Unlocking the Power of Headcount Data in your Board Meetings
Table of Contents
Why Headcount Data is Critical For the Board?
Headcount is central to the board conversation and provides all of the context for every deep dive issue in the board meeting. This is true for 3 main reasons:
Headcount Data is the Largest Cost Center
At 70% or more of most companies’ total spend, headcount is the largest cost center where investment dollars are deployed.
Headcount Adds are Directly Correlated to Revenue Growth
If a company is behind on hiring, it’s also likely behind on production or revenue.
Headcount Impacts the Equity Pool
When compensation includes equity, it’s not an unlimited resource. Tracking equity grants & the variance from target is a critical conversation for every founder and board.
Questions That Headcount Answers In Every Board Meeting
Is Headcount Performance Blocking Growth?
A key indicator as to whether or not headcount will be a pain point in your board meeting is whether or not headcount is blocking revenue growth, production growth, launch speed, or any other metric that has to do with hitting the targets you’ve set for your board.
Key Data Points:
Hiring Target to Goal
If you’re missing in other parts of your business, one of the first questions is whether you have the resources you need to hit those goals. If you do, they want to know about how you're managing performance or other external factors. If you don’t, you’ll have some explaining to do.
Late Hires / Hires on Time
How many people have not started on the time you initially put on your forecast? Are they revenue-generating? What’s the impact? You’ll have to answer all of these questions, not only as an explanation of events, but to help them manage the forecasts for future performance.
Attrition
If people are leaving (especially revenue generators) you need to be able to articulate the gap in skills, production and/or revenue between the time they left and their replacement. Forecasting attrition, knowing your time to fill for all backfills, and showing relevant salary & revenue ramp data will help you build comfort in managing the uncomfortable.
The value of covering the variance between actual and planned headcount in a board meeting
Covering these 3 points with objective data will earn you more credibility than trying to explain what’s happening with your headcount subjectively. Having a forecast for how attrition or hiring performance impacts your production or revenue allows you to better set & hit goals with your board.
Headcount365 variance tracking tools provide the essential data to craft a narrative about how headcount performance impacts financial goals 7 outcomes.
What is the Financial Variance Created by Headcount?
Understanding the financial implications of headcount is crucial for managing burn rate and aligning with the P&L. This includes not only the salaries of the employees you’ve hired relative to the budget, but also how soon you have them start, and the cost burden of an individual’s employment. Splitting a 100k role into two 50k roles is not the same money, and details like this can become a problem with scale.
Key Data Points:
In-Year Salary Variance
Evaluate the impact of start dates on fiscal year spend. If you’re hiring ahead or behind the start dates you forecasted on your plan, you can activate this OPEX elsewhere in the business. Having a real-time look at in-year spend is one of the key benefits of headcount365.
Annualized Variance
Assess the impact of salaries on the annual OPEX. Annual Spend = Burn. This will be one of the key focal points of your board. That being said, just producing the number won’t help you navigate the meeting. You’ll need to articulate why costs have changed, and what you’re doing about it.
Burden Costs
Differentiate the financial impact of varied role costs, such as comparing a single $100,000 role to two $50,000 roles. This is most impactful for expense-heavy businesses that require equipment or materials investments per headcount.
The value of including financial impacts from headcount models in board meetings
Getting ahead of cost variance will help you navigate your financials. Understanding the trends of your headcount spend through a historical lens will give credibility to future forecasts you deliver to your board.
Headcount365’s ability to intelligently track OPEX & Revenue from headcount delivers predictive insights about future performance, which is critical for managing board expectations.
Have You Identified the Root Cause of Headcount Performance?
Headcount changes happen, but the CEOs who get hit the hardest in board meetings have no idea why. Through years of experience in this process, both as a headcount leader and within venture capital, I have identified four main reasons why businesses often miss with headcount & hiring.
Key Data Points:
Recruiting Capacity vs Demand
Assess if the recruiting team had sufficient capacity to meet the demand. This matters both from the aspect of your initial planning, as well as whether or not your recruiting team could flex with the changes to the business.
Hiring Manager Interference
Assess how the changes to your hiring plan by hiring managers have impacted your ability to meet demand. Are they adding or changing the plan, interrupting recruiting performance? Empire building? Individual changes may not mean much when isolated, but they add up.
Headcount Forecasting Accuracy
Assess if headcount issues were a result of an inaccurate plan. This doesn’t have to be bad, by the way. You could have blown your sales plan out of the water, and you are behind on AM/CS hiring. Identify the reasons why the plan changed and deliver an update as to how you’ll adapt in the future. Build out a new main forecast and get more accurate with your scenarios. Boards will appreciate this rigor.
Recruiting Team & Funnel Performance
If you had everything right, but the recruiting team missed the goal, analyze your funnel & production performance. Show up to a board meeting with a plan to get from the recruiting capacity you’re at today to the one that will meet your goals in the future.
The value of identifying root-cause headcount issues to the board
If you can identify the problem, you can fix it. You can articulate the time and cost between you & a solution and MOVE ON in the board meeting. There’s nothing more frustrating than putting together a board deck to cover your entire business, only to get caught up on a solvable problem like headcount.
Headcount365 provides the context for these variances, transforming board discussions from subjective narratives to objective, data-driven action plans. This approach enables a more informed dialogue about improving headcount performance and, consequently, business outcomes.
What is the Action Plan to Correct Any Blockers?
When headcount is a critical blocker to a company's revenue growth, it’s imperative to understand why headcount goals were missed and ensure it doesn't happen again. Here are some key actions you can take to improve the headcount performance for your next board meeting.
Action Items:
Improve Recruiting Funnel Volume or Conversion
Investments in improving the funnel volume and conversion will improve efficiency across all teams. Improve branding, advertise jobs to customers, or run a referral program to improve the top of the funnel. Switch to competency-based interviews to improve funnel conversion rates. Evaluate your compensation strategy to improve the close rate.
Increase Recruiting Capacity
Adding recruiters, agencies, or RPOs will help unblock hiring from the business growth. Map this recruiting capacity against the demand to deliver a predictable hiring process to your board.
Update Headcount Forecasts
Leverage previous headcount plans to inform future scenarios. Work backwards from scenario plans to figure out when you need to open roles to make a hire on time. If sales unlock customer support headcount, but the onboarding date is sooner than the time to fill for that role, you’ll be in trouble.
Eliminate Variance
Implement an approval process that drives accountability for changes that impact your ability to fill on time or on budget. Report on the number of changes & use them as a KPI for fixing.
The value of headcount action plans in board meetings
Set a target, have a plan, move on. This will not only give them confidence in your ability to solve the problem, but you’ll be able to talk about bigger things than headcount problems during the meeting.
Headcount365 integrates ATS and HRIS data to uncover the reasons behind missed headcount goals. By tracking every change, its origin, and its impact, both finance and recruiting teams can investigate and report with objective data, eliminating the ambiguities of spreadsheet-based tracking.
Headcount365 Intelligently Talent and Workforce Reporting for Board Meetings
Headcount365 creates a board narrative in minutes with reporting architected to help CHROS and CEOs articulate the performance and impact of headcount for their boards. We’re able to answer all the above headcount board meeting questions, provide data to support the findings, and intelligently recommend solutions.
Headcount365 creates more successful and collaborative board meetings with objective data that answers the most pressing questions.