GLOSSARY | Strategic HR | 6 MIN READ

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:

What is an employee headcount report?

An employee headcount report helps you keep track of your organization’s headcount to allow you to plan your staffing requirements now and into the future. 

A detailed report will contain data on each employee, such as:

  • Job title and role
  • Salary
  • Gender
  • Race
  • Whether the employee is active or inactive
  • Whether the employee is part-time or full-time
  • Whether the employee is eligible for overtime pay
  • Whether the employee is eligible for certain benefits

This will help you to make accurate cost projections and improve efficiency by always ensuring you have the right number of employees at the right time to effectively handle workloads.

As well as helping with business planning, headcount reporting helps your organization to comply with the standards set by the Equal Employment Opportunity Commission (EEOC). Demographic data collated in your reports can be used to show that you have a diverse workforce that meets the requirements of the EEOC.

What are some types of headcount reports?

There are several types of headcount reports that you can use depending on your organization’s needs:

  • Overall. Broken down by full-time or part-time and permanent or temporary contracts.
  • Departmental. Showing the headcount across departments or teams within your organization.
  • Location. Showing the headcount by office, region, or country.
  • Diversity. Showing the headcount by diversity factors such as gender, race, ethnicity, and age.
  • New hires. Showing new employees hired during a specific period.
  • Termination. Showing employees who have left during a specific period and the reasons for leaving.
  • Time to hire. Measuring the amount of time taken to fill open positions.
  • Succession planning. Identifying potential successors for key positions and tracking their progress.

How do you calculate headcount?

Defining a consistent method for calculating headcount is essential for accurate reporting.

First, you should decide when employees are considered full-time, part-time, or temporary. Typically, a full-time employee will work 40 hours per week with an ongoing contract. However, this may differ depending on your industry and organization.

To calculate an overall headcount, a full-time employee working 40 hours per week is counted as one worker, and a part-time employee working 20 hours per week is counted as half a worker. So, if you have 400 full-time staff and 100 part-time staff, your total headcount would be 450, even though you have 500 individuals working for your organization.

Temporary workers or contractors should be considered separately as they do not have the same long-term commitment to costs as permanent staff. You should determine their full-time or part-time status in the same way and then calculate the overall headcount of temporary staff, separate from your total number of permanent staff.

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, helping them 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
  • Making informed decisions regarding recruitment, hiring, and budgeting 

How can you analyze your headcount?

Once you have calculated your headcount and created reports, you should analyze your data to provide valuable insights into the workforce of your organization. This analysis can include:

  • Measuring key metrics such as headcount growth rate, employee turnover rate, and average tenure. This will help you understand the cost of hiring as your business grows.
  • Identifying trends over time or within departments. This can indicate if external or internal factors have affected your headcount and help you decide where improvement is required.
  • Comparing metrics with industry benchmarks or competitors. This will provide more context and help you understand the areas where you are performing well and those in which change is needed.

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-time, part-time, temporary, 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 and accessible headcount document can provide the facts and figures that management and HR need to make evidence-based decisions and avoid 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 HR tech help with headcount tracking, reporting, and analyzing?

HR software can give you a great advantage when it comes to headcount tracking, reporting, and analyzing. Here are the most significant ways in which it can help:

  • Automated data collection saves time and eliminates human error.
  • Customizable dashboards with real-time reporting give you up-to-date information, enabling quick decisions to be made in response to changes in the workforce. 
  • Integrating the HR software with other HRIS systems can provide better insights. For instance, headcount reporting can be combined with performance management and learning and development to help understand how they all affect one another.
  • Automated analysis such as identifying trends, predicting future staffing requirements, and recommending changes optimizes efficiency.

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.