Mastering effective Headcount Planning with Florian Blaschke

Thomas Kohler:
Today’s guest, Florian Blaschke, CEO and Co-Founder of HRCast.

Florian Blaschke:
But ideally, you plan cautiously and realistic and you avoid the situation where you hire a lot of people and then have you fired them immediately afterwards. That’s of course, super stupid. It happens, but it’s, it’s like, it’s also bad management. Actually, it’s a sign of bad management.

Thomas Kohler:
And what I would be really curious now about, let’s compare the spreadsheet approach versus the ideal HR cast approach. What are maybe some core problems you solve in the whole HR controlling and headcount planning process with your new venture.

Florian Blaschke:
Yeah, so what we definitely solve is we provide like a platform where you can collaborate and you can make sure that everyone has access to the data he or she needs, but without avoiding like spreading too much information. So basically, as an administrator, you have like the opportunity to, or the option to, to really define who can see what. We also support you a little bit by applying the hierarchy that we already import from the HR system. So basically the system understands who is the superior of whom and who is the team lead and so on. So naturally the managers would always see only themselves and their direct reports. So we avoid like this. Yeah. Spread of information, I would say, like also the storage of sensitive information in spreadsheets, which is anyway, not a good thing.

Like, spreadsheet should always be like seen as a tool for analytics, but it’s not a data storage. So that’s, I think, like, true. You can talk to other bi experts about this, I think so. Everyone would say there will always be spreadsheets to do a quick analysis or calculation. That’s all fine, but you should not basically hold extensive lists and data, especially sensitive data in lists somewhere on servers. That’s just not good. What we also support you with is this topic we just discussed. So this update in the background.

So you have the situation that you start budgeting and then a few weeks pass by. And normally when you do this in a spreadsheet, you would have to always keep an eye on what’s actually happening in the background and keep this, this list of employees that you used as a starting point updated. This is what we are also providing automatically. So you always see what’s going on in personio hypo, whatever in the background and can then decide if you want to update also your scenario with this information that has been changed in the background. Also the whole approach, how you plan, how you budget. I think it’s also designed to help people that are not so comfortable fit or also have some, I don’t know, don’t like to work in spreadsheets. So it’s definitely designed also for people that are not spreadsheet experts. So you can also hand this work over to, let’s say, managers, normal HR people that are not.

So let’s say like, don’t know a lot about like formulas and stuff like that. You can also not destroy something that’s also something that very often happens. You have like a financial analyst that builds like a super nice model. And he thought about everything. But as soon as he invites someone to work in this, in this, in this, in this spreadsheet model, he cannot be sure that someone is like changing formulas or the whole structure of the file. And then he, in the end, anyway, has to put in again a lot of manual work.

Thomas Kohler:
Florian and I talked about headcount planning, how it’s done right, how it’s done wrong, from a CFO perspective, from a Talent Acquisition and HR perspective, what the pitfalls are of headcount planning and what you can do about it.

Finally, we have a podcast with Florian around headcount, HR controlling and all the perspectives we want to see and hear about today. Loren, first, maybe you can introduce yourself and give us some context. I remember we know each other, I think since maybe four or five years, because back then when I did a CFO search, we just had one call. It never went to work together, but we stayed in touch. And now we are talking about headcount planning. I’m really looking forward to it.

Florian Blaschke:
Yes, thank you Thomas, for having me today. So a little bit about myself. So my name is Ferran. I’m originally, like you, from Austria and ended up in Berlin around 15 years ago. Directly after university I started my career as a financial analyst, so to say, at daimler. So Mercedes Benz, very corporate, very traditional, but good school directly after university. And then at some point decided that’s not really the right career I want to follow, and contacted someone that I knew back then and was introduced to Team Europe back in the days. This was also like a company builder incubator, similar like Rocket Internet.

And I got my first assignment to head of finance position in a very small shoe startup. And the rest is, I would say history. So then, step by step, I worked my way up the ladder, took on more responsible roles in the finance area, and always switched a little bit between hired manager, interim CFO, fractional CFO. The last two years I’m working with torque partners, an agency that is providing executive interim support for digital younger companies. Also lately for bigger, even private equity funded companies. And the very last project I started is HRCast. So it was basically an idea we had last summer to not only provide services, but also take a step into the direction of software so that we are also providing a tool. And I think by nature it was a tool that was created from a challenge or like a problem we faced, or I faced very often when I was in this finance managing roles, namely this headcount planning.

Because reality is that still in most of the companies, if they don’t have an excessive ERP system or specialized software, this whole HR headcount planning is more or less always done in spreadsheets. And so that’s basically the solution. And that’s also why I now in the last months are much closer to HR as a topic. I mean also in my assignments as CFO, sometimes I had also the responsibility for the HR department. But so I would say like in regards to really like this also why we are talking today and why we are talking about numbers and KPI’s and analytics in Hrtaine. I would say the main reason is because I started this software that should now help to make analytics and headcount planning in the HR area much easier.

Thomas Kohler:
Let’s maybe talk a bit about the organic way on how startups usually start with budgeting and then also planning headcount. Because I think one of the biggest cost positions are personal costs.

Florian Blaschke:
Exactly.

Thomas Kohler:
I think somewhere between 50 and 70% maybe. What do you think?

Florian Blaschke:
Yeah, it depends on the industry. But I mean, since I think like so both of us, and I think, I think I would say like so also our audience. So all this digital industry is more or less a people business. And there is like 70, 80% are HR cost. I mean, we are. So most of the companies need like educated experts and therefore like the largest share of cost is in the, if it’s not a production company is HR cost. So that’s a good guess. Was a good guess with the 70%.

Thomas Kohler:
And then it’s not even done accurately or aligned, right, because.

Florian Blaschke:
Absolutely. Yeah. It’s actually crazy that even though this is such a large position in the p and l, the tools to manage it and analyze it are very, let’s say simple. I mean, I would say so in general. I mean that there’s a saying that the economy runs on gas and Microsoft Excel, so that’s for sure true in many areas. But I mean, I would say, like, for a lot of things, you can see that lately there’s more specialized software and also, like in the HR tech area, there’s a lot going on, but it’s very fragmented, I would say. And now it’s getting more professional and also more connected. So you have a lot more options to connect different systems with each other so that they are well integrated and communicate with each other so that it feels like a real efficient and comfortable to use tech stack.

So I think that’s definitely something that’s happening right now. But HR as an area is definitely one of the later areas where this is happening. I mean, you had much more going on for, let’s say, marketing also, like, I don’t know, even finance. And I think so HR was a little bit of a late starter, but I think now there’s a lot coming up. So that also people in HR area have like, super cool tools, actually, and also like, not very costly. So you get good value for money and have nice tools where you can manage your area and do your daily work and get a little bit away from this pure list and spreadsheet type of work.

Thomas Kohler:
And Florian, over the past ten years, you saw a lot of financial plans, a lot of financial planning processes, and also a lot of personal cost planning and HR controlling. What do you see as a pattern? How do most companies start with which then ultimately later on maybe is not a beneficial way of doing it and why can you maybe talk us through a process where you see this is a naturally organic process that just is being done when a first timer is doing it versus how it should be when you have a lot of experience doing it?

Florian Blaschke:
Yeah, well, I think there’s different approaches. So you do the HR headcount planning for different reasons. So one is certainly that you want to understand the cost. So sometimes the driver is that you have like a complete financial plan for the company. And let’s say the CFO also wants to understand what does the HR part cost me. And that can be like, let’s say like a starting point. But of course, the other approach would be to understand what actually what you need in terms of resources. So more like a strategic approach and also like, let’s say a plan for the HR department themselves so that they know and understand how the, let’s say the future, the next month, next year, will look like what they need in terms of resources, recruiting resources, what’s actually the task, what are the targets that they have to meet in terms of recruiting and hiring so that they can also derive their own capacity.

So, I mean, we already had a little bit of a chat before this podcast that, let’s say very often you can quickly write a plan and you say like, okay, next year we need to hire, I don’t know, 100 more people, but it’s not that easy. So you need the resources to do so. You need people to do it, you need money to do it, you need maybe external help to do it. And this is something that needs to be taken into consideration when you want to make a good hrtainous headcount plan.

Thomas Kohler:
In which way should it be planned and updated?

Florian Blaschke:
Well, so, like, I think, like, and that’s, that’s something I think that has just developed over the year. Like, I mean, businesses think in business years. And I think a good approach is like to do this once a year very thoroughly. Yeah. So that you see like, so I really like make it a bigger process where a lot of people are involved and where you take a little bit of time to think it through. But then you should for sure have regular updates, maybe not monthly, but I would say at least quarterly, because things change, especially when you are in a dynamic environment. A yearly plan can quickly be obsolete if there is a significant change to your business. So you also need to update the HR plan regularly. But I think so coming back to the original question, how should you do it? I think it should be done together because HR is not something that is just planned by the HR department, so they need input.

Thomas Kohler:
Not by the CFO, right? Because sometimes…

Florian Blaschke:
Exactly. Absolutely. Absolutely. That’s also the, the other wrong approach, I would say just there’s like the finance department calculating something and this makes it actually also a challenge because like several people in the company, several stakeholders have to come together and find a good agreement. And this is where I would say the traditional way, doing it in Excel, in spreadsheets, in lists of, is a little bit challenging because you are working with highly confidential data, you are working with personal data, you are working with salary data. Also, this type of information, who is coming, who might need to go, is something you want to keep disclosed. And therefore, you really have to think of a good way how you design this process so that you get all the information you need to get to a good result. But the same way you also make sure that everyone in this process only gets the information that is necessary.

Florian Blaschke:
This is, I think, where professional software can definitely be a good help compared to the standard Excel or G sheet that is somewhere on the Google Drive and everyone has access to it, or you don’t actually know with whom it has been shared and so on. So that’s the thing.

Thomas Kohler:
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And is it the updated version or not?

Florian Blaschke:
Exactly, also versioning it the actual. Absolutely correct.

Thomas Kohler:
And what I wondered is why I, why there is no tool for more early stage companies out there already. Right. Because I also face the same problem, the same situation also from tenant acquisition perspective, because if you’re there on the receiving end of, let’s say, misaligned or had complaint, that is maybe unrealistic because it was not done, aligned that the pressure. And it signed off and communicated already to managers. Yeah, you will get the resources by January, and in December you sign it off and then everybody’s on Christmas break. And then the hiring managers come back and say, okay, where are my hires? They are in my budget. And talent acquisition doesn’t even know that they need to hire.

Florian Blaschke:
Yeah, I think so. The reason is because in a lot of companies it’s really like a yearly process, so they are not doing it that often. And then you just accept the fact that it’s just a shitty process and that it’s painful. It takes some time, but in the end you get to a result. Yes. I mean, like, so Excel can be good enough. So, I mean, it has been, it worked for the last 50 years and there is like an existing approach, an existing process to it. And I think that’s, so that’s why it’s, that’s why there’s not yet so much, let’s say, offer in terms of specialized software for this.

I also see that some HR or HrIs companies are having this as an extra feature sometimes, but you have to pay for it. And then it’s very often also, yeah, another tool, another software, it’s extra cost. Is it really worth the money? I think the people that sometimes decide on software acquisition, they don’t understand the real process that they are trying to fix and how costly it actually is. I mean, you have to, I would say, like with tools like that, it’s not something that brings you additional revenue or additional customers. It’s not something that’s for growth of the business. It’s more, we are saving money, we are improving the efficiency of processes. And for this, you really have to look a little bit deeper into the actual cost of a process. But I can tell you it’s very costly because if you have the management involved, if you have the HR department involved, you have the finance department involved, different other stakeholders, if you have certain cycles, you have maybe a top down, bottom up process where things are going back and forth, you have all the risks that you have to value in the risks of wrong data, lost data, shared data.

And if you calculate all of this, then I would say like a professional software that is solving you this issue and making it way more easy and comfortable for the whole involved team is definitely a good purchase.

Thomas Kohler:
Yeah. And I think ultimately it should make decision making more accurate and easy and maybe also even convenient, because I think what is also true, the bigger a company gets, the more you pay for a wrong decision.

Florian Blaschke:
Absolutely. That’s the risk of mistakes. Also, I would say one approach is that you say we only do this once in a while because it’s so complex, but you miss out on insights that you would have if you do it more regularly and more frequently. But it’s like with reporting, with bi, of course, if it takes you two weeks to run a report, you will only do this report once in a while. If it’s just pressing a button, you can do it every day and you have more insights, more accurate, more actual recent data, and hopefully you can make better decisions based on the latest data. So that’s the thing about it. But I mean, I would say planning, analytics, bi, it costs you a little bit of money, but the value that it brings. And I think we are developing into a more and more data driven environment, society, business environment.

Less and less should be done based on feelings, on emotions, on gut feeling. I think even if you have gut feeling, you need to support it somehow with data. And I think all tools that provide this are definitely helpful and a good and valuable addition for your everyday business.

Thomas Kohler:
I would have a question for a practical question. So let’s say you are now an HR person. Maybe at a company, 100 to 150 employees, doing a series a, expanding or serious b, and then suddenly headcount planning and budgeting is getting way more serious after the first bigger funding, maybe then the CFO comes in and says, okay, now we need to really plan more accurate and we start budgeting now. And then the HR or talent acquisition team, they are not really involved. What do you think should be done from an HR perspective or from a telenetic perspective? Or what can a CFO also do to make sure that it’s a cohesive process? That at least, even if you don’t have the best technology or a tool that is also guiding the process in a way that you just use poor spreadsheets. What can you do from different perspectives and stakeholders perspectives in the company to make it a smooth process? And how would this look like?

Florian Blaschke:
Yeah, well, I would, I think like. So a good approach is that you definitely, you need to prepare it so you can do it with spreadshirts, spreadsheets you can, but you need to involve a certain group of people. So you need to be open for feedback from HR. And ideally you do it in a top down, bottom up approach, so that basically there’s an exchange of thoughts. So it’s fair that, for instance, the finance department starts with a version where they say, this is what we derive from the past or this is what we derive from the expectations of our investors, how it should look like. But then there should also be like they should listen to the other side, especially like the team leads or the head of departments for all the areas, if like, this top down approach is realistic, and also if there might be some feedback in regards to the timeline and the resources that stand behind it. So especially like time to hire if it’s like fast growth. Also, certain KPI’s in terms of can a certain size of business be done by a certain amount of people, given certain resources, tools, whatever.

So I mean, if you, if you are talking about like larger organizations with a bigger operation, I don’t know, call centers, sales teams, etcetera. So this is something that needs to be played a little bit back and forth to really get to a good process. How we do it is that you basically really start with this top down, then you basically send it back to the team. The team has a certain time to give feedback, make their own assumptions, and then you come together and compare, and then you do this in maximum, I would say like three cycles. So to get to an agreement and then a final version, when you’re using a certain setup, it can be a tool, it can also be spreadsheets. What’s also very important is that you also educate the people a little bit how to work in this. So it’s not enough to just send out a list and say, write me a list. You also need a little bit of explanation.

You can also not always expect that everyone is super fit in working in spreadsheets, that he has understood the logic, the structure of such a file. So I think also there should be a little bit of training and introduction involved to make this a smooth process that the people that are contributing to this headcount planning really understand what’s the request and how they should do it from the technique. So also assumptions is a super important topic. So there needs to be an alignment. What’s the actual goal? So I think it’s also, for instance, if you say we want to make now a super fancy, good looking headcount plan for the investors because we want to get the round, the financing round closed, we know it’s unrealistic, but then everyone involved should know so that you avoid the conflict and you have like the situation that only one side knows what this is good for, or was it what it is used for? And the other side is like, so yeah, this is super unrealistic. So the things should be treated as they are. And I think like, so it’s important that all the people involved in such a process understand what this is good for. So that’s super important because I’ve seen this a lot that actually like the major assumptions are completely unaligned and therefore like, so you don’t get like this together, this top down and bottom up, because people have not understood what it is good for.

Thomas Kohler:
How long should this cycle be with the three iterations?

Florian Blaschke:
Yeah, I think so. This can be done within six weeks. So I would not also suggest to take too much time because time is passing, things change and you want to avoid the situation where you do like a certain version of your headcount plan. And in the meantime, the whole base information has completely changed. So things have completely changed. People have left, other people have joined, and you have to basically spend a lot of time updating with the current situation. But that’s not only true for the headcount plan, it’s true for any budgeting cycle, that there needs to be a certain speed to get this done so that it’s out, so that you can continue working and that you don’t end up in a never ending budget cycle with it.

Thomas Kohler:
Yeah, you’re never right. And I think. Do you think that it’s good to also then freeze offers during the process of headcount planning?

Florian Blaschke:
No, I don’t think so. So free software in terms of like, did you say so I don’t even hire someone in this, in this, in this period.

Thomas Kohler:
Exactly. So I think Talent Acquisition could continue to build pipeline, but offers will not be accepted until the plan is signed off. Because what I saw is, for instance, let’s say later stage, maybe not at that stage yet 150 people, but you’re suddenly thousand. And then you have a recruiting machine that is maybe delivering 30, 50 hires a month and suddenly the process doesn’t take six weeks, but three months. And then you made in the planning process maybe 90 or 100 hires. So you added 5 to 15% of Headcount.

Florian Blaschke:
Then decides you have to do a riff.

Thomas Kohler:
Yeah. For instance.

Florian Blaschke:
Yeah, so can happen. But so I, what, I mean, in general, like, but that’s more like a personal view and approach. It’s super sad that this happens, but it’s not about like, so the answer to your question in regards to the process and the technique of headcount planning. So I would say that’s not, that’s nothing. It’s not important to stop the recruiting, but I think it’s important to avoid this situation that you’re planning for. I don’t know, hypergrowth. And then along the way you decide it’s not hypergrowth anymore, it’s more like consolidation. And then you have to lay off the last hundred people you just hired.

So that’s, but that’s more from a human perspective, something that one, the HR department, the management of companies should avoid because it’s super bad for culture. We both have seen this a lot. It’s a little bit nature of the business that you get funded and you have a lot of money and you need to grow and you also need to show this growth. And then half a year later, one year later, everything is different and people need to go again. But ideally, you plan cautiously and realistic and you avoid the situation where you hire a lot of people and then have you fired them immediately afterwards. That’s of course super stupid. It happens, but it’s also bad management. Actually, it’s a sign of bad management.

Thomas Kohler:
In case you have any feedback or anything you want to share with me, please send me an email on thomas@pplwise.com or hit me up on LinkedIn. And in case you really enjoy the show, please subscribe. I would really appreciate it.

And what I would be really curious now about, let’s compare the spreadsheet approach versus the ideal HR cast approach. What are maybe some core problems you solve in the whole HR controlling and headcount planning process with your new venture.

Florian Blaschke:
Yeah, so what we definitely solve is we provide like a platform where you can collaborate and you can make sure that everyone has access to the data he or she needs, but without avoiding like spreading too much information. So basically, as an administrator, you have the option to really define who can see what. We also support you a little bit by applying the hierarchy that we already import from the HR system. So basically the system understands who is the superior of whom and who is the team lead and so on. So naturally the managers would always see only themselves and their direct reports. So we avoid like this spread of information, I would say like also the storage of sensitive information in spreadsheets, which is anyway not a good thing. Like spreadsheet should always be like seen as a tool for analytics, but it’s not a data storage. So that’s I think, like true, you can talk to other bi experts about this, I think, like, so everyone would say there will always be spreadsheets to do a quick analysis or calculation.

That’s all fine, but you should not basically hold extensive lists and data, especially sensitive data in lists somewhere on servers. That’s just not good. What we also support you with is this topic we just discussed. So this update in the background, so you have the situation that you start budgeting and then a few weeks pass by. And normally when you do this in a spreadsheet, you would have to always keep an eye on what’s actually happening in the background and keep this list of employees that you used as a starting point updated. This is what we are also providing automatically. So you always see what’s going on in personio hypo, whatever in the background and can then decide if you want to update also your scenario with this information that has been changed in the background. Also like the whole approach, how you plan, how you budget.

I think it’s also designed to help people that are not so comfortable, fit or also have some, I don’t know, don’t like to work in spreadsheets. So it’s definitely designed also for people that are nothing, spreadsheet experts. So you can also hand this work over to, let’s say managers, normal HR people that are not. So let’s say like don’t know a lot about like formulas and stuff like that. You can also not destroy something that’s also something that very often happens to you. Have like a financial analyst that builds like a super nice model and he thought about everything, but as soon as he invites someone to work in this spreadsheet model, he cannot be sure that someone is like changing formulas or the whole structure of the file. And then he in the end anyway has to put in again a lot of manual work because he cannot be sure that the data is right just because of this collaboration. This is also something that is definitely covered with our solution and also the comparison and the analytics.

So you can then later on connect it with your payroll. You can import the real cost. So also like this type of HR cost report or also FTE headcount reports. They come out automatically and you don’t have to set up something new like another spreadsheet where you basically build this report. So the idea is really to create an HR analytics and planning suit where you can fix all these topics that normally come up in HR in regards to numbers, KPI’s, planning, comparison, forecasting and so on in a way more comfortable and easy to use weight than it is currently done in a spreadsheet.

Thomas Kohler:
Thanks. What is your plan for the future? In a very short maybe vision or goal statement of HRCast?

Florian Blaschke:
Well, what we want to achieve is we want to become a decision making platform. So in the end, now the features are planning reporting, but we also want to extend it to workflows. So when you have all this information already in the system, it absolutely makes sense to also document and manage the decision making process. So, meaning if you have planned positions, you can push out the request, get the official approval from the CEO, the CFO. You can then also manage your recruiting and hiring lists. Also promotion processes can be managed in there. You can ideally at some point also push back all this information into the other systems in your HR tech stack. Let’s say Personio, HiBob whatsoever.

Once you have a planned position, ideally this plan position can be pushed into your atsitive. But as soon as someone for instance has a promotion, you can also push this back into Personio and you’re not forced to maintain data into different systems. It will definitely also pay into the comfort of working with your HR tech stack. That’s something I would say where we want to go and also be open for additional data sources. Right now, today we were talking a lot about like head count cost, but that’s not all of it. So ideally you also get performance data into our system, recruiting data into our system, absence data, you get benchmark data. For instance, if you want to do promotions that you can ideally also directly benchmark this in our system. Maybe also connect it with figures hrtaine and see what similar roles cost in other companies in your industry so that you really only have one environment where you in the end plan and execute HR decisions. So that’s the vision for HRCast.

Thomas Kohler:
Cool, thanks for talking us through and the nice insights. That was it for the podcast and thank you so much.

Florian Blaschke:
Thank you very much for having me and have a good day. You too close.