How HR teams can successfully use headcount planning

One of the biggest staffing-related challenges I’ve seen at rapidly-growing organizations has been accurately predicting hiring demand. Hiring managers at these organizations want the flexibility to respond to changing market conditions, such as new technology. They also want the freedom to make opportunistic hires — for example, when a competitor has layoffs. At the same time, HR teams require lead time to allocate resources effectively, build out the candidate pipeline, and cultivate long-term relationships with candidates.

As a result of this push and pull between hiring managers and HR, staffing can be stretched beyond capacity as they react to unpredictable shifts in hiring needs. But attempting to resolve this problem with overly-rigid headcount planning can leave the staffing team — and the rest of the organization — unable to properly react when the job market conditions change.

Pursuing flexibility and predictability in hiring doesn’t need to be an either-or decision. Armed with the right tools and questions, a HR team can help their organization achieve balance by engaging company leadership and hiring managers in a thoughtful conversation around headcount demand planning.

As a Program Manager on Google’s Workforce Planning team, I spend most of my time helping connect Google’s business strategy to its people strategy. I’d like to share with you what I’ve learned about successfully planning for future hires — no matter the size or rate of growth of your organization.

What is headcount planning, and where does it fit within strategic workforce planning?

Headcount demand planning is a forecast of future hiring needs at an organization. With this type of planning, a team’s projected hiring demand is proactively discussed with their staffing team well in advance of the actual need to hire. Because these needs are often tightly integrated with the goals and strategy of the organization, each hire that is forecasted has a defined purpose, and the candidate who ultimately fills the vacancy should gain an immediate understanding of how they will help drive the business forward.

As an example: At Google, we frequently plan launches of new products, or updates to our existing product suite. We set launch dates for these products months, or sometimes years, in advance. By determining what kind of product will be launched, and when the launch will take place, our staffing teams can understand:

  • What types of hires and skill sets will be needed to support the new product — for example, engineers, designers, or project managers.

  • How many of each role should be hired, by sourcing internally or externally.

  • When each new hire should start in order to adequately support their portion of the product creation, launch, and promotion.

With this forward-thinking approach to hiring demand, our HR team is able to plan very large hiring periods in advance. And, because the team uses our organization’s goals to drive their planning, each future hire’s purpose is clear from the moment the job ad is created, and HR can speak with confidence about the duties and responsibilities of that role.

It’s important to note that headcount demand planning is just one part of a broader strategic workforce planning process. Before determining future hiring needs, your organization should first clearly establish business and product objectives, identify gaps in skills and capabilities among its current workforce, and think strategically about filling these gaps through internal mobility and upskilling. Only then should teams engage in defining their demand for external talent.

How does headcount planning benefit organizations?

With greater insight into the goals for the organization, HR can more clearly identify which candidates have the right skills to impact these team- or company-wide goals. This proactive approach also provides HR with time to ask the hiring manager questions that may help source stronger candidates, such as, “what will this hire be working on?” or “what specific skills are needed for this role?”

Headcount demand planning also allows recruiters to spend more time identifying these strong candidates. With ample lead time on upcoming roles, recruiters can start building closer relationships with strong candidates — something that is typically not possible otherwise. This allows for more opportunistic hiring at a later date: If a recruiter begins to build a relationship with the ideal candidate for a forecasted role prior to the job ad being posted, the recruiter can take immediate action, speeding up the hiring process.

Finally, hiring managers who take part in demand planning also enjoy the flexibility to respond to changes in the job market. If demand is rising for a specific role that has already been forecasted, and quality candidates are becoming scarce, the hiring manager may have a conversation with staffing about taking action to prioritize this opening in the recruiter’s queue.

How HR professionals can successfully plan for future hires

At large and growing companies like Google, we’re constantly hiring to meet new demand and support our business strategy, but we are also in “growth mode”: We’re continually expanding into new areas and need to regularly grow our workforce to meet these needs.

Smaller organizations, or those not actively growing, will still find headcount demand planning useful, however. Even if you are a recruiter for a small business making just a few hires a year, having conversations about future demand will give you a much better idea of the staffing needs that you will be asked to support.

Understand the business strategy

To successfully plan for future hiring demand, you need a strong understanding of your organization’s business strategy. In my experience, I’ve found that this is a crucial stage in the planning process, as it allows you to understand both when and how future hires will support the growth and goals of your organization.

To learn more about your company’s business strategy, start by asking these questions:

  • What are our major investments for the next 1-2 years? These may be financial investments, including new products that the company is developing or major updates to current products. Or they may be personnel investments, such as teams in need of expansion or additional training programs.

  • Are we expanding our footprint? This includes the opening of new offices and the expansion of existing ones, both of which require additional staff to be hired.

  • Where is the organization growing the most or at the fastest rate? Such as specific teams or skill areas, like development, engineering, or marketing.

  • How is the industry changing? For example, are advances in technology increasing the importance of new skill sets such as machine learning or 3D printing?

This information can be acquired by speaking with company leadership, or it can often be found in earnings reports, press releases, blog posts, or internal news sources. By gathering the answers to these questions, you will start to grasp areas of future demand, and the types of resources required to meet it.

Speak with hiring managers about their needs

After gathering company-specific information, I recommend speaking directly to hiring managers about the needs of their particular team. This is another opportunity to get useful information about future vacancies within the organization, and often allows staffing teams to better prepare for brand-new roles or, occasionally, changes in the company’s direction.

Start by asking hiring managers these questions:

  • How will this team support the business strategy? A development team may currently support one product, but soon begin work on a new one. Understanding each team’s role in meeting future goals allows recruiters to better grasp which roles or skills may be currently missing.

  • What types of roles will be needed? Do hiring managers anticipate any brand-new roles, or will they just be adding roles similar to those already present on their team?

  • How soon will these vacancies take shape? To avoid overhiring, staffing teams must fill vacancies at the right time — not before a new employee is truly needed.

Integrate forecasting data to your HR system

Most organizations utilize at least one system that tracks the number of current and future employees at their organization. These may be a human resources information system (HRIS), an applicant tracking system (ATS), a spreadsheet, or a combination of tools.

Once the staffing team has acquired details on forecasted hires, this data should be added to their chosen system. When documenting this information, be sure to include all of the details from your conversations with leadership and hiring managers, including:

  • The roles that are needed: Including job titles, teams, ballpark salary, and responsibilities.

  • How these employees will support the organization’s goals: Are they being hired for a specific product launch? Or due to forecasted growth within a specific team?

  • When these hires should be made: This should be as close to a set date as possible, so that staffing teams may use their knowledge of your organization’s time to hire to inform the time that the job ad is posted, that interviews take place, and so on.

To avoid any dysfunction in planning for future hires, all headcount demand data should be stored in the same place. This provides a single “north star” headcount for all roles, whether they are planned to be filled immediately or forecasted for the future.

Dealing with uncertainty

I’ve often heard business leaders say that their industry is changing too fast to engage in rigorous headcount planning. They argue that they need the flexibility to change plans and redirect headcount to take advantage of changing market conditions or make opportunistic hires.

These are real concerns in fast-moving industries or early-stage companies. Yet even in these situations, HR teams can avoid being caught off guard when conditions change. By working with business leaders to understand the sources of uncertainty, HR leaders can incorporate scenario planning into their existing headcount demand planning, and be ready to hit the ground running when the unexpected happens.

Maintain excess staffing capacity proportional to the level of uncertainty

Every time leadership creates a new job opening, staffing requires time to write a job description, prepare interview guides, and build out the candidate pipeline. Unexpectedly closing or changing the requirements of open roles taxes the productivity of the staffing team.

As a result, businesses expecting conditions to change rapidly should reserve excess staffing capacity proportional to the level of uncertainty. The organization could set aside a portion of recruiter time to respond rapidly to ad-hoc requests, or set aside excess budget to engage an external agency when hiring demand unexpectedly surges.

Set clear rules for opportunistic hiring

Occasionally, recruiters may come across a stellar candidate with no corresponding job opening. In other cases, you may have two exceptional finalists for a single job opening. Rather than make a seemingly impossible choice, a hiring manager may like to extend an offer to both qualified candidates, even if there is no established budget for their hire.

In these scenarios, establishing clear guidelines on when the company should make opportunistic hires not captured in the demand plan can help maintain fairness in the hiring process, limit overhiring, and prevent the loss of critical talent.

Headcount planning is a useful process for all businesses

While headcount planning may seem worthwhile only to very large or growing businesses, I’ve learned that it can be an extremely useful process for HR teams of any size at any organization. By investing the time and energy into learning about your company’s future needs, you’re not only preparing yourself for these upcoming hires: You’re also showing your hiring managers that you’re ready and willing to meet their needs, no matter when they arise.

This proactive approach often results in a much closer relationship between staffing and other business teams. This, in turn, strengthens the hiring process even more by preventing confusion or conflict, and allows all teams to work together in harmony toward their common goals.

About Hire by Google

Hire is a recruiting app by Google that uses AI to make the hiring process faster and simpler. Because it is designed specifically for G Suite users, with Gmail, Google Calendar and other G Suite integrations, Hire streamlines administrative tasks so that your team can hire the best people, faster.