For the first session of our "Headcount Confidential" series, we invited Lisa To and Nolan Church to speak with Trace CEO Mike Gonzalez about their experiences with headcount management, especially coming from high-growth companies like Facebook, LinkedIn, Doordash, and Carta. As head of FP&A Transformation at LinkedIn, Lisa brings the “tools and systems” angle to the conversation. While Nolan, CEO of Continuum and former Chief People Officer at Carta, brings the CEO and Talent perspective. Here are some of our favorite parts from our talk with them.

It starts with planning season 

From the talent perspective, Nolan says, “The finance team comes to me and wants to know how many people we need to hire next year. But the headcount for our team is a function of how much the business is going to grow. So the process always begins pretty rough because finance is looking for answers right away. Finance is looking for headcount requests and it's hard for the people team to even give those insights—without understanding what the other business inputs are.”

Lisa adds that it’s also a tool problem. “Different groups want to see the data in different ways. And there’s not a central place to come together and collaborate. So everything goes back to Excel because that's quick and easy to get up. And then there’s a proliferation of Excel spreadsheets.”

But then the plans go “insanely stale”

The second issue, adds Nolan, is how his team needs to work with hiring managers every day. “We go through this two, three months cycle. We think we’ve got headcount planning nailed," he says, "and then we enter Q1 and it feels like everything's changed. That model that we came up with is insanely stale. Everybody's trying to go outside of the process because the world's changed and it's a new year. It’s because there's a lack of coordination and a central source of truth.”

No workflow for incremental requests

Lisa agrees, quoting Dwight D Eisenhower, “Plans are nothing; planning is everything.” As we all know, she says, “There are incremental asks and different changes throughout the year that happen. And a typical structured tool—even if you have the perfect tool—is just not flexible enough to adjust from a structured way of doing things to a fluid way.”

No fun for hiring managers

Hiring managers are confused too, Nolan notes. “They’re always coming to us with their gripes on the process and what's working well, what's not working well. They might say the CFO is being really tough about allocating heads to their team. So they try to come to the Talent team to circumvent the process. You get into March, and we’re seven months away from planning. Everybody's thinking about the goals that they have to hit for the end of the quarter and going into the next quarter. You will get teams that say, ‘We're understaffed. We didn't realize growth would be like this. We're in pain.’ And we have to say no. It’s not a fun experience.” 

And yet, says Lisa, “your main audience is your business partner.” Adds Mike, “We have to manage changes and have workflows for what happens after the plan is set.”

Unified dashboards and terminology 

So what’s the gold standard, asked one of our guests. What are some best practices to get headcount management right? “You need a central dashboard that everyone can work off of,” says Lisa. “Get your master data in one place, have position IDs, and define your terminology. Define approved headcount vs. budgeted headcount and don’t use them interchangeably. You’ll have different tools—an ATS tool and an HCM tool, for example—and then you need either a tool or a process that will bring these together into one source of truth. And it can’t be Excel. It’s not a source of truth unless a system generated it.”

Derivative metrics

Adds Mike, “As you re-forecast and plans change from a finance perspective, you always want to give your budget owner a dollar target, or even a headcount target to keep it simple. As well, try to show people a derivative metric that matters such as headcount as a percent of revenue. You can trust in your budget owners to understand, for example, that R&D is a percent of revenue. That way when revenue comes in light or revenue is outpacing what you were expecting, they get it. They know when it’s time to tighten things up or when, if the business is growing faster than expected, they’re going to have some freedom.”

A weekly meeting and a slush fund

“One thing that works really well,” advises Nolan, “is to carve out  time for the head of people, the head of recruiting, and the CFO to get together for 15 to 20 minutes every week to look at what’s changed. Also, we created a slush fund at Carta. The executor of the slush fund was our CEO. So when it comes down to these specific resource requests, having the CEO as the executor of approving it was super helpful for us.”

“We don't ever want to tell the business no,” he says. “As the people business partner working with my finance business partner, that's not our job. Our job is to make sure that the business is moving as fast as possible.”