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Setting the stage:What does a successful headcount forecasting model look like?

Before we jump into our templates, we first need to consider what a successful headcount forecasting model looks like to ensure the model is actionable and useful to the organization.

We have detailed the characteristics of a successful model below, as well as what these mean for the construction of the model. You can also watch a quick clip of our founder, Katie Fifer, walking through these considerations.

  • Setting the stage: Watch the clip

    Setting the stage

    Using her knowledge and expertise gained through leading finance teams at multiple organizations, Katie discusses what defines a successful headcount forecasting plan.

Characteristics of a successful model Implications for model construction
Actively used throughout the year to manage headcount. Not just completed as part of the annual planning process and never opened again. Drills down to the team and individual level
Makes sense in the context of historical information Includes historical headcount information and a clear waterfall bridge to go from beginning to end of the year
Translates headcount into cost Includes salary information + fringe cost estimates
Makes sense in the context of the revenue and business plan Includes relevant metrics and KPIs
Clear and easy to follow Easy to update, flexible model with clear inputs and summaries

Template Overview

There are two templates included in the file – the first template forecasts headcount at the individual role level, while the second template forecasts at the team level.

For each template, we provide a step-by-step video guide to help you understand and operationalize the model:

Template 1: Forecasting at the Individual Level

  • Introducing the model

    Planning at the Individual level

    Our first template forecasts at the individual role level, and is most relevant for smaller organizations, or a division within a larger organization.

  • Understanding and building the model

    Filling out the key inputs for Template 1

    The key inputs you will need to start filling in your individual-level forecast include existing employees, new planned roles with timing, and related salary information.

    Breaking down the monthly forecast

    The salary information for each individual flows into monthly salary calculations using IF statements.

    Summarizing salary & headcount by team by month

    The next step in the model is to roll up the salaries and headcount information by month by team using common summary formulas SUMIFS and COUNTIFS.

  • Summarizing the data and putting it in context

    Getting ready for cross-functional discussions

    We recommend creating the summary forecast on a separate tab from the inputs to be able to clearly see and understand the outputs.  We mainly leverage the XLOOKUP formula to carry data across the two tabs.

    Ratios & metrics

    The final step is to put the forecast into context – what does it mean related to revenue, cost, and industry benchmarks.

Template 2: Forecasting at the Team Level

  • Introducing the model

    Planning at the team level

    The second template focuses on a headcount forecast at the team level.

  • Understanding and building the model

    Inputting headcount changes

    Key inputs for this team-level forecast include historical headcount information and planned attrition and new hires by team.

    Adding in the cost (salary) forecast

    The next step is to translate the headcount changes into cost using historical and planned salaries at the team level.

  • Summarizing the data and putting it in context

    Summarizing the data

    The final step is to summarize the team level forecast on a separate tab to see planned changes by quarter and total changes over the year.

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