Budget season is now underway for many organizations. A major factor in developing the annual budget is analyzing current compensation, present and future hiring needs and how it all fits into the company’s overall goals and strategy. Headcount planning, which includes salary benchmarking and a compensation overview, will benefit anyone responsible for talent acquisition.
When headcount planning, consider these five steps as a guide:
- Identify business challenges and goals that relate to current headcount and future hiring needs.
- Review market recovery forecasts and when your location/city will be gaining back jobs.
- Review current compensation – benefits as well as salaries – for all employees and how your comp compares to the local job market.
- Factor in potential merit increases, salaries for new hires and budget for any other employment needs (such as contract or project-based work).
- Create a budget that is based on the organization’s hiring and retention needs.
With these fundamental steps, you ensure that your headcount strategy provides an accurate blueprint for the organization’s recruiting, hiring and retention efforts. Recruitment firms that understand this process will have an edge over the competition in meeting their clients’ needs.
Connect Business Goals to Hiring and Employee Retention Efforts
When done well, headcount planning allows talent acquisition teams to accurately plan for new hires and merit increases by assessing what the budgetary needs will be for the upcoming fiscal year. For external teams, headcount planning for their clients’ recruitment needs can help solidify their role as a useful advisor, as well as provide their clients with the most up-to-date salaries based on current market value.
For internal talent acquisition teams, the process will include reviewing the compensation of the organization’s current personnel, the salary expectations for anticipated hires and how these needs tie into the coming year’s business goals.
Let’s say an organization is preparing to pitch a new product. To meet objectives pertaining to this new product, the organization may need to concentrate its compensation budget more on the product development, marketing and sales teams to carry out these objectives. Alternatively, suppose an organization hasn’t been able to meet its revenue goals for the current fiscal year. Assessing its current headcount could help see where money could be saved or reallocated to make up for the shortfalls and plan accordingly for the upcoming fiscal year.
Make Salary Reviews and Headcount Planning More Effective
For purposes of talent acquisition, a huge part of the compensation overview process includes salary reviews and benchmarking. Performing this comprehensive review during budget season is a good idea because hiring managers and the HR team can correct any salaries that aren’t at market value, plan for merit increases and promotions and evaluate the budget in terms of new hires.
With the right software, the HR team and hiring managers can be more effective in their hiring and recruiting needs from a budget standpoint. For external recruiters, knowing the true market value of a salary is helpful when advising clients. Using a tool with accurate salary answers based on an independent market analysis will help recruiters advise clients who may pay too little for their desired requirements or who may need to cast a wider net in their candidate search based on talent availability. LaborIQ® by ThinkWhy can help both the internal and external sides of the talent acquisition coin.
Accurate salary data is based on these factors: location, talent supply, skills, experience and industry. Company size and annual budget can also play a role. With LaborIQ, a user can quickly input a job title for a specific city and include years of experience and education level, as well as industry, company size and company budget. Unlike other “salary answers” tools, LaborIQ will then provide users with the most up-to-date salary range and recommended salary, the required hard and soft skills, a six-year forecast for the salary range and the available talent supply in the specified city for the role.
Being able to rely on accurate, unbiased salary answers will help recruiters advise clients who may be in more competitive job markets or who may be considering remote workers in other U.S. cities. The more reliable salary data a recruiter can provide, the more the client will depend on the recruiter for repeat placements, resulting in more business for the recruiter.
Another benefit of LaborIQ is how easy it is to benchmark salaries across departments and the entire organization. This feature gives a quick overview of how employees’ salaries compare to others with the same qualifications for similar job titles in the same city.
Though salary benchmarking is especially useful for internal talent acquisition teams, external recruiters can benefit from it, too. When working with a client on retainer, the ability to compare how team members’ salaries compare to the local market can help the recruiter see how much a client can actually afford when bringing on a new team member. This can help a recruiter better advise the client on how to adjust its overall hiring and recruitment strategy.
Create a Realistic Budget to Meet Hiring Needs
Headcount planning ahead of budget season allows talent acquisition teams to set realistic goals for recruitment, hiring and employee retention. Hiring managers can feel confident when adjusting their budgets to build out their teams, while recruiters can be confident in advising a client on salary ranges and recruitment strategies. Whichever aspects of the talent acquisition process you handle, LaborIQ can help you do it more effectively.
LaborIQ by ThinkWhy continuously monitors and forecasts labor data at all levels, measuring impact to MSAs, industries, occupations, and businesses across the U.S.