Internal transfers are any employee action that results in a new salary or title. This includes promotions, backfills, and movement between departments. They are a great way for employees to progress in their careers while staying with the same organization.
They allow a company to retain its best employees and ensure a smoother transition, since the employee knows the company culture and processes. They can lead to increased productivity and higher levels of employee satisfaction.
But for Financial Analysts, internal transfers aren’t as great as you might think. They’re tricky and complicated, and can have some serious downstream consequences if you don’t get them right from a financial planning perspective.
In this blog, I want to share why internal transfers made my job so much harder, and how we’ve simplified the process with TeamOhana.
Obviously, I’m a happy TeamOhana customer. But I actually volunteered to help write this blog post because when TeamOhana released the internal transfer feature, it changed the game for me and our Finance team.
Internal transfers: Back-office process gets complicated… fast
At the most basic level, all that’s happening with an internal transfer is an employee is changing roles within the company.
For example, a business development rep (BDR) gets promoted to an Account Executive (AE). Sounds simple enough.
But even though it’s just one person, from the technical headcount side, it can incorporate up to three different positions: an existing BDR, a new AE, and potentially a new backfill BDR. While I’m thrilled for our newly promoted AE and excited for them to go sell, I now have three headcount in my spreadsheet, but only one actual person who has changed positions.
Typically, this leaves me with a list of questions for the department leader (e.g. Head of Sales) and the Head of Talent. I outline some of those questions in the next section.
Dollars and cents
The first question I ask is, “What’s the budget impact of this change?” Our new AE got promoted from a BDR role at $50k/year salary to an AE role at $100k/year, and now we’re looking to backfill the BDR position.
Our HR team helps determine that we have to backfill the BDR position at $55k/year because that is the new fair market value for BDRs. Now I have three different salaries for three different positions – just from one promotion.
Next question is, “How long was the person in their BDR position?” I use this to calculate how much budget from their salary is left over. Can I give some money back to the department for the backfill?
I also have to find out if the AE position was in the headcount plan, and if it had been budgeted to start earlier or later than the promotion occurred. In other words, the position was budgeted to start March 1st, but the promotion occurred on April 1st, so technically there is budget favorability.
Or did the promotion fill the AE position sooner than expected (i.e. promoted March 1st, but planned for April 1st), so there’s budget variance? Even if the variance is small, it’s my job as an analyst to reconcile it so our numbers stay true.
How I get the answers I need to complete the transfer
In order to make these determinations about compensation, start dates, hiring plan, and other employee details, I have to do two things: bug people for answers and login to other systems.
Because some questions require answers from a specific person, I have to bug people. Since I don’t always know who the right person is, I start with our Head of Talent, move to the Head of HR, then to department leads, and so on until I find the person who knows the answer to my question.
Other determinations live in one of our other tools, like the HRIS, or the ATS, or the hiring plan spreadsheet. The truth is that I typically have to check all three to get the answers I need.
Bugging people and logging into multiple systems is not only annoying (for me and the people I bother), it’s inefficient and time-consuming, too.
As you can see, one exciting promotion gets complicated and technical very quickly.
Why ‘getting it right’ matters
Even if the variance is small for one internal transfer, every analyst knows that little variances add up quickly. Forecasting headcount makes up most of our annual spend.
It’s pretty simple: if you don’t reconcile the variance correctly, your numbers will be off for the rest of the fiscal year.
As proud Finance folks, we don’t like assigning a margin of error to our final numbers. We’re after exact numbers. If a few internal transfers don’t get reconciled correctly, that could lead to a variance of a couple hundred thousand dollars.
That’s not the kind of thing any CFO, CEO, or Board of Directors likes to see.
Internal transfers with TeamOhana
Today, our internal transfer process is so much simpler. I don’t need to maintain multiple roles, salaries, budgets, or spreadsheets. Everything is initiated and processed in TeamOhana.
Just like with our original process, any of our admin stakeholders (Finance, Talent, HR, etc.) can initiate an internal transfer, now with the click of a button in the system.
We link the transferring employee to the open position and set the start date, and voila! It’s done. The employee details, cost, and forecasts are automatically updated in the system. We can reconcile these changes to the HRIS, as well, to make sure the employee record is accurate everywhere.
Then, if we decide to backfill, the remaining budget from the original position gets automatically transferred to the backfill role. I don’t need to do any detective work on start/end dates or calculate how much budget remains. It’s all automated.
As you can see, it’s one system, one source of truth, and a much simpler process overall.
Internal transfers, solved
If you’re a FP&A professional, you know the pain I described above. You too have spent hours reconciling variances that arise from the tricky process of internal employee transfers.
At the end of the day, tracking and managing internal transfers manually is doable. But it is inefficient, time-consuming, and creates so many opportunities for error. The added complexity can lead to miscommunication and relationship strain between your business partners internally.
With a real-time, integrated tool like TeamOhana, all the complexity and busywork goes away, while still maintaining strong collaborative relationships across the org. The internal transfer feature is one of the biggest contributors to operational efficiency and effective budgeting at Docker.
About Aaron Solomon
Aaron is a Senior Financial Analyst for Docker, and his top goal as the primary owner of headcount management is to keep headcount variance within a desired threshold. In his career, he’s performed a variety of Finance functions in addition to FP&A, including tax, revenue accounting, and treasury work.
