How to Explain Head-count Forecasting Methods
A successful head-count forecasting program requires a buy-in from your entire organization. Although human resources is responsible for predicting future hiring needs and creating compensation plans using current and previous year’s head-count information – including the total number of employees, their status and pay rate – the results can only be as accurate as the information your management team submits. However, getting managers to commit to maintaining accurate head-count data might be challenging. Because of this, your approach and explanation are critical to getting everyone on board.
Start by stressing how successful work-force planning requires human resources and managers to work together. For example, explain that before counting the employees in each department and status category, HR and managers need to work together to review and update existing employee status and compensation information to make sure it’s correct. Once HR creates head-count forecasts, both work together again to make sure hiring goals align with next year’s hiring guidelines and fit within next year’s hiring budget.
Explain how head-count forecasting can benefit your management team. For one thing, head-count forecasting can help managers meet hiring goals, which include hiring the right people for the right jobs at the right time. In addition, the information managers send to HR is vital for pinpointing, analyzing and dealing with troublesome trends, such as attrition, to increase retention rates. A benefit to you – which you might not want to mention – is that head-count forecasting methods increase accountability, which increases the chances that managers will comply with hiring and compensation guidelines voluntarily.
Explain how HR uses head-count information to estimate future open positions, time recruitment efforts, plan for promotions and set starting salaries and annual raises. To accomplish this, HR often creates multiple what-if scenarios when preparing head-count forecasts. These help answer questions such as how head-count needs will increase or decrease according to changes in an annual sales forecast or how changing the compensation plan or annual raise schedule will affect the head-count budget.
Explain data collection procedures and go through a sample form. Most businesses use a computer spreadsheet divided into three status sections that allow them to categorize employees according to whether they are active, on leave or terminated. Columns allow for tracking information such as the department, title or job role, full-time or part-time status, start date and compensation rate.
Instruct managers to perform periodic head counts by counting full-time-equivalent employees, where part-time employees count as 0.5 FTE, or by counting each employee, without respect to his work status, depending on your preference.