Headcount planning sounds like the kind of process that comes with an FP&A team, a forecasting model and several people whose job it is to keep both up to date. But what if it's just you, a spreadsheet and department heads asking when they can make their next hire?
If that's where you are, we'll start there. We'll look at how to run a headcount planning process with the time and resources you already have, without borrowing a playbook built for a much bigger finance team.
A growing company can reach an awkward middle stage. There are too many people, teams and headcount changes to keep track of, and you may not have someone whose job is to manage it all. The information you need is usually there, but pulling it together into one clear view is another story.
In practice, that can lead to:
Headcount planning gives you a process to weigh those needs, costs and tradeoffs together, without relying on a dedicated FP&A team.
You can break the process down into five steps, from getting a clear picture of your current headcount to deciding which changes to prioritize. There is no need for a finance background to work through them, just accurate information and a consistent way to use it.
Start by getting your current headcount into one place. You need every role, who it reports to and what it costs, including salary, benefits, tools and any other recurring costs tied to that role. That may mean pulling employee data from People or payroll, checking reporting lines with department heads and adding costs from your budget or accounting records.
Don't worry about building a complex model. A simple spreadsheet is enough for the first pass, as long as everyone is working from the same numbers. This gives you a baseline for the next four steps and something you can update each time you review headcount.
Once you have your baseline, look at where teams are feeling the pressure now and what skills you’ll need as the company grows. These usually fall into two different types of gaps:
Knowing the difference helps you work out what you actually need. A team with too much work may need more capacity. A team missing a specific skill may need a different kind of role altogether.
For each gap you've identified, work out what it would cost to close it. Include the fully loaded cost of the role and when those costs kick in, rather than looking at salary alone.
Say you need another project manager. A $55,000 salary becomes $81,000 in the first year once you add $15,000 in benefits and employer taxes, $3,000 in tools and $8,000 for senior team members’ time during a three-month ramp-up. If the new hire starts in month one but takes three months to get up to speed, you’ll be paying for the role before they’re fully productive.
This is where having cost intelligence in the same place as your headcount can make comparisons easier, especially when you're looking at several gaps at once.
Next, look at the other side of the decision: what happens if you don't close the gap? The cost of taking action is easy to see in a budget. The cost of doing nothing can be harder to spot, but it matters.
Look ahead six months and make the impact as concrete as you can. A project might be delayed, a manager may have to keep covering work outside their role or a team may have to take on more than it can realistically handle. Estimate the cost where you can, but don't force a number where it doesn't make sense. The goal is to compare the cost and risk of closing the gap with the cost and risk of leaving it open.
In practice, you're rarely looking at one gap on its own. Marketing may need another content lead, ops may need the project manager from step three and customer success may still be short a person after someone leaves. All three needs can be valid, even if the budget only allows you to fill one of those gaps right now.
This is where the work from the previous steps comes together. A gap that's risky to leave open and affordable to close may be a higher priority. One that's less urgent and expensive to close may be easier to defer. Looking at every gap through the same lens helps you compare competing needs instead of approving whichever request comes first or makes the strongest case.
There still isn't a formula that can make the final call for you. The process gives you the information you need to make that call yourself. And when an individual hire, cut or restructure needs a closer look, you can use our headcount planning template to work through that specific change in more detail.
The more teams and requests you have, the harder it becomes to keep the headcount planning process consistent. You don't need to gather every piece of information yourself, though. Department heads can flag where they're stretched or what skills they're missing, and your people or payroll data can give you the current roles and costs. Your job is to keep the baseline in one place and compare those needs against the same priorities and budget.
It also helps to review headcount regularly rather than waiting until someone asks for a hire. SHRM recommends revisiting workforce plans at least quarterly, with more frequent reviews when things are changing quickly. Once you've built your baseline, each review can start with what's changed and what new gaps or priorities have come up.
As the number of changes you're considering grows, a spreadsheet can start to get in the way. Consider a scenario builder to help you model different combinations of hires, cuts and reporting changes using the same data, so you can see what each option would mean for your structure and costs before making a change.
Start by building an accurate baseline of every role and its fully loaded cost. Then identify your capacity and strategic gaps, calculate the cost of closing each one and look at what happens if you leave it open. Finally, compare the gaps to decide what gets priority when several are competing for the same budget.
Hiring is the execution of an approved role. Headcount planning comes before that: deciding whether you need the role, whether you can afford its full cost, what happens if you don't fill it and how it compares with other headcount needs competing for the same budget.
A quarterly review is a good starting point for growing companies. You may want to review headcount more often during periods of rapid growth, restructuring or other significant change. Once you have an accurate baseline, each review can focus on what's changed rather than starting the process again from scratch.
You need four things: an accurate list of every role and its fully loaded cost, your current org structure and reporting lines, output and capacity data for each team and your company's priorities for the next six to twelve months.
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