Being intentional about headcount management

Tushar Makhija: [00:00:00] welcome everybody. Uh, today we are talking to Florian Jeno, who is the head of finance at Bank Novo. I have known Florian for the past two years and I considered him someone as an expert on all things headcount.

And today he's been, uh, gracious enough to spend some time with us and tell us all about headcount management and headcount planning of how he's been doing. Uh, things to grow Bank Novo in the last, uh, two to three years. So welcome Florian. 

Florian Gendeau: Hi Tu. Thank you for having me. Um, so my name is Florian. I'm the head of finance at Novo.

Um, I joined the company when we're about 12 employees and now we are north of 300. Um, it's been about four, four and a half years yeah, since I've been at the company. And a lot changed both in terms of the way we do our job in the day-to-day, but more particularly in the way we hire. So very excited to speak about that with you today.

[00:01:00] Um, for us that don't know Novo, we're an SMB neobank in the US so we target small businesses and we try to create a better banking offering for them. Um, we've been in business, as you say, officially since 2018, and we're currently series B-C stage company. 

Tushar Makhija: That's great. It's the, sounds like you have grown a lot, so there is a lot of best practices that, uh, you can share with us today.

So let's start with our first question. Let's directly jump in. Why is headcount management important? Uh, and I love if you can give the audience an answer and your perspective from. Why do you think finance should care about it? And then also why do you think the C-Suite and the leaders in the company all the way, starting from the CEO, should care about headcount management?

Florian Gendeau: Sure. Um, [00:02:00] I think this is actually a very easy time to answer that question based on what's happening in the market. Um, there's layoffs happening in multiple companies and even big tech really. got headcount Planning wrong over the last year. And so I think it's a really good time to reflect on why it matters because it simply affects a lot of people's life if you get it wrong.

And so for startups specifically, especially in finance, where finance, in a startup is much more strategic than it may be at certain let's just say say later stage companies You have a lot of influence in finance over the hiring decisions being made because there's so much money that we have at the end of the day to spend on things in the early days.

And so we wanna make sure that we hire at the right pace and that we hire the right people. And if we don't do that right, we don't get that next round. And so that then becomes a finance problem. 

Tushar Makhija: So for him, you said you have to [00:03:00] hire the right people at the right time and headcount or people are the company's largest expense.

But what I would also ask you is, Let's, let's define headcount management from your perspective. It's like, what does headcount management entail? And if you can add some support color to it from, how do you do headcount management or how you communicate this back to your c e o would be very interesting to know for everybody. 

Florian Gendeau: Sure. Um, so in terms of the way I think through headcount management, um, there's a few core pieces that are involved. The main ones that I see are one, the pace setting of the company. It's really how quickly do we want to grow the internal organization and really how much capital do we wanna dedicate to it.

The second piece is around org design, which is something that most startups don't really [00:04:00] care about once when they're 20 employees, but once you're in the hundreds, it becomes very important. How do each department scale versus one? . another Um, and the third piece is about company productivity. Um, I think the common mistake is thinking, Hey, if I hire more people, I'll solve more problems.

It's definitely not true. Um, I think our hardest time is just say in terms of, Productivity per employee was probably when we were about 40 employees at Novo. And there was definitely too much work for us to do. But that was the time where we at Peak Productivity because of the way the org was structured.

Um, so I think these three pieces are really what makes headcount management in my eyes. Um, and companies should be very intentional about the way they do it, whether they're 20 employees or 300 employees. It's very different for both, even when you add the 2000 plus employees. Um, but there are specific things to do in each of our steps, so, In terms of how do you do headcount planning?

[00:05:00] Um, if we get a bit, um, tactical, I would say that the best way to do headcount planning is if you have a planning process in place, if you don't definitely worth selling one. But most companies usually have a yearly planning process, sometimes quarterly for early companies. Um, and as part of planning, I think the first thing that comes in, my eyes Is pace setting around growth of the business.

And it's basically saying, Hey, I think let's just say if we're at a million dollar, uh, in AR right now, we want to get to 10 million AR by the end of the year. Let's just say you have exponential growth to make the numbers easy. Um, You are gonna have to first think through that before you think, oh, this is how many people I'm gonna hire.

Because at the end of the day, that's gonna drive how much money you're gonna have to hire people. And sometimes one is dependent on the other, where you need a certain amount of people to achieve a topline goal, but it's gonna give you some guidance. And basically that's a guidance that you [00:06:00] can then give to department heads when they think.

through um, their staffing plan. Now, after you've done, um, pace setting, the basic step is just to create a template for people in the org to use. Um, campaign can get very messy, especially once you start hiring a lot of roles. So if you don't use a tool, you want to have an easy to use template internally that people can fill in.

Um, after that, especially as a finance department, you wanna do pre. Basically on thinking through headcount planning at a strategical level. And what that means is really looking at, okay, what are the ratios of the departments within VR right now for the stage of the company we're at, AKA for example, is finance for 8% of the organization is engineering 20 or 30%.

Those kinds of discussions and having a general idea of how the world should look. because then when you go into the budgeting meetings with department heads [00:07:00] that filled in their template, you have a clear view as to what to expect. And if you see a major misalignment, you can call it out in the meeting and be prepared to discuss it.

Um, whenever you do the meeting, let's just say the budget meetings and go through the field templates with department heads, um, it's very important to. Qualitative answers as well as the quantitative, because most people are just gonna collect, this is how many people this department needs. But this is really just level one information.

Um, as a finance person, you need to get level two and three information, which is what is that person truly going to do? What are the KPIs that they might impact if it's an important. How is that department going to scale over time if it's a new functions? And that will then inform the approval decision later on to know which roles to approve versus not.

Um, and the last piece of the process is obviously to connect the dots, um, where everyone is gonna [00:08:00] request, um, something and probably too much compared to what usually you can afford. Um, and so it's the time to put all of that together, see if there are any duplicates, problems that departments are trying to solve.

Both on their own way, um, and make sure you are as fair as possible based on the projects that you have in the organization.

Tushar Makhija: That's great. Lauren, I think one of the most interesting but. Clear points that you've made today is that it's not just about the number of people you want to hire, but you have to go back and connect the dots into what they are doing in the companies. What are the initiatives or what are the OKRs they're gonna be hitting and how does it all bubble up to.

Meeting the larger level goal of the company on how do you go from a 1 million R company to 10 million R company. Uh, and I think that is, um, uh, it is that this, what [00:09:00] we call is headcount planning is also very strategic because it is largest expense and then ties to your largest output as the company of the growth that you wanna see.

So that's awesome. Let's now take a next step, or let's double down a little bit more on the time that is being spent in this iterative process. So how long do you think that it you, when do you start the plan headcount planning process? How long does it usually take? Does it ever end? Uh, what's been your experience?

Florian Gendeau: Sure. I'll take you a little segue then in terms of what I think good planning is, because headcount planning is a piece of overall planning, um, on my eyes and what I've learned from, let's just say successful, larger organizations is there's four main steps in my eyes in a great planning process. The first one is really looking at the vision of the company.

Which is a [00:10:00] five year view of who do we want to be as a business five years from now, and that's something that's usually driven by the CEO or founders of the company. Then the second step is strategy, which is more of a three year view. What are the things that we want to build to try to go towards that vision over the next few years?

And that's usually something that the exec team or small group within the exec team. manages Then the third step is actual planning, which is the one we're talking about now, and is the one year view of what is the budget that we're going to allocate to each department over the next one year to achieve that three year strategy.

Um, and then the last step is OKRs, which everyone knows nowadays objective key results, which is more of a quarterly view. These are the KPIs and objectives that I set for myself or the organization, uh, to be successful And so a good planning process that takes into account all those four steps [00:11:00] actually takes a while.

Um, and if it's done on a yearly basis, it's probably a three month process, which most startups in the early days won't do. But then once they reach size b plus series and have leisure say, mature leaders in each function will. Um, within that, the true planning step to be done well probably takes about a month.

Um, I will say, um, I don't think you need longer than that. I think if you do two weeks, it might be a bit too short once you're a certain size, but if you are very small org of 20 people, um, you, you should definitely be able to do it probably in, in two weeks. But then after some time you wanna leave at least a week or two of.

Just people to talk to each other about the different issues or different views of opinions that we may have and really resolve that, uh, to make sure that you have a full, complete process with everyone aligned.[00:12:00] 

Tushar Makhija: Excellent. I think f Troy. Now let's make a natural segue to step two. Let's assume that we did all the hard work. Of the four steps in planning that you mentioned, let's say it's beginning of January, we have a plan in place and I think now starts the part of executing towards the plan. Right. So what in your opinion, are some of the best practices or some of the processes that you are following for month over.

month Execution operations and, you know, keeping the plan up to date because the world is changing at a very fast pace. Um, and because planning is a once in a year kind of, uh, process, the plan can basically be changing at a very rapid pace. So how do you manage that step one, and then [00:13:00] how do you work with, I think it'll be the next step.

Next set of questions is how do you work with the hiring managers? How do you work with hr? And then how do you work with talent to keep the hiring plan 

Florian Gendeau: up to date? Sure. Um, I think in terms of day-to-day management, it really comes down to the tools that you're using, right? There's really four main types of tools that usually are involved in that. The first one is the payroll or just HRIS system that the organization use. The second one is the ATS dash recruiting system that the company uses. The third one is the FP&A tool that does, I should say, the finance team uses an FP&A tool to try take care of budgets.

And the third one is, the fourth one, sorry, is staffing plan and org chart, um, tools. And so those different tools, depending on the way they connect with each other or live, um, [00:14:00] might make your job harder or. I would say small organizations usually don't have ATS tools. And then once you reach maybe a hundred people, almost everyone has one.

Um, but having a good ATS tool like Greenhouse in my is very important to be able to keep track of how we actually opening those roles, have they been filled, et cetera. Um, payroll goes without saying, that's just to keep track of who you. But then S P N A and staffing plan org chart tools is why it gets a bit messy.

Um, cause not all tools are created equals, and a lot of teams still aren't using those. . Um, so at Novo we started using fp n a tools early on because back then I was actually alone doing everything, and I just didn't have time to do all those manual templates anymore. So I had implemented a tool called Cube Software.

Um, back in the days in recently, we've moved to another fp n a tool called [00:15:00] Pigment. And so really what you want out of a good FPNA tool is keeping. Of that budget and staffing plan and knowing what you are supposed to do, as you say, over that year. And then every month it's easy to review. Now we have a staffing plan and org chart tool, uh, comes in and there's various in the market.

Um, Including your tool, Trisha, obviously, um, Moana, um, we, I think in my eyes, it's really okay, I have a staffing plan. What are the roles that were approved? And that way within the year, it's very easy to keep track if there's more roles that need to be approved. Because we're always gonna make a one year plan that's gonna look great on December 31st, but we'll need adjustments starting January 1st.

Um, so I think it's, it's very important for that to keep track and if that works well with the fp n A tool, that's why you get a lot of value. Same with the ats, because you're able to then get that full view of a business, um, and [00:16:00] how it's performing. Um, yeah. I'll stop there. In terms of tools to. Now in terms of how do you work using those tools as just say, on a monthly basis with the C-Suite, um, and different department leaders to set budgets and plan headcount, et cetera?

Um, every company does it differently in my eyes, at Novo. For us, they are four key groups that we partner with in finance during the planning process, um, for headcount planning, specif. The first one is obviously hr. So I think a lot of sometimes finance leaders in the very early stage might forget that HR is there.

But HR is a very much an important part of this process, um, and should be the key partner in crime to make sure that. Things happen properly and that they give their view for their competencies. The finance person is gonna be really good [00:17:00] at thinking through like overall budgets, KPIs, what ifs, the productivity that some employees might bring, but they're not gonna be good at org design or thinking through potential departmental conflicts.

And so having HR really involved in that flow is super important. The second piece is the top line leaders, which are the execs, which is usually the C levels of the company or the VPs. And so these are the ones that are gonna oversee large functions and that usually request the budgets. Now the third step is really at organizations that have gained size, is mid-level leaders.

So all of the different directors, um, that report to a VP or C-level. They should contribute to the budgeting process. And so if finance has the bandwidth, there will be a need to work with those mid-level leaders to help them help the top line leader put their budget together. [00:18:00] Um, and the fourth group.

Which I don't know if every company does this or not, but definitely I think everyone should is having a hiring committee, um, which is really who are the people that approve roles, especially in the early days. It's often common for that job to just be the CEO or just the finance person, or just the HR person, but it should really be a committee for a few different reasons.

One, it removes all the different biases that people may have on approved roles Two, it makes sure that it encompasses for different points of views when it comes to departmental understanding, because finance might have a very specific understanding of the way the department works versus HR versus the CEO of the founders might have a different one.

Um, and the third step and most important one in my eyes, is it really removes any potential emotional frictions in the sense. that The staffing plan process is a very emotional one for many leaders because [00:19:00] that's the time where we tell you, yes, you are gonna be well staffed in the next quarter, or no, you're gonna have to survive with what you have right now, which sometimes those aren't fun conversations.

And so making those decisions as a committee forces you to make sure that there's no one to point your fingers to. It's really, you've all agreed as a group that this is what was best, uh, for the organization Now. Now that you know these, as you say, four groups, who they are, I think for each of them, what's most important is to create relationships with those people through the year.

There's no point in meeting someone when it's at the budget level and say, Hey, I'm your finance person. Been working together side by side for years now. Um, let's work together for a first time for your staffing plan. That's not necessarily a. Good view in my eyes. Ideally, um, you've built relationships intentionally with the leaders of the organization in advance because that way when you have the tough conversations, but Jenny Wise, it's [00:20:00] much easier, um, to find common grounds and really what's the best thing for the organization.

That's great. 

Tushar Makhija: So Florian, we clearly, uh, I think everybody who's listened to this whole conversation so far has a very good understanding that you have a perspective and have really thought deeply on the benefits of headcount management, headcount planning for a company, and have shared some very good pointers. You know, how organizations and leaders should start thinking about it.

But if we have to boil this down to top three, top five tips or the best tips that you could give to finance leaders around how to think about and how should go and execute on a headcount management process, uh, what would those be? 

Florian Gendeau: Sure. Um, Many, but if I had to limit to a [00:21:00] few, um, I'd say the first one will be, um, good templates and good meetings.

Let's just say agendas are very much underrated. Um, usually for startups specifically, a lot of department heads sometimes are gonna do this for the first time or are gonna do this for the first time at the size of organization. And so giving them the tools. Saying, Hey, this is exactly the kind of information I need from you.

And conducting the meeting in a way that's productive is very, very important and will make the difference between a good versus a bad, um, headcount process in my eyes. Um, the second piece is to remember that this is not a finance only on HR only job. Um, there's a lot of people that should be involved in this process, not because one size, let's just say, Power to decide everything or should be a teamed power.

It's really just everyone has different [00:22:00] perspectives that matter, uh, in this process. And so I think it's very important for specifically finance people to leverage HR folks and HR folks to leverage finance folks in this process because both sides will come out better in terms of results. Um, another tip I think is headcount planning at the end of the day should be done on a yearly basis.

When thinking through a three of you, which is what most people get wrong, is they think through, oh, I'm gonna hire all those people for the goals in the next 12 months. And that's what causes layoffs. Um, and layoffs management is very, very hard and we're seeing it in the market now. And really, when you're doing headcount planning, it's your responsibility to make sure that you plan the right.

For your next round, if you're a startup, right? Or, or for your acquisition, uh, whatever exit you might be targeting for, because that's what's gonna drive the way you hire at the end of the day. Even if you have, let's just say 12 months [00:23:00] goals, but you're running out of money at months 18, you want to be sure that you plan for, okay, what if I'm not able to.

At month 18, what if I need to do it at month 24 or month 36? Now that doesn't mean that she always needs to have 36 months of runway, um, but it's very important to keep that view in mind when doing the headcount planning because it will drive better decisions. Um, and I guess the last step. For me specifically, which is something that we've started to implement more now, um, is really linking hires to outcomes.

I think you reach a point in organizations where you just hire because you know you have to hire and there's tons of work to do, but then you get into a probable lack of focus and you're just hiring people to do things that don't. matter And so it's very important to be clear of, Hey, I'm hiring these 20 people in that department to drive those outcomes when it comes to OKRs or [00:24:00] yearly planning, because then when it's mid-year and you're at month 67 and you have everyone making adjustments to their plans, requesting more, potentially, you can then look at department heads and say, Hey, I gave you 20 roles for this year.

You hired 10, you achieved 10% of what you said you were gonna. do Did you actually, or are you actually going to be able to do this? Or do you need more people? Maybe I didn't give you enough roles, or maybe you are mismanaging the current people that you have. And so having that view when you do headcount planning of saying This is what those people are going to do.

When you then go back and review the plans and review the performance, you are able to have that connection and see how each department does. perform And once again, right. The goal is not to just say, oh, if you don't do your goals, it means you did a bad, bad job. There might be a case where you just didn't get enough people and you thought you were gonna be more efficient, but you need some help, which is totally fine as well.[00:25:00] 

Tushar Makhija: That's excellent. We have gone through this process today with you, where we have outlined, uh, not just the processes and the ways to do things, but also the clear benefits that any organization, starting from as young as 50 employees all the way to, you know, 500 employees in higher should be.

Taking a deeper look into the headcount management and headcount planning processes, uh, and bringing all the different stakeholders together. Uh, easier said than done, but at least now we have a blueprint on what to do and what not to do. All thanks to you Florian. Thank you so much for spending this afternoon with us.

I really appreciate 

Florian Gendeau: it. Thank you for inviting me. Touche. Pleasure was mine.