Why is headcount planning outdated and inefficient?
- The process relies far too heavily on spreadsheets to fill gaps between important systems.
- Companies can only move as quickly as the last person to manually update their data.
- It confuses the key stakeholders, who exchange information in Slack, email, spreadsheet comments, Zooms, and texts.
- The old way forces everyone, including a lot of highly paid people (CFO, VP Engineering, CRO, etc.), away from their important jobs to try and make sense of hiring trackers and budget updates.
Ultimately, planning is a slow and uninformed process. Even after all the alignment meetings, spreadsheet reconciliation, and triple checks, you still end up finding discrepancies in the plan. These discrepancies are more than just minor spreadsheet mistakes; they often have major budgetary implications, considering how headcount makes up ~70% of most companies’ operating costs.
However, workforce planning is being reinvented right before our eyes. The new way is painless and collaborative. The new way works only with the most up-to-date people data, compensation bands, and org chart. The new way brings self-service tools to leaders’ fingertips to create and modify headcount plans not in a siloed spreadsheet, but in an access-controlled workspace purpose built for headcount planning.
Welcome to TeamOhana's strategic workforce planning platform.
In this blog, we’ll talk about the old way, or rather current way, that most companies workforce plan. We will share why it’s a painful process, as well as the downstream consequences of planning this way.
Then we’ll talk about the new way to workforce plan in greater detail, including how TeamOhana’s platform powers the entire strategic exercise.
The old way to workforce plan: Spreadsheets, data silos, and a ton of manual work
In the past, Finance would build an initial budget based on assumptions about the company’s growth goals. Because headcount costs are 70% of the budget, Finance then would start asking department leaders to share their workforce plan for the upcoming year – including their hiring “wish list.”
Building the hiring wish list in a silo
Typically, they compile their wish list in a spreadsheet and create multiple versions of the plan based on different scenarios.
For example, Gusto’s team would prepare scenarios based on high, medium, and low hiring budget. Other teams may evaluate different scenarios based on team composition and org design.
In addition, the leaders would want to work with “collaborators,” such as directors or team leads, who could help contribute their thoughts to each scenario. In some cases, multiple versions of the spreadsheet need to be created, in order to collaborate on the plan but not share sensitive data like compensation.
Once the department leaders are confident in their plan, they pass it along to Finance, who turns the many spreadsheets into one big “master” spreadsheet. Then, they take the master sheet to HR to help determine compensation benchmarking, leveling, and the total cost of each department's plan.
If the company needs to adjust the model (e.g. to reduce the available budget), Finance then needs to reshare the spreadsheets back to the department leaders to make changes. Once the changes are made, they go back to Finance to reconcile the plans together again and again.
It is a back-and-forth dance that occurs until the entire company collaboratively and iteratively sets the final budget and list of approved roles.
Throwing the approved plan “over the fence” to Talent
At this point, Talent Acquisition (TA) gets the call that the headcount plan is approved. But guess what? They haven’t been involved at all in the planning process!
Without seeing the plan until now, the Talent leaders can’t be certain that there are adequate hiring resources and recruiter capacity to make the planned hires by the target start dates. They need to determine all of this on the fly. Then, they need to get to work assigning recruiters, opening jobs, sourcing candidates, running interviews, and much more.
But keep in mind: assessing and building recruiter capacity is not a turnkey process in itself. It takes a strong understanding of the plan and what’s in it, and that takes time.
The consequences of spreadsheets and manual work
You might be thinking, “Updating headcount spreadsheets, doing manual work… that’s just my job, that’s always been my job.”
Maybe it’s true. Some people even enjoy a few hours of data entry every week (allegedly).
But consider this: what if running a last-minute headcount forecast for the Board wasn’t a five alarm fire drill?
Or what if you could actually spend thoughtful time sourcing and interviewing every single candidate?
What if everyone wasn’t confused about how and why that one headcount’s salary got changed?
These are just a few of the consequences of all that manual spreadsheet work: no insights, no time to work on things that matter, and no visibility. These issues are both extremely personal to each stakeholder and hugely impactful to the overall business.
When an accepted offer is over budget, the variance affects the bottom line. With today’s ever-changing market conditions, budget variance is a key performance indicator that needs to be tightly controlled. Even when an accepted offer is under budget, Finance doesn’t have this data until the end of the month at best, end of the quarter most likely. That’s problematic because those dollars could have been allocated elsewhere.
When Talent gets involved late in the planning process, or has limited visibility into it, that very often leads to delayed hiring. Delayed hiring means delayed onboarding and a longer time before the new hire is fully ramped and making meaningful contributions to your business goals.
In other words, delayed hiring has a direct correlation to missing business goals.
The TeamOhana approach: Strategic and collaborative workforce planning
TeamOhana introduces a new approach to workforce planning, unifying the siloed tools and processes and promoting collaboration among disconnected stakeholders.
Instead of working in isolated spreadsheets, TeamOhana enables leaders to create multiple versions of their plans in a single platform that has real-time connections with the HRIS, ATS, and budget. In other words, as they create or modify headcount plans, they don’t have to dig around in different systems for compensation, leveling, org charts, or anything else. They are starting with accurate data.
Collaboration and decision-making made easy
One of the key advantages of TeamOhana's scenario planning is that collaboration happens earlier and more effectively in TeamOhana. Before a plan ever gets passed along to Finance business partners for final approval, Talent, HR, and other managers/team leads are expected to give input on the different scenarios.
Talent and HR will provide accurate assumptions for compensation and target start dates, which makes the plan more accurate and realistic.
Managers and team leads will guide team structure and which roles and levels will help them hit their goals.
Each collaborator will have their own level of access to the data; Finance and Talent collaborators may see everything, but managers and direct reports may not see compensation or other sensitive data.
This unprecedented level of collaboration sets the foundation for better decision-making because you’re planning and growing as a team. It also ensures that plan changes happen with context.
For example, if a Talent leader adjusts the compensation of a planned hire to reflect current market conditions, the department leader and Finance team can view a detailed changelog and understand who made the change, when, and why.
Moreover, when the modified plan is ready for approval, it can be sent in bulk to Finance. Once approved, Finance merges the department plan with the company’s overall hiring plan.
No single source of truth means manual reconciliation… and worse
One of the main drawbacks of the traditional spreadsheet approach is the lack of a single source of truth. Because the different departments’ plans are all in separate sheets, Finance partners need to reconcile all the plans together into one master spreadsheet.
This is a huge burden and time-suck for Finance teams, to make sure all stakeholders have access to up-to-date budget information. It costs a lot of time, effort, and money, and it’s still near impossible to get 100% accurate.
“We would spend hours and hours a month managing HRIS, ATS, and forecast information, and still not even quite getting it right.”
– Daniel Fulmer, Finance Director, Invoca
Why is a spreadsheet not a single source of headcount truth?
- Data is always lagging, never real-time.
- Prone to human error, making them unreliable and often inaccurate.
- Takes hours of low-value work for multiple FTEs.
But wait, there’s more. There are deeper consequences like delayed hiring, missed business goals, and overspending, as we discussed earlier in the post. With reduced staffing in HR and Finance, companies are running blind because they’re making big decisions based on stale data.
Merging plans into one cohesive and transparent plan
TeamOhana addresses this issue by filling the gap between the HRIS, ATS, and budgeting software and providing the single source of headcount truth that growing companies need.
Everyone can work on their individual workforce plans, and the Finance team can merge the plans together with one click. It’s really that simple.
How each stakeholder uses TeamOhana workforce planning:
- Department leaders create, track, and modify plans with self-service tools designed to let them run as many what-if scenarios as they need.
- Finance reviews plans and merges approved plans into the overall company plan. They also run regular forecasts using the most up to date information.
- Talent collaborates with department leaders and Finance to adjust plans, plus uses the visibility to plan recruiter capacity as the plan is being built, not after it’s approved.
- Executives review and approve plans and have complete visibility into hiring progress and forecasts.
- Team leaders and managers get visibility into certain plans that they’re responsible for and can collaborate with department leaders to adjust.
TeamOhana also provides the most robust access controls available, so each collaborator in the platform only sees the information they’re supposed to see.
For example, if a department leader wants to explore different budget scenarios or adjust team composition, they can clone their entire hiring plan and start making changes within the system in a sandbox environment. This allows them to quantify the impact of each modification on the budget and hiring strategy, providing a clearer picture of the potential outcomes.
TeamOhana is designed for all stakeholders
With workflows and features for every stakeholder, workforce planning becomes collaborative, efficient, and transparent. This is great for growing companies, who can forget about the problems of spending too much money or hiring too many people that weren’t in the plan. Instead, they become more agile with a real-time view of their budget and variance.
They also save costs in the ballpark of millions, thanks to strict budget controls and completely eliminating manual work from highly paid employees.
Break free from the shackles of spreadsheets
In conclusion, strategic workforce planning is a critical process that shapes an organization's future. TeamOhana has reimagined the process to help growing companies plan more effectively as a team, and hit their headcount targets without ever going over budget.
Want to see it in action? Check out one of our live group demos, or book a personalized demo here.
