Welcome to this issue of The Contingent Compass. Each week, I send two essays to help you navigate the complex world of the Contingent Workforce. If you need support on your journey, upgrade to a paid subscription where you’ll instantly be able to interact with the community through group chat, live Q&A’s, gain access practical program tools and useful how-to guides.
For decades, companies have treated headcount as the scoreboard of workforce success. “We grew by 2,000 employees this year.” “We hired 437 people last quarter.”
It sounds impressive. It looks great in slide decks. But let’s be honest: headcount is a vanity metric. It tells you nothing about whether those people created value, drove growth, or improved profitability.
The boardroom isn’t fooled. CEOs and CFOs don’t care how many people you’ve hired or engaged. They care about one thing: return on investment.
Headcount is the Wrong Scoreboard
Think about it this way. Two companies each hire exactly the same 100 new people.
Company A integrates them strategically, aligns them to revenue-generating work, and delivers new products to market faster.
Company B spreads those same people across low-value functions, misses project deadlines, and sees 25% churn within the year.
On paper, both companies can proudly claim “100 hires.” In reality, one created shareholder value, the other just added cost.
💡 Reflection time: When was the last time your workforce dashboard showed the impact of people - not just the number of them?
High ROI vs. Low ROI Companies
This isn’t theoretical. Look at companies like Apple or Meta. Their revenue per employee consistently outpaces peers. They aren’t focused on “how many” people they hire - they’re obsessed with productivity per head and talent ROI.
Contrast that with organizations that balloon headcount quickly to show “growth,” only to face margin compression, layoffs, and shareholder backlash. Headcount growth may win headlines, but profit per head wins markets.
The Contingent Workforce Blindspot
Headcount obsession is even more misleading when it comes to contingent labor. Contractors, consultants, and freelancers often deliver mission-critical work, yet they’re not counted in traditional workforce metrics.
That’s like running half your business through a shadow P&L and pretending it doesn’t exist.
Imagine this scenario:
10 full-time hires cost $1.2M in salary and benefits.
A 5-person SOW team delivers the same project in 9 months for $800K.
Or a pool of contractors does it for $950K while also flexing up and down with demand.
Which is the better investment? If your metrics only track headcount, you’ll never know.
💡 Reflection time: Does your current reporting make contingent labor look invisible - or does it highlight their role in delivering ROI?
The Hidden Pitfalls of Headcount Thinking
Headcount fixation does more than mislead. It creates blindspots that cost money.
It rewards bloat. Leaders “add heads” to prove progress, even when automation or outsourcing could achieve more with less.
It hides underperformance. A growing workforce can mask declining productivity.
It blinds you to channel ROI. Without measuring outcomes across perm, contingent, and SOW, you can’t know which channel actually delivers.
Headcount feels safe. But safe doesn’t win markets.
Technology and Productivity: The New Equation
Another reason headcount metrics fail? Technology. AI and automation can now multiply output without adding people.
Imagine reducing manual tasks by 20% through automation. You don’t need more hires. You’ve increased profit per head by freeing existing staff to focus on higher-value work.
Boards know this. They’re not asking “How many did we hire?” They’re asking “How productive is each dollar of workforce cost?”
Risk: The Part Nobody Talks About
Workforce ROI isn’t just about profit. It’s about risk avoided.
One misclassified contractor can cost millions in fines, wiping out the ROI of an entire team. Poor supplier oversight can lead to blown project deadlines and reputational damage. Workforce strategy isn’t just a growth lever - it’s a risk management lever.
💡 Reflection time: Does your reporting capture the risk your workforce model avoids, or just the cost it creates?
From Counting People to Measuring Work
So how do leaders make the shift? Stop asking, “How many people do we have?” Start asking, “Is the right work getting done - faster, better, cheaper, safer?”
That means tracking:
Profit per head: Contribution by role, team, or channel relative to cost.
Outcome velocity: How quickly new workforce investments turn into market results.
Channel ROI: Which channel delivers the best value for the cost and risk.
This is not HR data. This is business performance data. And it belongs on the CFO dashboard.
A Playbook for Leaders
Here’s how to start:
Tie roles to revenue. Work with Finance to connect workforce costs to outcomes.
Include all channels. Permanent staff, contingent, SOW, freelancers - all part of the ROI picture.
Redesign KPIs. Swap headcount for profit per head. Replace time-to-fill with time-to-productivity.
Report like a CFO. Translate workforce metrics into margin, EBITDA, and growth language.
The Shift That Wins the Room
This isn’t about ignoring people. It’s about proving their impact.
If your workforce reports are still anchored in headcount, you’re showing the wrong story. Move to ROI, and suddenly you’re not just updating on hiring - you’re talking about profitability and growth. 🚀
💡 Final reflection: If your workforce budget doubled tomorrow, could you prove the business impact - or would you just show a bigger headcount?
If you enjoyed this read, the best compliment I could receive would be if you shared it with one person or restacked it.
If you need support on your journey, upgrade to a paid subscription where you’ll instantly be able to interact with the community through group chat, live Q&A’s, gain access practical program tools and useful how-to guides.