revenue-generating role like sales would typically be measured using a dollar amount or number, e.g. the amount of revenue generated over time.
Smith and his team use a different approach. “At 15Five, rather than aiming at performance directly,” he says, “we find creating an empowering context around people more effective — one that involves psychological safety, positivity, growth mindset, taps into intrinsic motivation, focuses people on their strengths. Those are the ways we think employee lifetime value can be increased. You can often measure these elements, even when productivity isn’t so easy to measure. You can be innovating and creating programs around that type of empowering context. And you can be working with your CFO to have more financial metrics around individuals’ contributions.”
More real-world tips to help you master headcount planning
This is just a sampling of the many best practices shared by our expert panel for accurate forecasting planning in the new decade. Discover the rest in our recording of Headcount Planning, Reporting, and Budgeting today! And if stuck on where to start, our quick Capacity Model Cheatsheet can help you kickstart the planning process for your organization.