Headcount

What headcount is, how to calculate it, how headcount differs from FTE and which HR metrics are built on it

Headcount

What is headcount?

Headcount is the number of people employed by a company on a given date, regardless of how many hours each of them works. One full-time and one half-time employee give a headcount of 2.

Headcount is a basic HR metric. Payroll budgets, workforce planning, turnover and most per-employee metrics are built on it.

Headcount vs FTE

	Headcount	FTE
What it counts	people	hours worked, expressed as full-time equivalents
An employee on 0.5 FTE	1	0.5
Team of 3 full-time and 2 half-time	5	4
Used for	structure, communication, licences, benefits	budget, workload, capacity planning

Read more about working out FTE in our article on full-time equivalent.

How to calculate headcount

Pick a date. Headcount is always counted on a specific day, such as the end of a month or quarter.
Decide who counts. Usually all employees on employment contracts, including those on leave or sick leave. Independent contractors and agency workers are counted separately.
Count people, not hours. Each person counts as one.
Break it down. By department, location, employment type and job level.
Compare with the plan. The gap between actual and planned headcount shows open vacancies or overstaffing.

Metrics built on headcount

Metric	Formula
Average headcount	(headcount at start + at end of period) / 2
Turnover rate	leavers / average headcount × 100%
Vacancy rate	open vacancies / (headcount + open vacancies) × 100%
Growth rate	(headcount at end − at start) / at start × 100%
Revenue per employee	revenue / average headcount
HR-to-employee ratio	HR staff / headcount

Headcount in the UK

In the UK, headcount triggers several obligations. Employers with 250 or more relevant employees on the snapshot date must publish gender pay gap figures every year. Companies also disclose the average number of people employed during the year in their annual accounts under the Companies Act 2006, and headcount is one of the tests used to decide whether a company counts as small, medium or large.

PeopleForce tracks headcount without spreadsheets. The employee directory in Core HR holds every person's hire and termination dates, department, location and employment type, and the Headcount report in HR analytics shows the monthly total, new hires, terminations, average growth and turnover, filtered by department or location. In workforce planning, you create planned positions with a department, manager and budget, and see how many are filled and how many you still need to hire.