Headcount Planning and Forecasting

Whether you’re expanding, downsizing, evaluating your long-term goals, or planning your five-year budget, headcount capacity planning will almost always be brought up during any forecasting plan. 

Effective headcount planning is an essential part of any forecast strategy, and it could be the difference between whether you excel or fail in actualizing your long-term goals. 

Below we’ll get into everything you need to know about effectively integrating a headcount forecasting and headcount budget planning forecast. 

What is Headcount Forecasting?

Headcount forecasting is the process of aligning your current and future business goals with the number of people you have employed in your business. Beyond just the number, though, dynamic headcount strategies take into account the quality of hires you’ve attained your capabilities based on the skills/qualifications of your current employees. 

If you have ambitious goals for expanding new products or services, a headcount plan would determine whether or not your current workforce has the training, qualifications, or tools they need to accommodate those goals. 

In order to develop a holistic headcount forecast plan, you need data and cooperation from your product development team, finance leaders, HR department, and departmental managers. 

How do you project headcount growth?

Projecting headcount growth is primarily about identifying areas of improvement or expansion. 

If boosting brand equity is part of your long-term plan, then you’re likely to expand your marketing team. If you have growing demands for your products and services, you might increase your sales force. 

Use your future goals, needs, and areas of improvement as your headcount forecast measuring stick. 

How do I optimize my headcount?

Headcount optimization is about information and planning. The more data and information you have, the better prepared you’ll be to add, cut, or reorganize your talent. 

You should be leveraging the blow items to optimize your headcount:

• Future budget
• Revenue goals
• Current employee capabilities
• Current number of employees
• Expected positions to be filled
• Areas of improvement

The Value of Headcount Forecasting

Headcount forecasting isn’t just about budgeting for the number of employees you expect to need. It’s about where you allocate resources to reach your goals. 

Redundant hires aren’t just wasteful monetarily, they actually hurt your ability to grow long-term. Recruiting budgets are limited, and if you don’t allocate those resources to departments that actually need the help, you’re less likely to hit your KPIs, benchmarks, and long-term goals. 

Headcount forecasting planning can also help you in the following ways: 

• You’ll be able to optimize your recruitment needs.
• You’ll have a more able and equipped workforce to reach your goals. 
• You’ll be able to improve your overall budget plan. 
• You’ll be better suited to adapt to internal and external market demands. 
• You’ll be able to decrease your hiring costs. 
• Your HR process will be more aligned with your business strategy. 
• You’ll be able to identify talent gaps. 

How Do you Forecast Headcount?

In its most basic form, headcount planning is about identifying the number of employees you currently have and how many employees you will need in the future. The headcount step is actually the simplest part of the process. What takes time, effort, and resources is everything you do around your actual count.

You can break headcount planning into a few different steps.

Organizing data: You can’t make informed decisions on where your business needs to grow if you don’t have the right data. Data helps you evaluate where you should be allocating your resources and where you need to improve.

Budgeting: Budgeting will tell you how many employees you can hire, the kind of salaries you can offer them, and which departments need the most hires. It may also tell you if you need to make any layoffs. In order to budget effectively, your HR team should be working with your finance team. 

Headcount manager: It helps to have a headcount manager to organize, facilitate, and present your various findings from each department. Because effective headcount planning requires cooperation from various departments, you want a manager or set of team leaders consolidating information from your various data points and collaborations. 

Make the count: When you’ve identified your goals, your current capabilities, your budget, and your future needs, you’re ready to make a headcount. 

You can calculate this number in two ways: either a direct headcount of the number of employees you have working under you or the full-time equivalent. You can calculate your full-time equivalent (FTE) by dividing an employee’s scheduled hours by the employee’s actual worked hours. If an employee is scheduled to work 40 hours a week and only works 20 hours a week, their FTE is .5.

Final Thoughts: Headcount Planning and Forecasting

Headcount forecasting and forecasting are integral parts of any recruitment plan or internal business changes. Whether you’re expanding, downsizing, or reassessing your business goals, a robust headcount plan will enable you to hire with confidence, define your KPIs, and gain insight into your business. 

Crosschq was made to take the guesswork out of hiring and allow you to make smarter hiring decisions. Leverage Crosschq’s pre-hire assessment tests and 360 reference checking technology to aggregate data on candidate soft skills, compare candidate self-reference scores with managers, and reduce unconscious bias in the hiring process.

Optimize your headcount planning strategy with Crosschq today.