This article about maximizing your headcount strategy to start out the new year strong was originally published in October 2020. All relevant copy and statistics have been updated as of December 2023.
The past few years in the business world have been nothing short of tumultuous. With the pandemic, its subsequent recovery events, talent shortages, and a tight labor market - it’s been a challenge for organizations to find their footing. An unpredictable world begets a turbulent labor market, but how do we chart a path to recovery despite these variables?
Even if your company has been able to weather these recent economic storms, and kudos to you if you have, uncertainty still lingers. However, as many organizations are learning fairly quickly, the only way to survive is by adapting and keeping a close eye out for any changes in market trends.
As illustrious lyricist and humanitarian T. A. Swift once said (and probably many people before her), “If you fail to plan, you plan to fail.” And that’s exactly what today’s landscape is warranting from recruiters and talent acquisition professionals: a strategic, intelligent headcount plan. So, let’s look at what headcount planning is and how to maximize your strategy to meet your organization’s unique needs.
A Closer Look at Headcount Planning
Headcount planning is the process of determining the right number of employees to run a business effectively and efficiently. It involves considering the skills and experience available within the company, as well as the business needs and objectives, to ensure the most effective utilization of resources. This process is especially important now as it can help to ensure that businesses have the right number of employees to meet their current and future needs.
Basically, you need to be sure you have the right number of people with the right skills in the right roles so your company can execute its business strategy.
As companies move into 2024, they face a new set of challenges in workforce planning. These challenges include:
- Talent shortages: Despite the growing gig economy and the rise of remote work, many companies are still struggling to find the right talent to fit their needs. In some industries, there is simply a shortage of qualified candidates to meet demand. To counteract this, organizations are investing in new recruitment strategies, such as leveraging ethical AI talent recruitment platforms to attract and identify top talent.
- Shifting workforce demographics: With the emergence of Generation Z and the increasing diversity of the workplace, companies must develop strategies that cater to the unique needs and preferences of different employee groups. To ensure that all employees feel valued and supported, companies must take note of the changing demographics and adapt accordingly.
- Economic uncertainty: In an ever-changing global economy, organizations face various challenges in workforce planning. Economic uncertainty makes it difficult to predict future demand, leading to potential overstaffing or understaffing situations. With labor costs making up a significant portion of operating expenses, companies must be able to balance their hiring needs with financial stability.
- Automation and artificial intelligence: While automation and AI offer significant opportunities for workforce optimization, they also introduce new challenges. Organizations must carefully navigate this transition to ensure that employees are not displaced or marginalized and that automation and AI are effectively integrated into existing workflows.
With these changes impacting companies worldwide, many, if not most, experienced ebbs and flows in workforce management, revealing the increasing need for talent and outsourcing solutions that scale and flex with business needs.Do you have a #HeadcountStrategy going into the new year? You need to have the right number of people with the right skills in the right roles so your company can execute its #BusinessStrategy. Get tips from @IQTalent:
Executives and HR Managers are well aware of the alignment between talent costs and goals throughout the organization. However, what happens when these goals are rapidly changing?
This is where headcount planning becomes crucial! It ensures that your company has the optimal number of skilled individuals in the right positions, enabling effective execution of your business strategy.
Creating a flexible, strategic headcount strategy will ensure HR Managers start the new year off right. Here’s how:
Identify Your Current Challenges
At IQTalent, we urge our clients to thoroughly assess their talent requirements, as they may have become somewhat skewed and are likely to change again. If you notice a slowdown during the holiday season, take this opportunity to reassess. To identify your current challenges, consider the following questions:
- How are your customers' needs evolving? Are these changes permanent or temporary? Do you have a solution that aligns with their current needs?
- How has your competition evolved? Many businesses are striving to adapt their models, offer new services, or introduce innovative products to stay relevant. Pay close attention to how your competitors are navigating these changes. Is there a gap you can fill? What kind of staff will you need to compete with a model you aspire to emulate or evolve for your own business?
- Do you need new technology, automation, or other innovative solutions? As companies across industries undergo transformation, understanding how work gets done and gets done efficiently is crucial. Evaluate your processes, programs, and personnel to identify gaps and overlaps, ensuring you maintain momentum.
- Do you need to expand or explore new markets? The market you served at the start of the year may differ significantly from the one you presently cater to. This might require a cultural shift in your hiring approach or a fresh perspective on the positions you need to fill.
- Will your business introduce new products or services or focus on enhancing existing offerings? It's important not to pivot unnecessarily out of fear. Take a holistic view of the situation to determine your next steps.
- Has anything on your product roadmap changed or been delayed? Which products or projects are progressing despite the challenges? This assessment will enable you to make informed staffing decisions, which form a crucial part of the process.
Establish Your Metrics. All Metrics.
Your headcount planning strategy needs to be free of bias, guesswork, and any room for error. Establish the metrics by which you’ll determine if your current teams are appropriately staffed and, if not, the difference between where departments currently perform and where they need to be.
To get started, focus on:
- Position requirements. Do you have the skills you need? Are there skills or requirements you could remove? Do you have enough bandwidth in the position to manage the current workload? Do you have positions that prepare your workers for “the next step”?
- Performance metrics. Before you begin headcount planning, you need to know where your current performance is. Productivity levels have fluctuated over the last few years; you might have to dig deep to find accurate numbers. Keep in mind that productivity is difficult to measure when the workforce is under prolonged stress.
- Skill sets, certifications, licenses. What skills and abilities are crucial for your team to succeed? Where are the gaps in these skill sets that your organization is currently facing? Once you've got a good idea of the kinds of skills your company is lacking, you can begin to focus your recruiting efforts on attracting and retaining workers with these abilities.
- Turnover and retention rates. Find a general average of turnover rates over the past three years to the current year. There may be a similar trend in the numbers to help you glean more insight.
- Opportunities for growth and succession planning. Organizational charts have gone somewhat out of fashion these days, but when it comes to the path of a role or career, they’re pretty helpful. You may find that three jobs can move into two roles, each with room for advancement or growth potential. Or, you might realize what was once an FTE-only role could be handled by a contractor based on seasonal changes. Bottom line: Identify these opportunities and mark them for employees craving career advancement.
Then, put those metrics to work and think outside the box. Which roles are critical right now? Which positions can you do without? If you’re experiencing high turnover, what’s the leading cause (that you can control)? Is there room for growth within the company?
By carefully considering these aspects, you'll be better equipped to navigate the evolving landscape and make strategic decisions for your business.
The Best Strategy For Stability
Implementing headcount planning is crucial for HR departments to establish a sense of stability and normalcy. A well-crafted headcount strategy serves as the link between strategic organizational priorities, budgets, and talent management. It facilitates alignment among leadership at all levels, enabling effective management of individual department needs and the overall company.
When you have a clear roadmap for success, along with metrics to refer to, your company is sure to maximize your headcount strategy and start the new year with the talent you know will help you reach your company-wide goals.
Even a clear headcount planning roadmap can leave room for uncertainty. You can see where you need to be and what talent you need to get there, but that doesn’t answer how your team will source and recruit.
Outsourcing your recruiting function is the perfect way to be sure your headcount planning strategy is solid. But that’s not to say you need to hand over your process completely.