The case for integrated workforce planning


Kouros Behzad

Director of Product Marketing, Anaplan solutions for HR and workforce planning

Learn how workforce planning can drive better decisions through ensuring appropriate levels of recruiter capacity and understanding internal talent movement.

We’ve all been in those meetings where a business leader desperately wants to add capacity – 10 more people by the end of the quarter, say – and they haven’t been able to reach that goal. FP&A numbers show that headcount only grew by four. The talent organization counters that they hired nine people in the month. Reconciling these numbers takes so much of everyone’s time and it’s not productive. Multiply this across every finance/HR/business team in your organization and you’ve got a nightmare!

Why the discrepancies? Why is it so difficult to agree on how many people you are going to hire, and what that number looks like in a year? Because headcount goals alone do not tell the whole story: It doesn’t tell the attrition story and it doesn’t tell the internal movement story. This gap undermines what is delivered by HR and the talent team and much effort is wasted in explaining whose numbers are correct.

How can all the pieces and factors around headcount goals come together to align the different stakeholders across finance, HR, and the business, and how can each team support and drive the outcomes?

The full story around employee attrition and movement

For finance, the key numbers are headcount and personnel costs. Finance wants to know the financial impact, and whether they have the right number of open positions and headcount. Finance is not particularly detailed in their attrition planning and forecasting, and typically takes a high-level approach using cost-per-head for their calculations.

Top-down planning and target setting by finance

When HR connects with its partners in finance, they often start by discussing the net forecast or the incremental headcount. At the “top-down planning” stage, what’s important from an HR perspective is understanding what the current open positions are and the current headcount needs of the organization by location, level, and role type. The basis of this information is derived from the workforce expense models on the finance side, pulling the to-be-hired and attrition numbers, getting the finance forecast data, and translating this into what the open positions would be.

Headcount planning, top-down.

Even if an organization is headcount neutral, or finance forecasts low growth (i.e., only growing by a few heads), HR could still need to hire at many times that volume to keep up with attrition and internal movement, especially if it’s a large organization in a high-turnover industry like retail or call/contact center management.

It’s essential for HR to have visibility and understand via a real-time dashboard what’s happening at the position level, providing a view into churn rates, attrition, transfers, and promotions that tell the entire movement story. The dashboard can also be enriched with data such as movement into, within, and out of positions, distribution of internal versus external hires, who has moved between functions or locations, who’s left the company entirely, and internal movement trend data. Depending on the purpose and audience, the capability should exist to easily generate insights at an individual business unit level, for a whole company, or any step in between.

Incorporating attrition forecasts into headcount plans.

Using historical data is meaningful for attrition planning. Even a one-year look-back can help HR better understand the actual churn/attrition for a given position or role. Incorporating external talent market data (whether benchmarks or actual drivers of attrition, like position opening rates and competitor hiring activity) can make the analysis more rich and powerful. By having this information at hand, HR can tell a better, more complete people story to help finance and business stakeholders understand what is driving the increased hiring volume and discuss how to be more proactive in closing headcount gaps.

Having the ability to see positions segmented and categorized by job profile or skills becomes a big plus for any HR and talent team. Candidates might not be best qualified for positions they initially interviewed for, but they may match several skills required for other similarly situated positions. Imagine being able to refer the “silver medalist” for one role immediately to another role that might be an even better skills match. You’ll save the interviewing and sourcing time needed to find a new candidate, boosting recruiting efficiency, and you’ll make the “silver medalist” candidate very happy as well.

With increased visibility into movement, time to hire, and attrition, the HR and talent team can strengthen their headcount planning efforts beyond the constraints of static reporting to deliver dynamic insights tailored to each respective leader. HR and the talent team can take a net headcount forecast and immediately gross up for a particular part of the organization so that the respective talent VP, or business leader, can get advice beyond just incremental headcount or whether they’re headcount neutral. Leaders can receive insights into attrition and movement trends that indicate how much effort will be required by their teams to meet their headcount goals.

Eliminating the talent acquisition bottleneck

It’s great when you know how many people you need, what skills they should possess, where you need them, and that you have the budget to hire them. But you’re not going to get any closer to making this a reality if you don’t have the people to execute on your hiring plans.

There’s an organizational and a material impact to the movement of the workforce in and out of positions. HR and the talent organization need to balance budget and forecast requirements while understanding their teams’ capacity to track and manage workforce movement into and out of the organization, as well as to other parts of the organization.

For example, if you have the headcount forecast from your FP&A team, you can convert the forecast into the requisitions that need to be filled in a certain time, and then you can match those requisitions up with your recruiter capacity. The insights gleaned make it easy to identify any potential gaps and provide a runway for the organization to evaluate possible solutions. If there is an imbalance between recruiter capacity and number of requisitions to be filled, the organization is alerted. For example, if the target is 5,000 new hires in a specified timeline but recruiter capacity is estimated at 1,500, an alert goes out. The organization can then choose to hire or contract more recruiters in advance of future hiring.

The process requires transparency into the current HR capacity in terms of staffing, talent acquisition, and onboarding teams to manage through the open positions that have been forecasted. The insights should inform the recruiting plan if there are adjustments or additional recruiters needed based on the headcount requirements and forecasts.

Open positions based on budget, pulling data from the same source, and putting it into the context of current HR staffing.

In order to simulate and adjust recruiter capacity, scenario planning is crucial, especially if the type of open positions require special skills, or a high volume of new hires is needed. If you can estimate the number of open positions that one recruiter can handle in a specified period and the average time to close, then you can make tradeoffs about the types of roles to prioritize, the number of recruiters to hire or contract, and even opportunities to fill positions temporarily with contingent or vendor resources.

These are examples of two drivers that go into understanding and determining what the recruiter capacity could be. Different industries and recruiting teams need to have the flexibility to create the models that works for them. Then, based on whether resources are over or under the assigned capacity, you can get to the root of the objective, which is understanding whether the talent acquisition team needs to shift resources or bring more people on board to help the hiring process stay aligned with the business goals and objectives.

From personnel cost planning to integrated workforce planning

Aligning different stakeholders across finance, HR, and the business around what’s happening in the organization and how each team drives toward outcomes is key to effective and agile workforce planning. This is achieved by syncing up two traditionally siloed processes.

Moving toward integrated, continuous workforce planning.

The first process helps connect finance, business, and HR to understand what’s really happening in the organization, and what the business demands from a growth perspective and from a budget perspective. On top of that, it brings visibility into what’s happening inside the organization that drives the incremental demand above what’s been planned from the perspective of net headcount growth.

The second process simplifies how the data is brought together so that HR can spend its time supporting the needs of the business creatively and inclusively. Most organizations don’t do this type of recruiting planning consistently across the organization, or they rely on a manual process. Instead of being tied to real-time data, planning is tied completely to historical trends, which can pose its own challenges when data quality is poor. When this planning can be directly related to the real forecasts and changes that are managed by the finance organization, it aligns the number of recruiters that are set to support them and eliminates a bottleneck in the process of getting the right talent hired and on board.

The more an organization can incorporate this type of storytelling to describe the picture holistically, the bigger the positive impact will be as the organization moves toward the concept of Connected Planning (or extended planning and analysis – xP&A) that inherently includes workforce planning. This is no longer just a function of FP&A driving the workforce planning meeting. Achieving this requires HR, talent, and the business to bring their data and perspectives to discussions with finance. Ultimately, by assessing various scenarios, ensuring appropriate levels of recruiter capacity, and understanding internal talent movement, workforce planning can drive the best decisions for the business and for the workforce.

Discover how to improve the partnership between finance and HR to manage the talent imbalance.