How to build a headcount forecast people actually believe with Christian Wattig

Kirk Kappelhoff

Hello, everybody. Welcome to today's webinar. Really looking forward to having you all join here. We'll give it about thirty seconds as everybody begins to join, coming from their lunch breaks I'm sure. I am calling out of lovely warm Miami, Florida right now. Christian, where are you joining us from? I'm joining from New York City — not quite as warm, but not that cold anymore either. Certainly not as warm, but just as beautiful. No doubt about it. As you can see on the screen, everyone, we're starting with headcount. Headcount modeling is notoriously difficult — there's a lot of struggle with it, but luckily we have Christian here with us to give an overview. Who are we, and why should you even be listening to us at all? Well, I'm Kirk, director of strategic finance here at Drivetrain — an FP&A software, strategic finance software that helps you forecast more accurately and get to the places you wanna be. It's essentially a replacement for the traditional, lacking Excel software that can get a little buggy sometimes. But with me I have Christian Wattig. Christian is an FP&A expert with fourteen years of experience in multinational corporations — P&G, Unilever, to name a few — but also high-growth tech startups like Squarespace. After earning his MBA from NYU Stern, he helped take Squarespace public. Now an entrepreneur, Christian directs the FP&A certificate program at Wharton and runs his firm FP&A Prep, offering corporate training, online programs, and sharing insights through LinkedIn newsletters and his FP&A Tuesday series. Christian, super excited to have you here.

Christian Wattig

I'm excited to be here as well. Looking forward to this.

Kirk Kappelhoff

It's gonna be a lot of fun. Let's go over what people will be learning in today's session. Number one, an eight-step headcount forecasting method with best practices — this will be the meat of today's session, and Christian's gonna walk us through the steps. It's really insightful stuff; I've been doing headcount modeling for a long time and learned an immense amount working with him on this presentation. Number two, let's tackle some real-world challenges in workforce planning — we're excited to go through the theory, but also practically, how this shows up in models or in software like Drivetrain. And of course, reach out — we always wanna work with you on consultations around any workforce planning techniques, and you'll see contact info on the right side in the chat. Let's start with a poll: where do you currently manage your headcount planning, and what's your biggest challenge with headcount planning? A few answer options — Excel/Google Sheets, ERPs, HRIS tools, FP&A platforms like Drivetrain, or maybe you don't have a formal process yet. We wanna get a feel for where you're at, since it'll help direct the conversation a bit. But before we dive into today's topic — we all know headcount is critical, given staffing is seventy percent of expenses according to the Bureau of Labor Statistics as well as the Human Capital Management Institute. But are there any nuances, Christian, in terms of what stage a company should be ready for this, or not?

Christian Wattig

Yeah, absolutely. If you're very early stage, and especially if you have a short runway — anything below six months, even under a year — detailed headcount forecasting probably isn't the top priority right now. You're probably more focused on finding efficiencies and cost-cutting measures. But for growth-stage, more developed companies, headcount forecasting is extremely important, especially in these volatile times.

Kirk Kappelhoff

No doubt about it. So there's a time factor based on when you're prepared to do headcount planning — but this is important for everyone to know, whether you're early stage or more seasoned, since everything we'll talk about today applies. I'd love it, Christian, if you could give us a high-level overview of the eight steps we'll walk through today.

Christian Wattig

Absolutely. So, step one is to compute the top-down target. Any headcount forecast needs to be grounded in your targets — you may already have those from the last budget process, but if not, they need to be there, because targets reflect the expectations of leadership, the board, and investors. Then, in the next step, I highly recommend you build a top-down forecast — this is something you as the finance leader can do; we'll talk about how. Essentially it's about looking at drivers — I highly recommend a driver-based approach, and there are a number of advantages we'll get into. After you've built the top-down forecast, you go get the bottom-up from the department heads, and there are a number of things to consider there too. But let me pause and clarify why we recommend doing both a top-down and a bottom-up, because I often get the question: isn't bottom-up enough, since those people are closer to the business? And that's true — but typically your top-down forecast is a bit conservative-leaning, while your bottom-up is more aggressive. Department heads share headcount requests with a mindset of, we want to get a lot done, so we need a lot of people. Where you can often find the golden middle is by comparing the two — and it's not just that comparing them brings more realism by balancing a conservative top-down against a more aggressive bottom-up. It's also that if you do the top-down the right way, finance can add a lot of value even to the bottom-up — more on that later — because if you do the top-down at the right level of detail, you can use it to challenge the bottom-up effectively and have a real impact on the business, helping leaders make better decisions. The other question I sometimes get is which one should come first — top-down or bottom-up. Here we said step two is top-down, step three is bottom-up; that's how most companies do it. But I'd like you to consider doing the bottom-up first instead. Here's why: if you share your top-down forecast broadly with the team before they do their bottom-up, it can influence people. They might think, finance and leadership think we can only hire three people — I think I'll need five, but I'm not gonna submit five since it'll just get cut anyway, so I'll submit three and save myself the discussion. We don't want that. We want people to actually share how many people they think they'll need in the next month, quarter, and year, because we need to have discussions around why that's the case and how we can make trade-offs. At a company I used to work at, we had this exact challenge — partly a culture thing — where I had a strong feeling the bottom-ups we were getting were highly influenced by the top-down. So I said, let's do it the other way around this cycle — bottom-up first. But I got pushback, because department heads were uncomfortable, worried they'd submit a bottom-up completely disconnected from financial realities, and maybe a bit concerned it would look embarrassing for them. So how we solved it in the end was: we didn't give them the top-down first, but we gave them guardrails — you can hire in this range, you have roughly this much for hiring bonuses, etc. That made the whole process a lot more realistic. So that's why it's so important to do a top-down and a bottom-up as two different teams — finance does the top-down, the business/department heads do the bottom-up, and then you compare.

Kirk Kappelhoff

I love this point you made, Christian, because every team has its own incentives that shape their modeling and assumptions. The idea of comparing two completely separate sets of assumptions — a top-down and a bottom-up from two separate teams or owners — almost like scenarios, is a huge takeaway in itself for me.

Christian Wattig

Thank you. And then once you're done with that — step five — factor in attrition, backfill, new hires, and ramp-up times. I actually recommend doing this as a completely separate step from the bottom-up and top-down, because if you try to do everything at once, it gets complicated quickly and you have to redo a lot of work whenever something changes. So do that as a separate step — and then it's time to create scenarios. Don't skip that step. I often see people spend a lot of time on the headcount forecast, then just file it and move on. But the reality is, it's rare — I've never seen a case where the headcount forecast gets delivered exactly as planned. Usually it takes longer to hire certain key positions than anybody expected. That's why we create different scenarios: if you have a scenario where hires are delayed, the leadership team can already have a conversation now about how to deal with it — are there strategic priorities or launches that would need to be pushed back, or do we have enough slack in the existing workforce to absorb it, and how much? And in the other direction — if the hiring market is easier than expected, or your strategy is working and you want to put fuel on the fire and hire even more than baseline, what would that look like financially, and how does it tie back to budget and targets? That's why I recommend three scenarios, and we'll talk about how to differentiate between them later. Then step seven: once you have your three scenarios, you tie them back to your budget and margin goals — that reality/feasibility check — which feeds into trade-off discussions. And lastly, step eight: monthly tracking and reforecasting, extremely important. Some companies do it quarterly; I'm a fan of monthly, simply because then forecasting becomes part of the existing monthly cycle and stays top of mind, rather than a big, out-of-the-ordinary lift each quarter. So that's the forecast in a nutshell.

Kirk Kappelhoff

Oh, that's really good — thank you so much, Christian. We'll take these one by one, starting with step one, the top-down targets. This is something we see a lot at Drivetrain. These three approaches you're seeing here are actually the three most common ways we see it done: a percent of revenue budget — pretty common; a percent change over the previous year's budget, like a simple five or ten percent increase; and, a lot of the time, it's just based on investor expectations — you start with the goal from investor expectations, then figure out what you need to do to get there. Now, this would be more generic — something a bit more SaaS-specific would look a little different.

Christian Wattig

Kirk, oh, sorry — before you go there, I just wanted to add one more thing, which is on the percent-change-over-previous-year's-budget approach. You have to be careful with that, because if it's your only way of setting targets, people will realize that over time and you won't get realistic budget inputs. People are people — if they know the target they have to hit is ten percent higher than budget, or they have to do the same with ten percent less headcount than what they submit, they'll submit their budget accordingly — artificially inflating it because they know it'll get cut by ten percent. You don't want that. So I think the third point on the slide is really key: decouple your target process from your budgeting process, and say targets are set based on external inputs, specifically investor expectations.

Kirk Kappelhoff

Yeah, I couldn't agree more — there's definitely an incentivization issue with each of these. If it's just a prior-year change or a flat five-to-ten-percent bump, that doesn't really provoke innovative thinking about cost constraints — where does the money need to go to have the biggest impact on the business? So, as I mentioned, those were pretty generic. For something a bit more B2B-SaaS-specific, here are some of the more common approaches we've seen: starting with board-committed KPIs — this is the NRR I want, the GRR I want — and then making the assumptions fit that target goal. If you know where you need to get to, you probably know what your sales reps need to achieve per month. Computing downstream targets — this might be new ARR, expansion, or churn-related — has also been very helpful and common for setting top-down targets. And lastly, how do we think about non-revenue teams? This goes back to the previous slide — most of the time it's a percent of revenue budget, or a blanket increase over last year, similar to before. Be careful with those, as Christian mentioned, but they're two of the most common. The last one is that every team has some driver-based methodology it can apply — every team has its own metrics and outputs, and using those drivers is usually ideal because it creates an incentive that matches the forecast you want. So I'll pause there, Christian — any comments before we move on?

Christian Wattig

Thank you — you gave a complete overview there.

Kirk Kappelhoff

Thanks.

Christian Wattig

No problem.

Kirk Kappelhoff

So, to accompany all this, we have some good resources for you — they'll show up as links in the chat. We have an ebook on SaaS metric-based planning, and also a template, so you can spend time in the model itself and see how we get to the metrics we want and what inputs are needed. Feel free to check those out in your own time. Let's jump to step two, Christian — what are your thoughts on creating a top-down forecast for identifying key headcount drivers?

Christian Wattig

Yeah, there are a number of different ways to look at this, and you should really look at all of them. The first is revenue-driven — specifically useful for growth-stage, established companies, maybe less so for early-stage startups. Here you look at overall salary and benefits as a percent of revenue. This is a very high-level approach, and I'd never use it in isolation as the only way to do a top-down forecast — but it's useful so you don't miss the forest for the trees. If you're too deep in the weeds, you may be surprised that your salary-and-benefits-as-percent-of-revenue changes — and that's something investors look at frequently too, since it's a way to benchmark and compare your performance to other companies. So it's important to reflect that. When you look at sales specifically, revenue-driven metrics can be extremely powerful — you can look at revenue per sales rep. The second way to look at headcount drivers is headcount-driven, where you separate department metrics from organization-wide metrics. For department-wise headcount ratios, for example: for every product manager, I want four engineers, because I know the product manager will come up with a certain number of features, and I need four engineers to execute on the roadmap. Or, one QA engineer focused on quality for every three developers, because when developers ship new features there might be bugs, and you need enough people to make sure the solution is robust and bugs get addressed. Another common department-wise ratio is sales development reps per sales rep. Then for organization-wide headcount ratios — HR is a common one, like one HR rep per twenty employees, so that as you scale and hire fast, you have the right pace of hiring for support functions. Another thing to look at is span of control — what does your org hierarchy look like, how many individual contributors per manager? As you grow headcount, that may well change, and it's something you need to consider in headcount planning, working closely with HR on it. Then we have activity-driven headcount drivers, applicable across all growth stages — looking at how operations are doing, how customer counts are growing, whether you're entering new channels or a new geography. It's important that you, as the finance leader, stay close enough to the business to know what's coming and changing operationally, so you factor that into your headcount forecast. And lastly, efficiency improvements — it's important not to forget that these days, efficiency improvement should be high on the priority list for any leader, in any function, because we have tools like Drivetrain and AI chatbots that can help a lot with efficiency and making your life easier. So your headcount forecast should already factor that in — removing some slack so the forecast stays appropriately challenging.

Kirk Kappelhoff

Awesome. Thinking about drivers across departments — are there ones you've seen really stand the test of time across the businesses you've worked with? Or is it more that each of these, used properly, adds value, and you wouldn't necessarily favor one over another — more that an array of them helps?

Christian Wattig

That's a great question. I'd recommend that, to begin with, if you haven't done a detailed driver-based forecast before, look at as many metrics as possible, because you might not yet know where the levers are — which metrics have the biggest impact on your company's success. Then apply an eighty-twenty principle: once you've done that initial exercise looking at all those metrics and the historical data, focus on the twenty percent that drive eighty percent of the impact, and really understand those. Just to highlight a few examples: on the sales side, look at sales cycle length — how long it takes to close a lead, which impacts your sales team sizing. On customer success, look at productivity per customer success manager — how much revenue, or book of business, each one handles. For anyone unfamiliar with the term, book of business is the total contract value of all deals, irrespective of revenue treatment — because revenue per CSM alone can be distorted by accounting rules, so book of business gives a cleaner picture. And for customer support, it's important to keep those functions in mind too, because you don't want a situation where you've focused so much on revenue-producing teams that headcount growth or productivity hits a bottleneck because support can't handle the ticket volume the new engineers created. What's also really important to emphasize is that these metrics aren't just great for building your top-down forecast — they're also great for challenging the bottom-up forecasts from business leaders later on.

Kirk Kappelhoff

That's great. One thing I love about this slide is it nicely splits new-ARR-generating functions from the expansion side — sales, obviously, is about new customers, but keeping those customers around needs a good customer success and support team (maybe one and the same), who have their finger on the pulse of every customer's frustration levels and everything else. Getting their feedback has been super valuable for a lot of our customers too. Next, on establishing baselines for headcount drivers — I'd love your thoughts, Christian, on each of these and how they factor into building the headcount forecast.

Christian Wattig

Yeah, so once you have your drivers, you apply them to your baseline. First, historical trends — straightforward, you're probably doing that already. Internal estimates means taking a close look at your historicals and adjusting for one-offs — removing things unlikely to repeat. For example, maybe you know there was an unusually competitive hire last year where you paid an exorbitant sign-on bonus, and you know that won't happen again — so you'd adjust your baseline salary and benefits figures accordingly. External benchmarks are an often-underutilized tool, but I'd recommend them especially to get an outside perspective and sense-check whether your internal estimates are reasonable. They can also be great ammunition in negotiations with department heads on overly aggressive headcount requests.

Kirk Kappelhoff

No doubt — that external benchmarking piece is something we've spent a lot of time on here at Drivetrain. You should be seeing links in the chat to our blog posts on benchmarking; we're constantly publishing on modeling best practices and how tools are solving FP&A problems, so take a look. And on bringing in scenario-based planning, Christian, any thoughts on the best way to start that process?

Christian Wattig

Once you have your headcount drivers and your baseline, you marry the two. If you don't have a planning tool, you'll probably be building a fairly complex Excel model — taking a table of historical headcount and deciding whether to work at the employee, role, or team level, depending on your complexity. Then you project forward by combining your baseline with your headcount drivers.

Kirk Kappelhoff

Awesome. Now, I've got a note here on always taking fully loaded cost — what do you mean by that?

Christian Wattig

It's a comprehensive view of cost — not just salary and benefits, but payroll taxes, relocation, overages, training costs, and so on. I'm not saying you need a detailed model for every one of these — some will be quite minor — but you should at least take historical amounts for things like overages, office meals, and training costs to make sure you're working with fully loaded costs going forward.

Kirk Kappelhoff

No doubt. We've been talking pretty theoretically about all this, so as promised, let's show you how it looks in a tool. Let me jump into Drivetrain here. You can see a variety of pieces on this page — this is a typical modeling template we'd give for headcount. It doesn't cover everything, and this is more of a US-based example, but you can see the breakdown of the fully loaded costs Christian was describing — 401k, severance, Social Security tax, Medicare tax, SUTA and FUTA. These are historically difficult to calculate, especially in Excel with all the limits and thresholds involved — exactly what a tool like this helps with. We'll come back to this later, but the key point is that whether you're working at the department level or down to the department-and-team (i.e., individual headcount) level, we want to calculate these down to the cent. If you can see it on the pay stub, you should be able to reproduce it in the forecast — that's exactly what this is trying to address. We'll walk through this in more detail shortly. But Christian, back to you — how can we actually gather these bottom-up inputs from cross-functional teams?

Christian Wattig

Again, if you don't have a planning tool like the one Kirk just showed, you need really good templates, so that when you get inputs back, they're as easy as possible to consolidate in Excel. A question I get a lot is: how can I, as the finance leader, add value in the bottom-up process? That's what's in the middle of this slide — ask departments to justify their headcount, ask challenging questions. Super important. This is where a driver-based approach done at the right level of detail comes in handy, because instead of just saying, "your estimate looks high," you can open up your spreadsheet and say, "I actually think your SDR-to-sales-leads ratio is off, here's why" — a much more data-based discussion that's easier to challenge. As a pro tip: ask department heads to provide their hire list stack-ranked by priority. That way, in the likely scenario that headcount requests come in too high, you have a starting point for reducing them without putting the department's major objectives at risk.

Kirk Kappelhoff

Without a doubt. So, on step four — validating the headcount request against your estimates — what do you mean by "validate" here?

Christian Wattig

Now that you have a top-down and bottom-up, you compare them, in a meeting. The first meeting I recommend is always a learning one — as the finance leader, sit down and learn as much as possible about how department heads arrived at their numbers, without challenging yet. If you come out swinging with "your numbers look crazy high," that creates defensiveness, and you might genuinely be missing context that didn't make it into your top-down. So first, have them walk you through their reasoning, then discuss the differences. I'd recommend a coaching approach to get deeper insight — rather than telling people what you think is off, ask questions. I specifically like the GROW framework (Google it if you haven't heard of it): Goal, Reality, Options, and What's next. Ask what they're trying to achieve with the headcount (the goal); what's the reality — why can't this be done with existing headcount, what bottlenecks exist, what have they already tried; then Options — if we can't hire as fast as requested, or it doesn't work budget-wise, what are the alternatives or trade-offs; and What's next — being transparent about how the process will proceed, get justified, and get consolidated. Then you align on a shared proposal. And I'll add: if you can't align, use the requested figures as the official base case, and report your own scenario separately. This actually happened to me — we got very high headcount requests from a CMO with strong reasoning behind them, but we knew from historical data that hiring that fast just wasn't realistic, since recruiting needed more time. She insisted on the headcount and needed it quickly. So in the end, we communicated her requested numbers to the recruiting team as the official target, while internally, just for financial purposes, we used our own more realistic number to calculate the P&L roll-up — without sharing that publicly, so as not to confuse department managers or recruiting about the goal. That's one way to approach it.

Kirk Kappelhoff

Beautiful — a lot of big concepts there, especially around collaboration, validation, and reconciliation. A lot of the time you'll have "to be hired" roles in your forecast, and then when they're actually hired, how do you handle that mapping? Let me jump back into Drivetrain quickly — Christian, can you see this employee roster on my screen?

Christian Wattig

Yes, yes.

Kirk Kappelhoff

Great — this is what we call "lists" in Drivetrain. It stores all the employee information you'd need, tied to that expense. But as I mentioned, this has to be a combination of both actual headcount and "to be hired" — which raises the question: when a to-be-hired role actually gets filled, how do we ensure that mapping happens? You'll see something here about updating the list with new data — if I click in, I get a list of people who may or may not match an existing role. With Ava Martinez, for example, it's flagging this as not a new record — it's picked her up from our HRIS and is asking what to do with it. I could accept her as a new line item, or map her to an existing to-be-hired record she might be replacing. If I click into one, I see all the dimensions of Ava Martinez against the original placeholder role — some fields were originally blank and now get replaced with her actual details. That could be for any number of reasons: a hire date pushed back, a salary increase, a new title. Regardless of what changed, we want to be able to flag each of these and make sure it gets mapped to the right place. This feature was built in response to feedback from our second-biggest user group, HR teams, working alongside FP&A — wanting some kind of approval and mapping process built in. It's enabled that collaboration: teams can come in, ensure mapping is done properly, and with the right permissions, each person sees and approves only what they need to, and can submit referrals or headcount requests too. As we accept these, they get added to the list, and if I ever want to just add my own "to be hired" row, I can do that too, for any team or salary. So, I'll pause there — Christian, back to you. This was a bit of an overview of the top-line piece; now I want to talk about attrition, backfill, new hires, and ramp times — the theory first, then we'll look at how it's modeled.

Christian Wattig

Absolutely. As I mentioned, do this at the very end — once you're done with your bottom-up and top-down, had the discussion, and aligned on a base case between department heads and finance, then you sit down and work through attrition, backfill, new hires, and ramp times. I recommend doing it as a separate step because it can be time-consuming — you want to do it accurately, based on historical data, and be able to justify the decisions you made. Having to redo this multiple times, and I speak from experience, can be frustrating if you don't have a cloud-based planning solution. What's important here is not to forget ramp time, which people often overlook. Ramp time means: you hire the person — my recruiter likes to say "butts in seats," the date they actually start — but they won't be at full productivity right away. That's especially relevant for sales: if you have to train a new rep first, you need to factor that into your forecast. It won't affect your expenses, but it may affect revenue, and it may affect hiring plans for other functions like customer support — if you're scaling your sales team, it'll take a while before that activity generates enough volume to justify hiring more support staff. So it's important to keep that in mind.

Kirk Kappelhoff

Good point. We've got one more pro tip here — any comments on this one, Christian?

Christian Wattig

Yeah, there's a lot to consider here too — promotions, internal movement, and succession also matter, and these are sometimes hard to predict. What I'd recommend is using historical data as an average — how many people were promoted last year — and make reasonable adjustments, but don't spend hours and hours on it. It can improve forecast accuracy, so don't ignore it, but spend more of your time on attrition, backfill, new hires, and ramp time, since that's really what moves the needle.

Kirk Kappelhoff

No doubt. So attrition, backfill, new hire, and ramp times — in Drivetrain, we've templatized most of this into what we call the sales capacity plan, in this case by sales rep. Let me jump back into that screenshot. On the left, if we look at one month in particular, you can see the ramp time in months — this might vary by rep, department, or team, since I might have many teams each with slightly different ramp times depending on experience. A seasoned hire ramps differently than someone straight out of college, so we need to account for that, including tenure. I also need to factor in individual quotas by region. At the rep level, combining ramp, quota, and some attrition assumption gives me overall quota capacity available — taking the quota and backing out the portion lost to attrition. That's different from what I need: quota capacity needed, driven by my own goals — in this case, new bookings target divided by attainment rate. With both numbers, I can see whether I'm in a surplus or a deficit — here, a pretty substantial deficit of about $500K. That leads into calculations for new hires: knowing average ARR per rep, quota capacity needed, and the surplus or deficit, tells me how many new hires I need, offset by how long it takes to ramp — if I need 22 people by January, I need to start hiring the prior June or July, customized per role. Now, this is my base case, but say I want an aggressive case — I can switch scenarios, and by default all formulas carry over my base-case assumptions. If I then change something, like bumping attrition to five percent, I can see that flow through with the knock-on effects across the aggressive case, while the base case stays intact for comparison. All this is tabular here, but in reports I'd visualize it as a line or bar chart, showing the aggressive case against the base case for quota capacity available versus needed. So that's a bit of the practical side matching the theory Christian's walked us through. A couple of other resources for you here too — on sales capacity planning for SaaS businesses and calculating ramp-up time, which is surprisingly complex and varies customer to customer; reach out if you'd like those. The other piece I want to call out is validating against budget and margin goals. Christian, you've got some thoughts here — could you share what you mean by this?

Christian Wattig

Once you've calculated your scenario, you need to validate it against budget and margins — and you may find a gap, so it's not uncommon to need some top-down adjustments. The first and easiest lever is pushing headcount back, though you need to be careful about what that means for delivery — does it have revenue impact, and have a detailed discussion with leadership about the necessary trade-offs. It's important not to under-invest in really understanding headcount's impact on tactics and strategy. A mistake I sometimes see is that when people push back headcount, they start with support functions — the ones not directly generating revenue — so engineering, product, and sales stay untouched while customer success and support get cut. The problem is that if you're successful at driving revenue, you'll need more of those support functions later, so instead, do a thorough analysis of how much slack or stretch capacity those support teams actually have before cutting there. I'd also add: ideally, drive this prioritization through alignment among the leadership team, rather than pushing the decision up to the CEO — you want to bring solutions, not just problems, and department heads are closer to the day-to-day realities. It's also about building strong buy-in from department heads, since they're the ones who have to execute against the final numbers — involving them in the decision-making makes them far more likely to support you through the ongoing reconciliation between actuals and headcount.

Kirk Kappelhoff

That's a really good point — bringing solutions rather than problems always wins favor. Let's jump to step seven, Christian, on scenarios. This can feel like it's tripling the work, since now there are three scenarios to manage instead of two — what's the best way to do this so it adds value without becoming a time sink?

Christian Wattig

That's a fair concern, but if you approach it systematically it doesn't actually take much extra time. For the aggressive scenario, you can often just use the existing bottom-up the department already shared — which is usually already more headcount than your top-down, since people want the ability to exceed their goals. The downside scenario can use the worst case for attrition and backfill timing — you know some roles take longer to fill than others, so assume the high end of that range. And the base case should align with the budget and make sense against historical rates — essentially the outcome of the alignment discussion between bottom-up and top-down. So if you approach it that way, creating all three scenarios really doesn't take that much more time.

Kirk Kappelhoff

Good to hear. On step eight — monthly tracking and reforecasting — why is it important to do this monthly rather than quarterly or semiannually? I'm sure that's a question on people's minds.

Christian Wattig

It depends on your complexity — if you're not hiring much, quarterly might be fine. But the advantage of monthly is staying closer to what's actually happening: you can respond faster to hiring delays, or to good market signals where you might want to advance a hire before it becomes harder to fill that role later. If you only do it quarterly, it's harder to do thoroughly, since it becomes a big exercise on top of an already full plate. Spreading a little time across each month instead makes it feel like less of a burden, and lets you do it properly.

Kirk Kappelhoff

No doubt. What we're touching on with tracking and reforecasting usually ends up in some kind of dashboard too — let me quickly show what that looks like in Drivetrain's reporting. Here you can see metrics like closing headcount, employee retention rate, and headcount growth — plus the headcount walk we talked about, shown visually rather than just in a model. This is all interactive: I can leave a comment tagging a specific person — say, "this looks high" —ipping them in Slack, Teams, or email, and they can track comments as active or resolved. More usefully, I can right-click to see the underlying data — who the three people behind an attrition number are, what department they're in, with information masking available where needed. The mechanics work the way you'd expect: opening headcount, plus new hires, minus attrition, gives closing headcount, which becomes next month's opening headcount, creating that walk/waterfall/corkscrew calculation. I can view this monthly or roll it up to quarterly, and drill into it by department, name, or whatever dimension makes sense, sorting however I like. Everything here exports to Excel, so even though Drivetrain is the system of record, people can still work in Excel when they need to. Most of the time, though, we see people scheduling these reports directly — sending to a distribution list as a PDF or embedded image, on whatever cadence makes sense (daily, specific weekdays, or a set day each month), so it's automated going forward. The goal is getting to answers quickly, telling a visually clear story, and getting the right eyes on it, all controlled by permissions. So these visuals really tie back to what Christian's been describing on the tracking and reforecasting side — as actuals come in, you can still see the forecast right alongside it. Let's take a quick look at another poll: would you like a demo of Drivetrain's headcount planning, and did you find this webinar a good use of your time? We take that feedback seriously, since we want to keep improving these sessions and how we help with FP&A forecasting generally. Drivetrain is currently the highest-rated FP&A software on G2, and a couple of the logos and quotes you might recognize here are from people I've worked with directly — real fans of the tool who've picked it up quickly, in part because a lot of it mirrors things you already know from Excel, like DAX-style expressions or IF/AND/MIN/MAX logic, so there's not much to relearn. We're also happy to run a forecast, report, and KPI workshop tailored to your specific use case. A few more resources: how to forecast ARR (a comprehensive guide), and headcount planning Excel templates we've built for you — plus our blog and cheat sheets, and past recordings of webinars like this one. Reach out for any of that. We've got a couple of minutes left — let's take a couple of live questions. I'll start with one myself: how do we account for the delayed impact of hiring on revenue, especially when new hires don't boost revenue in the same year?

Christian Wattig

Great question — there are two angles: accounting and planning/decision-making. I can't speak to the accounting side, since that depends on your local accounting rules for how you recognize revenue and expenses. But from a planning perspective, this is critical, and it's exactly where ramp time comes in: you need to be clear about how long it takes a new hire — say, a salesperson — to reach full productivity. An experienced hire might start at fifty percent capacity right away, but either way, you need to build that into your revenue planning model. That's super important.

Kirk Kappelhoff

Great answer. When it comes to headcount, there are a lot of different ways to lay it out — we've shown a few today. Do you have a favorite? Is there one approach, in terms of a modeling or reporting standard, that you'd point to as the best you've seen?

Christian Wattig

I'm a big fan of driver-based headcount forecasting, for two reasons. First, it naturally becomes a living document — every time you reforecast, monthly or quarterly, you keep using that same original driver-based plan and just update the inputs as you get new actuals or new information. That ability to make incremental adjustments lets you always tell the story of the business, linking back to the original forecast — and leaders and investors love that continuity. Second, driver-based forecasting — especially for finance's top-down work — forces you to really know the business: to get closer to your business partners, understand what matters, and see how different departments function structurally. That business know-how makes you a much better finance and strategic partner to the business overall.

Kirk Kappelhoff

That's great to hear. Putting on your forecasting hat — where do you see the future of headcount planning going? What will change with AI coming into the picture — what will help, what obstacles do you see, and will things get simpler or more complex?

Christian Wattig

We're getting genuinely great tools now. If your headcount forecasting today is very manual — because of data quality issues, or because internal moves don't get reflected quickly, which I've seen happen — those are exactly the kinds of problems that should go away if companies invest early in these tools and don't put it off. I know it's hard, since it's like changing the wheels on a bus going a hundred miles an hour — people are busy, and it takes time. But from my experience, it's absolutely worth the investment, because it removes those pain points and frees you up to focus on what actually moves the needle: business partnering, staying close to the business, and helping leaders make better strategic decisions.

Kirk Kappelhoff

That's great. Christian, I think I can speak for everyone in saying we really appreciate your time. If anyone has questions, for Christian or for us at Drivetrain, feel free to reach out — contact info is on screen. Christian, any final thoughts before we wrap up?

Christian Wattig

I thought it was a fantastic discussion — forecasting is one of my favorite topics, so thanks so much for having me.

Kirk Kappelhoff

Our pleasure — we'd love to have you back again. This is our second time with Christian, and we're looking forward to many more; he's the FP&A Prep master, and also drives the FP&A curriculum at Wharton. Thank you all for joining us today — we look forward to seeing you again. If you'd like any of the resources mentioned, or want to book a demo, reach out or check the link in the bottom right. Thanks for joining, and have a wonderful day.