How to Build a Headcount Plan

This short video walks through creating Assumptions in Clockwork to incorporate your Headcount Plan into your Financial Model

Fady Hawatmeh avatar
Written by Fady Hawatmeh
Updated over a week ago

Simply put, Headcount Planning is a strategic process of planning current and future personnel resources to meet a company’s needs.

Headcount planning is important because:

  1. It’s typically the largest expenditure for companies and has huge implications for profitability

  2. Having the right talent and roles filled is arguably one of the most important aspects of running a business

There are three different ways to approach building a Headcount Plan in Clockwork:

  1. Top-Down

  2. By Department

  3. By Individual

There are pros to each of these approaches and the differing levels of specificity and detail that they’re driven by.

Top Down:

Top Down forecasts are great for those who are getting started with Headcount Planning, don’t need department-level visibility, and where there isn’t a large amount of variability in how much employees are compensated.

To get started, you’ll want to click into the account you’d like to forecast headcount for (Salaries, Wages, etc.) and select the Custom Formula rule. Then, you’ll want to define how long you’d like to drive your forecast.

Next, you’ll define your two variables. One should be a $ amount to represent the Avg. Monthly Pay for your employees and the other should be a # that represents how many employees you plan to have.

Once your variables are defined, make sure they’re being multiplied together by selecting the multiplication symbol from the drop-down between your variables.

Now, you’ll be able to input values for your variables. Adjust them according to any future plans you have such as growing or shrinking your team, or any changes in average pay that you anticipate.

Make sure you use Auto-Fill (the green arrow that pops up between cells) for any values that remain constant, grow by a percentage, or grow by a consistent amount. All set!

Note: You can use Custom Metrics in Clockwork to figure out your Avg. Monthly Pay by taking your diving your Salaries/Wages by your number of employees. Learn how to build Custom Metrics.

By Department:

Headcount Planning by Department is great for larger organizations that want to track Salaries by department for strategic reasons.

To get started, you’ll want to click into the account you’d like to forecast headcount for (Salaries, Wages, etc.) and select the Custom Formula rule. Then, you’ll want to define how long you’d like to drive your forecast.

Next, you’ll define your variables. You’ll need one $ variable and one # variable per department that you’d like to add to the forecast. For example, if you are forecasting for Engineering, Sales, Customer Success, and Marketing, you’ll want to create 4 sets of $ and # variables. Make sure you alternate between variable types so you can multiply $ and # for each department.

For each department, the $ amount to represent the Avg. Monthly Pay for the employees in that department and the # variable should be the number of employees in that department.

Once your variables are defined, make sure you multiply Avg. Monthly Pay and the Number of Employees in each department, while adding the different departments together.

Now, you’ll be able to input values for your variables. Adjust them according to any future plans you have such as growing or shrinking any department, or any changes in average pay per department that you anticipate. Make sure you use Auto-Fill (the green arrow that pops up between cells) for any values that remain constant, grow by a percentage, or grow by a consistent amount.

By Individual:

Headcount Planning by individual is great for achieving the greatest amount of granularity possible. That said, it’s not great for large organizations or for top-level management to have a strategic view of how the company's resources are allocated by function or department.

To get started, you’ll want to click into the account you’d like to forecast headcount for (Salaries, Wages, etc.) and select the Custom Formula rule. Then, you’ll want to define how long you’d like to drive your forecast.

In this case, since you’re going to input every employee, you’ll want to create one $ variable per employee. Each variable should be named according to the employee it represents.

Next, input each employee’s salary in the first month of your Assumption, then use Auto-fill (the green arrow that pops up between cells) to extend the value across the duration of your Assumption.

Once you’ve listed out all of your employees, make sure you add them all together.

Need help? Reach out to our support chat in the bottom right of your screen any time you have questions!

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