What is headcount?

Headcount is the number of people working in a company or in a department at any given time. Headcount, unless otherwise specified, includes everyone: full-time, part-time, temporary, and contract workers. The headcount metric enables HR professionals to:

Why should HR leaders care about headcount?

Headcount is usually unnecessary for small companies with just a handful of employees. Yet firms with hundreds or thousands of staff should take headcount seriously. Measuring headcount throughout different periods enables HR leaders to stay up-to-date on the number of workers and their roles to maintain a well-functioning and agile workforce. Headcount can help in areas such as:

  • Assessing workforce growth
  • Avoiding overstaffing
  • Ensuring that there are enough resources for employees
  • Providing an appropriate tech stack for the number of employees
  • Informed decision-making regarding recruitment, hiring, and budgeting 

What can HR leaders do to ensure an operative headcount?

HR leaders can take the following steps to implement a headcount that supports a robust workforce:

  • Who is a worker, anyway? To avoid confusion, leaders must abide by a shared definition of who is a worker. For instance, HR may define full, part-time, temp, and independent contractors as workers, while finance may be considering full-time employees as workers. There must be a collaboration between departments to ensure a universal understanding of the headcount.
  • Outline goals. Determine short and long-term objectives to give the project scope and guidance. Perhaps a company wants to assess the current salaries in the sales department. Running a headcount of the sales employees can provide context for managers and HR to understand the budget and workforce composition. Aligning the headcount objectives with the overall business strategy can support a realistic plan that addresses the compensation framework and prevalent labor trends. 
  • Create and maintain a centralized headcount document. An up-to-date, accessible headcount document can provide the facts and figures that management and HR need to make evidence-based decisions and avert disputes. With the numbers consolidated and documented for availability, leaders can refer to it when need be.  
  • Identify other metrics to implement. HR should ask: what other metrics can help strategically leverage the headcount metric? Perhaps analyzing attrition and bench strength, for example, in addition to headcount, can paint a fuller picture of the workforce dynamics for HR and management.  
  • Weave headcount into a compelling story. Headcount, on its own, is just a number. However, when HR incorporates headcount into relevant business processes, it becomes indispensable. 

How can monitoring headcount improve company culture?

Calculating headcount is fundamental to making intelligent workforce planning decisions. Knowing the number of people within a specific unit enables HR leaders to build and nurture a workforce composed of talented and passionate workers. Ensuring that everyone is accounted for assists the headcount team in building a robust company culture comprised of the right individuals in the appropriate positions.