One of the biggest challenges with traditional headcount management is the lack of communication and sharing of data between cross-functional teams.
Oftentimes, HR, Talent, and Finance teams work in silos, which causes disconnect and leads to an inefficient headcount planning process. In today’s dynamic business environment, organizations must embrace a strategic and iterative approach to optimize headcount management.
As a Finance executive, Krishna Vallebhenani has built teams and processes throughout his career. Today, Krishna is the Vice President of Finance at GRIN, a creator management platform for consumer brands to manage influencer marketing campaigns. Before joining GRIN over a year ago, Krishna held similar roles at Clear and Revel Systems.
Read on to hear directly from Krishna about the five essential practices that will enable your Finance organization to:
- Conduct quarterly re-forecast cycles for an iterative headcount planning process.
- Have seamless collaboration with the Talent team.
- Make data-driven decisions with an updated financial model.
- Regularly share data with the HR team and ensure data quality.
- Ensure long-term planning by looking at sales headcount and revenue targets.
[Krishna’s comments were lightly edited for clarity and length.]
1. Conduct a quarterly re-forecast cycle so that your headcount planning is an iterative process.
The first best practice is to ensure that headcount planning is an iterative process. Almost every team has an annual planning process that guides them through the headcount planning process. At GRIN, we have what we call a “quarterly re-forecast cycle” to refresh our annual planning process, budget, and goals.
During the quarterly re-forecast cycle, we take a look at all the open or new requisitions requested, and match that up with recruiting capacity as well as time to fill those roles.
The other part of the quarterly re-forecast planning process is to look at the budget. The more revenue a company has, the more cash that will be generated, and therefore the more people that can be hired. Finance should also have some level of sensitivity as to what the sales team can accomplish and how that impacts cash or runway.
Headcount planning is an iterative process that requires forecasting to be updated quarterly – or more, ideally. All the pieces of the puzzle also have to fit between recruiting capacity, budget, and cash flow from sales.
2. The Talent team should constantly communicate and document changes to the hiring plan with Finance.
Oftentimes, companies set a hiring plan at the beginning of the year or quarter. Yet, as the Talent team starts to execute on that plan, many factors end up changing. It is important that the Finance and Talent team work closely together to keep these changes up to date.
At GRIN, it is a manual process to update these changes. As the quarter goes on, the Talent team regularly meets with Finance to stay aligned and communicate on changes and updates that are made. The Talent team is also manually updating these changes and tracking each role in a Google sheet.
After receiving this information, Finance is updating the financial model every week with:
- New hires
- Start dates that are getting pushed out
- Compensation changes, usually because the job description changed
The key to being able to update these factors on a weekly or biweekly basis is having really strong communication with our partners, and that’s where the collaborative nature of planning comes in.
If it’s only Finance putting in numbers without receiving buy-in from partners, it is really hard to execute against a plan that everyone believes in.
3. The financial model should constantly be updated.
As the quarter progresses, information needs to get passed on to Finance about internal transfers, backfills, and attrition.
At GRIN, we have another Google sheet where all of these changes are inputted on a weekly basis by the People Operations team. At the same time, Finance also gets a download from the HRIS system with the active headcount data. We then do a reconciliation against the financial model the following week using all of this information.
This process ensures that the financial model is never more than a week out of date. This is important because the longer you let something get out of sync, the more likely it is that you make mistakes when you eventually update it, as there is more data to update. This leaves room for errors, especially because it is a manual process.
The Google sheet being updated by the People Operations team some weeks has no changes, and other weeks has many changes.
It is critical to stay diligent on updating the financial model more than once per quarter.
4. Emphasize data sharing and data quality with heads of HR for ideal collaboration.
Headcount planning can be a manual process involving multiple spreadsheets and having to manually update this data. Having a consistent, documented process between HR and Finance is key so that everyone is on the same page for how things will work on a weekly, bi-weekly, and monthly basis. In other words, you need to establish headcount governance.
Therefore, there is a huge emphasis on data quality. The Talent or People team usually provides the inputs for the spreadsheets, and ensuring strong data quality is important as these inputs have a downstream impact on financial modeling. Having incorrect data can impact metrics, investment decisions, and hiring plans.
My tip for HR – work closely with Finance partners and meet with them on a regular basis to share data. Ensure headcount governance and a well-defined process that is followed while keeping data integrity up to date to allow for a successful partnership.
5. Collaborate with the CEO and/or CRO to plan for the next 18-24 months by looking at sales headcount and revenue targets.
When planning for the next 18-24 months, look at your revenue model and how your sales headcount can impact that. This applies to most businesses, but especially sales led organizations.
For example:
- Do you have enough sales representatives and quotas assigned to hit your revenue targets?
- Are you accounting for ramp time for your sales representatives?
- Does your revenue expansion plan include a new product?
- Do you have to hire for this new product?
All of these are important factors that affect the revenue model.
Additionally, you should be thinking from the downside and running different cases. If your sales fell a certain percentage, how would that affect your cash runway? It is important for Finance to look at the range of outcomes and possibilities based on sales meeting their goals, and then communicate the confidence of these projections to the leadership team for planning.
Learn more headcount management best practices from Krishna in the full podcast
Fostering collaboration and data integrity in headcount planning is crucial for Finance executives looking to optimize their organization’s performance.
By following Krishna’s five best practices, finance teams can emphasize the iterative nature of headcount planning, constant communication needed between the Talent and Finance teams, up-to-date financial models, data sharing and quality, and collaboration with the CEO.
Check out Krishna’s full podcast, where he dives deeper into these best practices and shares more insights. Discover the keys to effective headcount planning and unlock the potential for success in your finance organization.
