Modern Headcount Planning

I guess you could call me a career changer. I started off in the education and non-profit worlds before moving to tech in 2013. Transitioning industries gave me a chance to observe as a newcomer - here are some of the observations I made about the environment of tech at the time that really stood out:

• Throwing people at problems: There was a pervasive theory that, if you found all of the smart and driven people you could, that they would magically solve your business problem. This was a hiring strategy that worked for some who had enough money in the bank to weather both success and failure in this model, but mostly meant a lot of wasted time building/hiring teams just to dissolve and re-org them later.

• “Six Sigma” were dirty words: It’s interesting - we were in the era of tech firms adopting agile methodology (and Coaches were hired accordingly) but the tried-and-true business effectiveness strategies, like Six Sigma, were frowned upon.  I think the rationale stemmed from the perception that these practices came from “antiquated” businesses that the community, collectively, was trying to up-end…so why would we use their business practices?

• Gut over strategy: This point kind of combines the two above, but the value of gut and intuition took over for strategy and data. With the ability to raise money on the concept of “investing in growth,” this empowered many leaders to build teams and products in the direction that they “felt” they should go.  Now, I would be remiss to not point out here that being a founder comes with envisioning a future that doesn’t yet exist, thus there is an element of gut that has always been part of this path…but there was a lot of “all gut” decision making happening.  

• My poor friends in Finance: Often, the Finance team was the only safeguard to over-spending. They beat the drum of effective FP&A practices, but their message often got lost in a big vision, an exciting funding round, or an enigmatic executive.  

I’m not going to lie - it was really fun working in the People and Culture space at this time.  We were given budgets and freedom to create exceptional and unique employee experiences, and our teams experimented with new products and technologies with the hope of finding “the next big thing.”

Today, the reality is different. I can reflect on a number of shifts that have taken place, but specifically the lack of readily accessible funding, the lack of reward for spending said funding quickly when you do have it, and the ability to leverage technology and data to improve decision making and team productivity really stand out.  Accordingly, I want to narrow in on the impact of all this in one particular process - headcount planning.  I am seeing teams shift from erratic, disorganized, and “empire building” tactics to much more refined and targeted steps to building the team they need to succeed, and here are the basic steps in that refined process:

1. Clarity on goal, KPI, or milestone(s): Let me be very clear here - the first step to solid headcount planning is rigorous goal setting.  You need to be clear on what you need to achieve and why.  Choose the right time horizon - you should have a strategic plan that stretches several years into your future, but be operating with about a year+ of goals ahead of you. Understanding what you need to achieve truly unlocks the next steps in this process.  Also, I want to call out being careful of goal-creep - your true superpower here is in knowing what you should say “No” to, and why you are prioritizing what you are.

2. Identify needed skills, and how much you need: In order to achieve these goals, what skills do you need on the team?  This can be a bit of a laundry list to articulate the skills that will be needed within the org.  Note here - I am not talking about “roles” yet.  I think we can find our creativity locked at times when constrained by something like a list of titles.  Thus, focus on the list of skills, and then start to estimate how much of each skill you will need.  The estimation is really important here - if you aren’t sure, tap into your network to get perspective.  I would try to answer this in similar language across the board - for example, you may determine you need 10 hours/week of social media management while also needing 160 hours/week of developer time.  

3. Role creation and hiring:  With the work you have done, you can create your headcount plan.  That 160 hours/week of developer time?  That likely converts into 4 full-time engineers you need to hire.  10 hours/week of social media management?  Sounds like a good contractor or part-time role.  I would look to see if that skill matches with other skills you need to get more out of a single contractor or up-level to a full-time employee  (ie, social media management could pretty easily get lumped together with community management or content creation).

This process focuses headcount creation on aligning to skills needed to achieve business success, and also builds in a layer of agility that can be helpful.  One of the results of this style  is the proliferation of a variety of employment relationships: full-time, part-time, fractional, consultant, etc. I see this variety of relationships as a strength and a challenge (more on the challenge side in a later post).  Importantly here, thinking more creatively about headcount planning (and employment relationships) can position a company to get the skills needed at the price and amount that best positions them to succeed. 

Do I see another shift on the horizon?  Not at the moment.  The lessons leaders have learned in the last few years about sustainable growth won’t be forgotten, and employees caught in the cross-fire of overhiring/re-org/layoff doom cycle will be wary of environments that aren’t intentional about their hiring.  Instead, I see leaders being better able to identify needed skills to build a successful business, and a continued proliferation within employees of how they want to structure their professional lives.  Hopefully, a win-win.