workplace

Why every company needs a headcount document

July 19, 2019
7 minute read

Will Otto is a talent design manager at PI. 

I recently sat down with one of our directors; he was losing an employee to another team, and it could’ve been a disaster. Instead, we both saw the opportunity in the situation. With one backfill role available, and another due up based on our strategic people plan, he had the rare opportunity to think about his team as a blank slate. 

I asked this director a series of questions: 

  • Did he want to have two individual contributors splitting work based on subject-matter areas? 
  • Did he want one new hire to manage the other? 
  • Did he want to create a service model for his team where employees are responding to needs and requests based on bandwidth?

At the heart of our strategic, proactive conversation was a simple tool: our headcount document. Nearly all conversations about hiring for business needs start and end with the headcount doc.

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I’ll use “headcount” as shorthand for a large spreadsheet that lists out budget-approved openings for each team, along with some basic information like when a role’s approved and how much is earmarked for the salary range. 

At PI, this is a living document within our people operations/finance partnership—and it’s shared monthly with the executive team. 

Here are some of the ways our headcount doc makes designing world-class teams easier.

1. Answering hiring manager questions

A strategic HR team can find itself between a rock and a hard place when there’s an impatient hiring manager on one side and a disciplined and planful finance team on the other side. 

As a business partner, the talent function can’t just rubber-stamp a request for a new role to open without considering budget ramifications. But it doesn’t make for a good working relationship to answer a stressed-out manager’s request for speed with “Go ask finance and then come back when you find out.”

By owning the headcount doc on the people operations team, we’re able to deliver quick responses when a manager comes to us wondering if and when a role is approved—or when we expect to start recruiting.

2. Repurposing talent and career pathing

Our people strategy requires finding top talent and creating dynamic career paths. Sometimes that means repurposing talent and finding new ways to deploy folks we know are performers.

For example, we hired a talented, fast-learning product manager, whose role then pivoted toward product operations analysis, living and breathing the data and intelligence behind product use. As he found himself more immersed in those systems, he decided that his future lie in being a software engineer. After an interview process, he found himself on a new team over in engineering.

Before we immediately backfilled, our VP of product and our SVP of client operations started a high-level, strategic conversation about where product analysis should live on the org chart. Does that analysis need to live on the product team? Or might it be better suited to the business operations team, where that person would have better access to our center of excellence for data and reporting?

The group’s decision was to move the role over to the business ops team, which ends up a net-neutral move for our organization’s budget. However, the headcount gives me a place to track all this information for next year’s forecasting. It also influences how we might start to forecast and encourage this type of internal movement going forward.

headcount documents help with hiring and career pathing

3. Determining recruiter bandwidth

I manage our two recruiters; while we have a team-first mentality, I also want those recruiters to build and develop true business partnerships by working with the same executives and leaders consistently. 

The headcount gives an accurate picture, by year or quarter, of how many roles we think will come down the pike. Then I make sure there’s a fair balance in how those roles get distributed among the recruiters. It lets me see all the pieces on the chessboard, and it makes my life easier as a manager, especially around expectation-setting.

4. Keeping track of team size and growth

Once you get past the point of growth where every team sits in a distinct part of the office, it can be tricky to keep track of just how big a certain team is getting. Having a day-to-day count of how big each team is, in comparison to the organization, allows for better forecasting

For example, if I see that a team is at five people now, but is projected to grow to eight by the end of the year, I will make sure there’s a plan to have a second people manager in place.

5. Making a business case for hiring

The old adage is that sports teams who can “make the other team play at their pace” are potential champions. As a strategic business partner, our people function should be able to:

  • Make strong business cases
  • Set clear expectations
  • Get the rest of the organization to play at our pace

I use the headcount to lay out the big picture: how many people we hire in a quarter or a year, how that number compares to how many people we projected to hire, etc. 

It’s rare that we get caught having to be reactive because we have a 360-degree view. What’s more, where we land on questions like projected vs. actual headcount give me good inspiration for difficult questions I need to partner with our business analyst to answer through collecting and analyzing data.

6. Preventing unhealthy conflict

The headcount also helps prevent unhealthy conflict. There are times when teams want to hire a role that’s simply not accounted for in the budget. It’s much easier for me to point to the headcount, which all executives sign off on, than try to argue as to why their pain point and business need aren’t real (they very likely are!).

One of these challenges recently cropped up around a WordPress developer. Our SVP of sales and marketing identified this as a need, and he had set aside money for contract resources. But we didn’t have it built into the headcount, and we didn’t have someone on his team who was ideally suited to managing a developer. 

Through some complicated math (that I’m thrilled I didn’t have to do), our team figured out that the money for a contract resource was enough to cover a salaried role for this year. And going forward, instead of scoping out contractors, we opened the developer role and added it to our headcount. This is a good example of how the headcount isn’t written in stone; it’s more a way for our organization to be disciplined-yet-flexible in our hiring plan.

30% of hires quit in the first 90 days

Make sure your next hire is the right hire with this hiring toolkit.
Download toolkit

A headcount document is a must for talent optimized companies

And that’s the best way to think of the headcount: it’s a guide, a blueprint, a general outline of the year’s people plan. 

What I care about is that our finance team and our executive team have signed off on the general budget. This allows our executives to shift their hiring plan in terms of what their exact business needs are, but stay within the pre-defined budget so we create equity and scalable hiring. 

When we do the vast majority of our work off the headcount, we avoid that horrible moment where the team is ready to hire, but no one has approved budget. (That could end up being a potential nightmare for a candidate.) 

Primarily, strategic use of the headcount allows our recruitment team an objective way to have structured talent conversations, helping our organization optimize talent and make informed decisions around our most important resource: people.