In yesteryears of tech startups, headcount was the go-to metric for measuring company growth.
But today, adding 100 employees in a year could actually be seen as a failure of a company’s leadership team, with mounting pressure to adopt AI and automate work previously done by humans.
So how are top decision makers approaching this question — of how to assess hiring requirements to meet business goals, when many companies are still getting to grips with where and when AI can actually be useful?
That was the focus of our latest Sifted Talks, hosted by HR, payroll and IT platform Rippling, that examined how HR and finance teams are working more closely together than ever, as headcount costs come increasingly under the microscope.
Our panel of experts included:
- Alessandro Bonatti, chief people officer at travel company WeRoad
- Katharina Bremer, Finance & HR at robotics startup Sewts
- Achraf Arifi, VP of financial planning and analysis at second-hand fashion marketplace Vestiaire Collective
- Rhiannon Barry, senior manager for EMEA HR, Rippling
From productivity to capacity
One shift in the way that HR and finance teams are assessing company performance today is moving from measuring people and their productivity, to tracking “capacity,” and what is the most efficient way to deliver what needs to be done.
“For example, if we suddenly need more capacity to handle our customers, we have a couple of different options open to us now,” says Barry.
“Either I can hire 50 people: the old-fashioned kind of view of people and productivity. Or we can deploy an AI tool, which could involve time and money in redesigning the process, or it could be a mix of both.”
Arifi, who is also now thinking in terms of capacity rather than headline numbers of employees, explains how this is creating complex decisions for a business like Vestiaire Collective, where human taste and knowledge is an important part of the company’s product.
“If we take, for instance, the curation team, which is very important in our process because they make sure that all the items are relevant on our platform, what are the tasks where we will still require human expertise, and how can we redesign that workflow [with AI],” he says.
“Headcount will remain important, but it will become an incomplete measure of organisational capacity.”
HR and finance teams, assemble
Automation’s impact on hiring plans is forcing a natural merging of HR and finance roles, according to Bremer, as CFOs can no longer simply allocate budget for extra headcount, when they need to think more carefully about how AI will change organisations.
“The role of the CFO function changed tremendously [due to AI]. It's no longer only a budgeting role, monitoring the figures, it’s really becoming more about shaping the future of a company, and way more strategic,” she says.
“Human resources are the biggest asset we all have, and this becomes more and more relevant with AI, where you can replace more simple functions.”
While HR and finance teams are naturally working more closely together, however, business leaders must rethink organisational structures to get the most out of automation, Arifi warns against fully combining the two functions.
“Even if there is still this common objective between both, they still have different objectives. HR should be the owner of the employee experience, the talent development, and the culture of the company,” he says.
“Finance should still focus more on capital allocation, economic arbitrage.”
“It can be dangerous if HR becomes too focussed on cost or if finance starts to try to manage people.”
A delicate time
Bonatti believes that AI will drive a future where companies are less likely to hire people on a permanent basis, with workforces shifting to a more fractional, contractor-based approach as they deploy automation.
“There will be a change in the composition of the workforce. There will be more AI and less full-time employees. There will be more part-time, project-based employee specialists for specific activities,” he says, adding that he’s seeing certain job functions that are more ripe for automation.
“Operations is definitely where we see the maximum optimisation [with AI], including some HR areas like payroll and admin.”
What seems certain is that anyone managing headcount at a fast-growing company is going to have to find a delicate balance between making the most out of AI, and not alienating or disenfranchising their human workers.
“While we're moving to this new capacity model, there are still the important issues of trust and culture,” says Barry.
“Ultimately, at the end of the day, we still have people, we still want to retain them, we want to make sure that we have the right headcount, the right skills and the right talent in our companies.”
