Effective Headcount Strategy requires integrated solutions

Headcount isn’t just expensive — it’s the #1 expense

Talk to any business owner or C-Suite Executive and they’ll tell you that the most expensive resource they manage is their workforce. “It’s a well-known fact that headcount costs are really quite substantial,” says Jeremy Klutts, Headcount Strategy and technology expert. The issue has only been exacerbated by rising wages, a result of a booming economy in the wake of the 2009 recession. Over the past 10 years alone, wages rose by over 6.6%.

Data Source: Bureau of Labor Statistics

Increasing wages put additional pressure on businesses to optimize their workforce planning strategies and to innovate. “For a long time, the thought was that these expenses were just a sunk cost, something that was part of doing business. Now that attitude is shifting, and companies are looking to a newer framework, what we’d call Headcount Strategy,” says Klutts.

Headcount Strategy isn’t only an HR objective

Comprehensive Headcount Strategy leverages a variety of inputs, ranging from employee engagement indicators to hardcore technical data curated by industrial engineers. While expert Headcount Strategists understand that integrating data from many business functions is necessary, many companies still see Headcount Strategy as an HR-only objective. According to Klutts, companies that rely on an HR data silo miss key insights. “People touch every part of the business, so you need to bring in additional data to enrich the HR info. Operations data, financials, customer feedback — they’re all crucial parts of the headcount model,” he says.

Effective Headcount Strategy requires that all apps and data in the environment communicate seamlessly.

Why is creating an effective Headcount Strategy so difficult?

Fully automated data extract, transform, and load (ETL) processes between HR and other non-HRIS applications, like Salesforce or Oracle, are the key to integrating the data needed to drive effective Headcount Strategy. Without tightly-knit, integrated solutions, analysts desperate to transform their data into meaningful insights turn to tools like Excel. Klutts says people use what they know, even if it doesn’t really work. “Excel is ubiquitous, especially in really large companies like the Fortune 500, but it’s an agonizingly slow and cumbersome substitute for modern, integrated infrastructure. People promise to deliver real-time metrics, but instead they’re pulling their hair out trying keep latency down to even a month.”

Why have companies, even those in the Fortune 500, been so slow to achieve a fully integrated state? Klutts points to two primary issues: data privacy and lack of technical resources. “Data privacy and security are such important considerations, so HR holds the keys to the kingdom and they’re understandably reticent about provisioning wholesale access to their systems,” says Klutts. “Ideally, business units could programmatically extract the data they need, without seeing details HR needs to keep protected.”

Technical experts could devise solutions that mitigate these privacy concerns, but these experts are often noticeably absent from Headcount Strategy initiatives. “Companies often don’t throw technical resources at problems like this one, because they’re focused on things that directly impact a product or customer experience,” Klutts says. “Ultimately, though, headcount issues touch every part of the business, so putting it on the back burner is a really costly mistake.”

Save millions of dollars with a data streaming strategy

Headcount Strategy can yield insights that drive out-sized dividends. Fortune 500 companies spend on average $1-2 billion on labor every year, so even a modest 5% improvement in headcount management would drive substantial savings, to the tune of $100 million. As Klutts puts it, “This outcome is the whole reason to do Headcount Strategy. It’s the ultimate goal for anyone working in this space. But you can only get there if you solve the ETL, data security, and technical resource scarcity issues.” Fortunately, new data streaming technologies replace manual, risky, and ad-hoc patches with automated, secure, and deliberate solutions.

Data streaming strategy transforms static data into dynamic currents, slashing 30+ day latency down to mere minutes or seconds, enabling near real-time data enrichment and modelling. Streaming data also mitigates security risks because data is never at-rest at intermediary points. Instead, only configuration files orchestrating the ETL processes, never the actual data, are saved. Compared to emailing data and consuming it in Excel, the data streaming method is incredibly secure.

Organizations that adopt a streaming strategy also unlock the power of AI and Machine Learning almost immediately, further bolstering competitive advantage. “Organizations couldn’t move fast enough, even strategically, to outmatch a competitor in a low-latency, fully-integrated state. A competitor at this level will get and retain the best talent at optimal costs,” says Klutts.

These organizations can also put their resources into activities more meaningful than manual ETL tasks, like transforming data into narratives that guide a business to new opportunities. “What drives us at our most fundamental level is storytelling. At the end of the day, the thing that steers a company towards new opportunities, a blue ocean, is a compelling story.” Companies that can’t wrangle their data into convincing Headcount Strategy narratives will flounder while their competitors flourish.

Let Machine Learning and AI give you a helping hand.

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