Head Count or Head Cost?

April 18, 2016
Written by Chris Moore
Head Count

Companies place a lot of emphasis on getting an accurate headcount. This makes sense; employee headcount is a pretty basic metric, and looks like a good place to start a workforce analytics program. However, in the rush to get a head count more valuable metrics may get ignored or overlooked.

Head Cost

Although head count is widely reported and many organizations struggle to get an accurate head count, it has little real value on its own.   Although it tells you the number of people working for your company, the true value resides in knowing how much compensation you are paying the heads and how much value those heads produce, also known as “head cost.”

Head cost and similar metrics are far more useful than head count when it comes to crafting an effective workforce strategy. However, organizations sometimes struggle to get beyond head count because they think that if they can’t get an accurate head count, other metrics can’t possibly be correct.

Applying Head Count

While there are other, more valuable workforce metrics that merit attention, head count does have its uses. Head count is useful in determining head cost, since total compensation divided by total head count gives you the head cost per person. Head count can also be used as a multiplier, extrapolating head cost over departments and your entire workforce.

It’s useful to know your employee head count, but in the grand scheme of things, a couple of heads here or there for large organizations may not make a huge difference. Contact a workforce analytics expert like ZeroedIn to figure out which HR metrics are the most valuable for you, and get the workforce information you need to succeed.

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