Why managing headcount requires a purpose-built software solution

You mismanage your headcount, you mismanage your company.

Great leaders understand that people are the backbone of any business. Marc Benioff, founder, chairman and co-CEO of Salesforce, has been quoted as saying, “Acquiring the right talent is the most important key to growth. Hiring was–and still is–the most important thing we do.”

Lawrence Bossidy, now retired former Executive at General Electric and CEO of AlliedSignal (now Honeywell), once said, "I am convinced that nothing we do is more important than hiring and developing people. At the end of the day, you bet on people, not on strategies."

But actually hiring the right talent at the right time and managing headcount effectively is extremely challenging for companies of any size. To get headcount management right, you need a purpose-built, first-class headcount management system like TeamOhana.

Headcount management is one of the most important considerations for growing companies

Headcount spend commonly makes up ~70% of a company’s operating expenses (OpEx). For companies like Demostack, this can be as high as 80%. A massive amount of company funds and cash flow are tied to headcount. So, if there’s one type of expense you simply can’t afford to mismanage, headcount is it.

For startups, headcount management can literally be a matter of life or death. As Keith Masuda, VP of Finance at Modern Treasury, explained, “Effective headcount management can mean the difference between raising the next up-round or running out of cash.” Missing headcount targets may lead to more cash in the bank, but it can also cause you to fall short of the growth needed to impress VCs and close your next funding round.

The goal of headcount management, no matter what size company you’re at, is to hire at the perfect pace and within budget — to support your company’s growth without burning through your cash runway too quickly. But you also have to make smart adjustments when company goals change or a particular hire simply requires a higher budget than you originally anticipated.

If you come in under budget, you need to figure out the best way to reallocate that capital. Do you increase your marketing budget for the next quarter? Is there an engineering or R&D project that could benefit from those funds?

On the flip side, no CFO wants to show up to a board meeting and have to explain why the company overspent on headcount. Going over headcount budget can have catastrophic ripple effects like layoffs or drops in stock price.

There’s also the human component. As Florian Gendeau, Head of Finance at Figure.ai and former Head of Finance at Novo, explained on our podcast, “It [headcount management] simply affects a lot of people’s life if you get it wrong.”

How well (or poorly) you manage headcount affects almost every other part of your business. Whether or not you hit your headcount targets impacts your sales targets, product, roadmap, your company culture, team morale, and more. 

What makes managing headcount challenging

Headcount management is a dynamic process involving multiple teams and stakeholders, layers of approvals, and constantly moving targets. You need Finance, HR, and Talent Ops teams to collaborate seamlessly while adhering to budget constraints, satisfying role requirements, and respecting security and privacy considerations.

To make matters more complicated, each team has historically relied on disparate software as their data source of truth. Finance uses FP&A software, HR operates out of an HRIS, and Talent Ops is managing candidates in an ATS. So, what winds up happening is data is pulled manually from each of these systems into a spreadsheet, so all of these teams can even begin to work together.

As anyone who has ever been part of this process knows, spreadsheets are fraught with issues. Manual data entry into the sheets is error-prone. Even if every number and formula is entered with 100% accuracy, the data becomes outdated very quickly, sometimes in a matter of hours. 

Teddy Collins, VP of Corporate Finance at SeatGeek explains, “Spreadsheets fall short when you’re trying to run a highly transparent process, creating a lot of mental and administrative overhead to try and merge all of the information together to keep a single source of truth.”

It’s nearly impossible for even the best teams to make decisions quickly or be agile strategic business partners when they’re bogged down with tedious manual processes and countless hours of data reconciliation.

Leveling-up headcount management with a purpose-built solution

At TeamOhana, we built the only headcount management platform that’s tailor-made to unite Finance and Talent teams. We’re proud to share that our clients have reduced their time spent reconciling and forecasting headcount by an average of 89%.

Taylor Fjeldheim, VP of FP&A and Data Analytics at Metronet told us, “Without TeamOhana, I would have needed to hire a full-time manager just to handle headcount planning. Now, it’s 10% of one person’s job.”

Real-time data

TeamOhana integrates with your HRIS, ATS, and FP&A software to give you an accurate, real-time view of open reqs, pending starts, impact on burn, and much more — crucial information that historically took hours or even days of tedious manual effort to compile. Finance and Talent teams can focus on analysis and execution, rather than data entry. And leaders can confidently make strategic headcount recommendations and answer questions on the fly at board meetings based on real-time data.

Enterprise-grade security

With TeamOhana’s enterprise-grade security features and access controls, you can make sure each collaborator only sees the specific information they need. Confidential in-progress hires and future new teams no longer need to be tracked manually.

TeamOhana is SOC Type 2 compliant and ISO 27001:2022 certified. 

Budget adherence

Headcount management is a balancing act. You want your Talent teams to move quickly when a great candidate is found for an open role, but you also need to make sure offers aren’t going out without proper Finance team approvals. TeamOhana helps teams balance speed and approvals, increasing agility without sacrificing budget adherence.

Instead of waiting for approvals from a busy CFO over Slack or in an email, salary adjustment requests and hiring approvals can be done easily within the headcount management platform.

As Pavan Chatlapalli, Head of Talent Acquisition at Postman, explained, “There is zero opportunity for someone to submit an unapproved job in TeamOhana because every new request enters the approval workflow, and I can’t even assign a recruiter to work on it until it is approved and ready to be hired.”

Improve your headcount management with TeamOhana

Headcount management is one of the most important workflows for growing businesses. Get it right, and you set your company up for sustainable scalability. Get it wrong, and your business may not survive.

We built TeamOhana because we believe something this important deserves a purpose-built software solution — one that makes it easy for Finance and Talent teams to collaborate, that empowers leaders to make strategic decisions faster and with confidence.

We’d love to show you what TeamOhana can do for your business. Join TeamOhana customers like Vercel, SeatGeek, Docker, and Postman in the headcount management revolution. Request a personalized TeamOhana demo today.