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:
- Monitor and improve workforce planning
- Support efficiency and productivity among personnel
- Forecast workforce developments
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.
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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.