Strategic Workforce Planning: 5 Tips for FP&A Professionals

Strategic headcount planning is essential to business profitability and success. It’s foundational, but that doesn’t mean it’s easy. It’s a complex process that involves every department, not just finance and HR. As the biggest operating expense for most businesses (up to 70%!), it’s important to make every position count. 

Many organizations develop a hiring plan and a budget to match, but reality rarely aligns with the plan. That’s why it’s so important for strategic finance teams to get a strong grasp on workforce metrics, align all stakeholders, and be prepared for the “what ifs” along the way. That way, FP&A can proactively guide business partners to understand better the fiscal implications of their headcount plan on overall business performance. 

Here are a few practical tips for a streamlined workforce planning process for finance teams.

5 Tips to make workforce planning more effective 

Tip #1: Align with HR on a single source of truth and plan assumptions.

Headcount is ever-evolving as positions are created or terminated, or as employees move on to new opportunities. You’re off to a frustrating start if FP&A and HR’s headcount numbers don’t match up. Unfortunately, that’s a common problem! 

It starts by understanding and aligning with HR on your headcount definition. HR’s definition may be broader, including contractors or part-time employees, while finance often focuses on full-time equivalent workers (“FTEs”). These different ways to count aren’t necessarily wrong, but it gets confusing for the C-suite when the two teams share conflicting data. 

Streamline your headcount analysis process by agreeing on definitions and the best cases to use different workforce metrics, and by capturing data accurately in shared workforce planning software. ‍

Tip #2: Don’t forget to include the whole management team.

Organizations working with a disconnected workforce planning process get stuck finger-pointing. HR gets blamed for bad data. Finance is pigeonholed as the bad guy recommending workforce cuts. Other department heads are blamed for unrealistic headcount wishlists. You need fewer frustrations and a synchronized approach. 

Your FP&A team needs intelligence on hiring timelines, training routines, seasonal workforce shifts, and new talent acquisition costs. That means business partners across all teams must be part of your workforce planning process. 

• Tap the recruiting team for their valuable knowledge of realistic compensation data and hiring timelines for your sector, to determine if the workforce plans are achievable or not. 
• Connect your financial analysts to each business unit so they can notice and suggest headcount tweaks that could solve problems or increase efficiency. 

But once you align on definitions, you still need to leave spreadsheet-based headcount reconciliation behind in favor of HRIS-connected, collaborative workforce planning software. This provides a single source of truth for all teams and the data-driven understanding of the present that is necessary to agree on a go-forward hiring strategy. 

Tip #3: Be prepared to scenario plan.

Strategic FP&A teams can give the answers to “what if?” when the question comes up. 

FP&A software with scenario planning capabilities allows your finance team to generate timely scenarios to evaluate the impact of adding or subtracting headcount, incorporating more part-time or contracted workers, and increasing benefits or wages. You can use these alternative plans to prepare for possibilities like an economic downturn, entering a new market, a new acquisition, or any other situation that would dramatically affect your workforce numbers.

These quick impact assessments will give your business partners the confidence to make business strategy decisions with a firm grasp of the pros and cons of any situation.

‍Explore More: Trends in Workforce Planning

Tip #4: Improve headcount analysis with workforce KPIs.

When your financial models for expenses and workforce are integrated, headcount analysis yields a more complete picture. You can make better, strategic recommendations to your CFO and other leaders because you’ll have all the important workforce planning and analytics data at your fingertips. 

Analyzing these metrics will help you spot trends playing out in your business and react strategically to increase the value of your existing workforce.

Be sure you can easily track KPIs like:

• Total cost of workforce (TCOW)
• Employee turnover rates
• Revenue per employee 
• Average time to fill a position 

Tip #5: Connect your workforce and expense planning.

Once your headcount planning and expense planning are integrated into one platform, changes in one plan will automatically drive changes in the other. There’s no need to account for implications separately. For example, if a new hire needs to be added to the forecast, related recruiting fee assumptions will automatically be added to the expense plan. 

This immediately improves the accuracy and consistency of your plans. It also saves a lot of time for your analysts. They can focus on assessing the business implications of changes or new opportunities instead of on tedious modeling and double-checking data accuracy across disconnected spreadsheets. 

‍Find the Right Fit: Top 5 Workforce Planning Tools for Strategic Finance

Make informed decisions with strategic workforce planning

More than ever, executive teams need data-backed guidance as they make headcount decisions. Once you’ve aligned with HR and other stakeholders and experienced the benefits of workforce planning software, your connected planning process will be stronger than ever. Then, FP&A can deliver greater savings for the business and the strategic advice that the leadership team needs to navigate today’s uncertain markets. 

When your headcount planning is streamlined, you’ll see clearly whether you’ve overspent or if you’re breaking even (and should invest in professional development), and whether or not you have the margin to hire additional talent. It will feel a lot less like shaking the Magic 8 ball, and the leadership team will gain confidence in both FP&A and HR to manage this key process. 

Want to compare your software options for workforce planning? Our article covers the best features and limitations of five leading tools. Read the blog.