Understanding Variance Bridge Analysis and Headcount Rollforward Report

In Workforce Planning, understanding the dynamics of your workforce and its impact on financial outcomes is crucial. So we have introduced advanced reporting tools, like Variance Bridge Analysis and Headcount Rollforward Reports, which provide benefits like:

• Invaluable insights into workforce trends

• Enables FP&A teams to explain variances, track workforce changes, and align the budget with actual workforce costs.

• Streamlines data analysis and also empowers to make strategic, data-driven decisions.

Note:

The Variance Bridge Analysis and Headcount Rollforward are a part of Workforce Pro and you must reach your Planful Account Manager to enable.

Variance Bridge Analysis

Variance Analysis is a critical reporting tool that helps FP&A teams understand the differences between planned workforce costs and actual expenses. By analyzing these variances, teams can uncover the root causes of workforce cost fluctuations, such as promotions, merit increases, or headcount costs.

This in-depth analysis not only explains why variances occur but also empowers you to propose adjustments for more effective budgeting and planning.

A Variance Bridge Analysis Report typically includes the following components:

• Shows the difference between the planned budget and the projected end-of-year budget, highlighting any deviations and their causes.

• Identifies the key drivers of variance, such as promotions, merit increases, or terminations.

By breaking down variances into actionable insights, Variance Analysis will further allow to:

• Identify the root causes of workforce cost fluctuations.

• Provide clear explanations to leadership about why certain budget variances occurred.

• Recommend corrective actions or adjustments to prevent negative variances in the future.

Understanding the Variance Bridge Analysis Report

The report shown in the image below is a workforce cost analysis, specifically focusing on Compensation Items over time.

The report provides the following information:

• Initial Salary Run Rate: Baseline salary expenses before any workforce changes.

• New Hire Monetary Impact: Costs associated with new hires (positive impact).

• Termination Monetary Impact: Cost savings from terminated employees (negative impact).

• Transfer IN / OUT Monetary Impact: Shows the monetary impact of employees moving between various home budget entities, departments, and locations. It helps Admins understand the overall impact on their cost centers.

• Promotion Monetary Impact: Salary increases due to promotions.

• Merit Increase Monetary Impact: Incremental salary adjustments for performance-based raises.

• Annualized Salary Run Rate: Final salary cost projection after accounting for all changes.

Key Observations

• Salary Cost Fluctuations:

  • New hires have a notable positive impact on costs in Q1 and Q3 2025.

  • Terminations bring cost reductions, particularly in Q2 and Q3 2025.

  • Transfers and promotions cause smaller fluctuations over the months.

• Recurring Cost Reductions:

  • Termination costs are consistently negative (shown in red), meaning employees are leaving at a steady pace.

  • Transfer OUT values also contribute to cost reductions.

• Annualized Salary RR Trends:

  • Shows steady increases, reflecting workforce expansion over time despite terminations.

  • Major jumps in Q2 and Q4 suggest periods of significant hiring or pay adjustments.

Headcount Rollforward Report

A Headcount Rollforward Report tracks workforce movements—such as new hires, terminations, transfers, and promotions over a defined period. This report provides visibility into how workforce changes align with budgeted headcount, making it easier to track workforce trends and their financial impact.

The Headcount Rollforward Report typically allows you to analyze:

• Headcount Movements like data on new hires, terminations, promotions, and transfers.

• Financial Impacts like these workforce changes affect the overall budget and forecast.

• Headcount Trends so the FP&A teams understand workforce trends and forecast future headcount needs.

Headcount Rollforward Reports will further enable teams to:

• Visualize workforce changes and their impact on the budget.

• Align workforce trends with financial forecasts to improve budget accuracy.

• Track staffing adjustments over time, ensuring that financial plans are reflective of actual workforce movements.

Understanding the Headcount Rollforward Report

The Headcount Rollforward Report below shows the workforce changes and monitors trends to ensure alignment with workforce planning objectives.

The report provides the following information:

• Beginning Headcount: The number of employees at the start of each period (month or year).

• New Hires: Number of employees added each month.

• Terminations: Number of employees exiting (negative values).

• Transfers IN/OUT: Employee movements between entities.

• Ending Headcount: Final workforce count after changes.

Key Observations

• Fluctuations in Headcount:

  • February and March 2025 show the highest hiring activity.

  • Terminations occur sporadically, with a major dip in March and June 2025.

  • Transfers are relatively low, with only occasional movements.

• Stable Headcount After Mid-Year:

  • From July to December 2025, headcount remains mostly stable, suggesting fewer hires or terminations.

  • Indicates a hiring freeze or workforce stabilization strategy.

• Alignment with Salary Report:

  • Periods with higher new hires (Q1, Q3) align with higher salary costs in the first report.

  • Termination spikes in Q2 reduce both headcount and costs.

Finance Cube Report

A Finance Cube Report provides a structured view of workforce-related financial data, enabling detailed analysis of employee movements and their impact on budgeting and forecasting. Unlike the Workforce Planning Cube, the Finance Cube allows drill-through functionality, enabling users to track individual employees involved in workforce changes.

This report helps FP&A teams analyze:

• Workforce Movements: Data on new hires, terminations, and transfers.

• Financial Impact: How these movements affect the overall budget and forecasts.

• Workforce Trends: Insights into employee retention, hiring cycles, and headcount fluctuations.

Understanding the Finance Cube Report

The Finance Cube Report below provides a detailed breakdown of workforce changes and ensures alignment with financial planning objectives. By drilling into specific numbers, you can trace employee-level data, improving workforce cost tracking and budgeting accuracy.

The report provides the following information:

• Beginning Headcount: Employee count at the start of the period.

• New Hires: Number of employees added.

• Terminations: Employees exiting the company (negative values).

• Transfers IN/OUT: Employee movements between entities, departments, or locations.

• Ending Headcount: Final workforce count after adjustments.

Key Observations

• Drill-Through for Employee-Level Details

  • Can trace specific employees associated with workforce movements, which is not possible in the Workforce Planning Cube.

  • Enables HR and FP&A teams to verify hiring, termination, and transfer records against financial data.
    
    

• Workforce Movements and Stability

  • January–March 2025: Increased hiring, with new employees being added each month.

  • March & June 2025: Noticeable terminations, affecting overall workforce stability.

  • July–December 2025: Headcount remains stable, indicating potential hiring freeze or workforce stabilization.

• Financial Alignment and Cost Impact

  • High hiring periods (Q1 & Q3) correlate with increased salary costs.

  • Termination spikes (Q2) reduce overall salary expenditure.

  • Stable headcount in Q4 suggests consistent workforce budgeting and planning.
    

How to Generate and Use These Reports

To successfully generate a Headcount Rollforward Report or Variance Report, you must ensure that all required compensation items are created and mapped to the relevant employees. The process involves:

• Creating Compensation Items: Ensure that all compensation elements, such as salaries, bonuses, and benefits, are defined for each employee. You can also create complex compensation items using the newly introduced custom compensation.

  • These items must reflect the specific compensation structure and any adjustments (e.g., merit increases, promotions, transfers).

• Mapping Compensation Items to Employees: Map the created compensation items to each employee’s profile, ensuring that the workforce changes (new hires, promotions, transfers, and terminations) are accurately reflected.

Once all the compensation items are correctly set up and mapped, you can generate these reports. Click here to learn more about designing a dynamic report.