Head count planning can increase efficiency and trim labor costs amid a turbulent economy, especially when HR and finance teams work together to create an effective process, according to a May 24 report from McLean & Company.
With head count planning, companies can prepare required changes to positions while aligning labor spend with business strategy, promoting agility, incorporating HR initiatives and understanding how labor costs can be effectively distributed.
“The main goal of headcount planning is to determine the right number of jobs and positions needed to achieve organizational goals while still operating within budget constraints. Without collaboration between HR and finance, there are missed opportunities to effectively achieve that goal,” Will Howard, director of HR research and advisory services at McLean & Company, said in a statement.
“Headcount planning has a lot of moving parts, so HR’s involvement in all the steps aligns stakeholders, brings focus and clarity to the process, and gives a larger perspective to the individual steps,” he said.
When HR is included alongside finance as a strategic partner in planning, organizations are 1.5 times more likely to be highly effective at changing quickly at scale, according to McClean & Company research. While finance leaders bring knowledge about labor costs and budgets, HR leaders understand quantitative and qualitative people-focused data, which can lead to data-informed decisions during head count planning.
In addition, the report highlighted the differences between head count planning and workplace planning, or the process of forecasting gaps between talent supply and demand, as well as a three-step process for leaders to implement an effective head count plan:
- Prepare a draft: Identify stakeholder responsibilities and gather data to inform the head count planning process, such as labor budgets and workforce costs.
- Engage with stakeholders: Collaborate with department leaders and stakeholders to create, evaluate and submit the head count plan for approval.
- Communicate and iterate: Implement the approved head count plan with department leaders, identify impacts on HR programs and plan for periodic review.
A strong partnership between HR and finance can serve companies in other ways, too, by boosting employee engagement, retaining talent and building on company initiatives, sources told HR Dive. Teams can work together to better understand how employee experience affects the bottom line.
HR leaders can also use data and analytics to inform strategic planning and demonstrate value to others, according to a recent report. In turn, finance leaders can bolster their people-driven skills and decision making.