The content below is a response to questions from students for each of the six assignments. The content is made available to everyone to foster education.
How do I find the headcount in each marketing sub-department for our selected company?
To help you out, I’ve uploaded the headcount for each company on the assignment PowerPoint. Pfizer is towards the end. You will find the total marketing headcount as well as for each division. All you have to do now is to recommend an increase, decrease, or no change for each sub-department.
Adjusting Disney Headcount for the latest sales
I’m on the Disney team. In the 2021 annual report, I saw a total revenue increase of 3.1% YoY. How do I change the numbers on the slide? Do I multiply all of these numbers by 3% to get the adjusted headcount for 2021?
No, you don’t need to adjust the estimated headcount for 2021. That’s an estimate anyhow.
The last 2 years have been exceptional so it’s important to look at numbers for 2019, before the Pandemic. The Annual reports for 2019 and 2020 have been uploaded into External Resources.
Digital media and direct marketing. Does digital media equal digital marketing?
I wonder whether you mean direct marketing or digital marketing, so let me respond to both.
Resources employed in Direct Marketing organize marketing strategies (such as mailings or calls). You are managing Disney. I could foresee a Direct Marketing strategy where they for example send a free sticker to encourage consumers to visit a store.
Resources working on Digital Marketing manage what content is posted on a website, Facebook, social media, and what strategy to use to reach more consumers.
Digital Media and Digital Marketing are a bit blurry in some organizations. In general, media is the content that was created for the channels used (websites, email). Folks in Digital Media will create the content. For example, someone working on Digital Media for this class would create the flyer we will be using for the Disney speaker we have this semester. That person would make this site look much better than it looks now since it’s all done by someone without any of those skills (me). Someone working in Digital Marketing will create a strategy to distribute the invitation for participants to join the sessions with our speakers.
Is revenue the same as sales?
Revenue and sales are the same. Different companies use different terms for it. We will learn about that in session 5. Other terms used are also turnover or even Income to refer to sales.
This assignment is Individual or group?
This, and the next 5 submissions, are all individual. Only the Strategic Plan, is a Group project.
I am doing the headcount assignment about IBM/Estee Lauder. I found their up-to-date annual report is 2020’s instead of 2021’s that I’m looking for. Can I just use the 2020 annual report for my assignment?
Yes, use the latest annual report available, in this case, 2020. For some topics, you may find more recent quarterly reports, but they don’t contain all the data. The best is to use the latest annual report.
I am trying to learn something from the annual report of Estee Lauder. I have found that information on the annual report is something general because Estee Lauder is a company with many brands. I am wondering if information from Euromonitor, Nexis, and Simply Analytics is more helpful for us when we are doing projects like our headcount assignment?
Companies don’t provide detailed information about headcount. That is why I provide students a statistical sample and ask them to adjust it by sales.
This is what I would recommend you do:
- How much do you think Estee Lauder sales can grow next year? Imagine you believe 5%. Then propose a headcount increase of up to 5%.
- Why did you pick Estee Lauder? Is there something that attracts you to the brands? Recommend a headcount increase for those ideas that you think could help Estee Lauder grow their sales.
- See if you can find any headcount information about it. Try these steps:
- Go to their Annual Report on Adobe, do CTRL F and search for “headcount’. See what you find.
- Go to Nexis and do a search like this: Estee Lauder w/10 headcount. You are asking Nexis to find any articles where the word “headcount” appears within 10 words of “Estee Lauder.”
There is no pressure at all on this first assignment. Try to find “fun ways” to do research about this company.
When I looked at the template, I found there is one segmentation called “Other”. I am very confused about what kind of people should be included in “Other” and how I should find related information about it.
Companies use “Other” for 2 reasons
1.In many countries, companies have people doing specific roles mandated by the government or local dynamics. We don’t include it in other lines because it will distort the ratios. We use “Other” instead.
2.It helps for the numbers to add up, and to adjust for roundings.
I recommend using the same ratio or adjustment for the line “Other” as for the total. For example, if you are increasing the total HC by 2%, do that to Other. If you are decreasing the total HC by 10%, do that to Other too.
This week we had a headcount assignment. I try to find the headcount of IBM these days but fail to do so. Now I only know the total number which is about 375,000 Still, I can’t find the exact headcount number for the marketing apartment or the headcount for each position.
Companies don’t provide detailed information about headcount. That is why I provide students a statistical sample and ask them to adjust it by sales. In the case of IBM, I did it for you guys. If you go to the Assignment folder again, you will find that on slide 3.
Why do we need to recalculate the headcount for the level of sales of our company?
The information provided in the original headcount is for a company with sales of $332 Billion. Nike’s sales are 11% of that. It doesn’t make sense to use a Marketing headcount of 6,171, because it’s too far from the truth. By recalculating it based on the level of sales, we are going to be closer to the truth. The numbers for both Nike and McDonald’s are below.
This will still be a gross estimate because the type of industry and company play a significant role in the number of people employed. Some companies include also some activities as part of marketing which others don’t. That is why we have a line called “Other”.
Is the revenue of the company the same as the gross profit of the company?
No. Revenue or sales are the same, but gross profit is something different.
Gross profit is how much money you make after accounting for raw material, packaging materials, and manufacturing cost
For example, if Nike sells a pair of sneakers for $100, it costs them $55 to make. Their gross profit is $45. To that we will need to deduct fixed expenses, which are not included in gross profit, to get to their net income.
To make it easier, here is page 25 of the annual report with the revenue for the last several years. Use the line called revenue.
How can I recalculate Nike’s Marketing headcount for their sales?
A business with $332 Billion in sales will have a marketing department with 6,171 employees. Since the Revenue of Nike is $37.4 Billion, we should assume their total headcount is 11.26% of that. Please multiply each line by 11.3% and you will get a total of 695. Then apply any changes to that.
This is how we calculate the numbers:
37.4 Billion divided by 332 Billion= 11.23%.
Total headcount: 6,171 times 11.26%= 695 heads
Each line will now look like this:
Now, as you suggested, you can apply any changes to the new total of 695.
Regarding the Nike example you’ve shared in the blog, about recalculating the Marketing headcount, shouldn’t the total employee number = total headcount number?
Yes, the total employee number should -total headcount number unless a company uses the concept of Full-Time employees and recalculates their headcount on that basis.
Also, in the previous blog, it is saying that Revenue or Sales are the same, but in the recalculating Nike’s Marketing headcount part I got confused with the example of 6,171 employees turning to the assumption of 695 headcount.
A company with revenue or sales of $332 Billion has a Marketing headcount of 6,171. But Nike’s sales are much smaller. They are not $332 Billion but $37.4 Billion. Should a company that is 10 times smaller have the same marketing headcount? Probably not. How do we adjust for it? Based on sales.
Why do we need to divide 37.4 Billion(revenue) by 332 Billion(sales)?
Revenue and sales are the same thing. Some companies call it Revenue and other sales.
We divide 37.4 by 332 to find out the ratio of how much smaller Nike is and apply that to the headcount
Is the 332 Billion just a basis to create an assumption for the Nike Marketing department?
A Marketing headcount of 61,71 for a company with sales of $332 Billion is the base we compare it with, to find out what would be a reasonable headcount for Nike.
Nike sales in China are $6.7 Billion. China, unlike the rest of the world, is growing. How can I account for that?
First, I would start with the global numbers. Do I want to recommend an overall increase or reduction?
Then I would treat China differently.
If I don’t have the headcount numbers for China, I would assume the same proportion. Since sales are 18% of the total (6.7 Billion divided by 37.4 Billion), I would assume the Marketing headcount is 124 in China.
Then, I will look at China’s sales growth (8%). I would agree to increase China’s marketing HC by 8% (9 heads).
Imagine that since Nike’s sales have declined by 5%, you want to reduce marketing headcount by 1%. That would be 69 heads. Since you want to increase HC in China by 9 heads, you need to reduce HC in the rest of the world by 78.
Then, you will need to find good arguments for the type of positions you want to hire in China, and whether you can relocate colleagues from other countries who would have lost their jobs to China.
How can I recalculate McDonald’s Marketing headcount for their sales?
A business with $332 Billion on sales will have a marketing department with 6,171 employees. Since the Revenue of McDonald’s is $21.1 Billion, we should assume their total headcount is 6.4% of that. Please multiply each line by 6.4% and you will get a total of 392. Then apply any changes to that.
This is how we calculate the numbers:
21.1 Billion divided by 332 Billion= 6.4%.
Total headcount: 6,171 times 6.4%= 392 heads
Each line will now look like this:
How do I modify the headcount by line?
First, I would start with the total numbers. Do I want to recommend an overall increase or reduction?
You have recalculated the current sales to be $19.2 Billion. That is a drop vs. the prior year sales ($21.1 B) of almost 10%. First decide whether you are going to keep the total headcount unchanged, reduce it by one third, or one half or sales, or grow it.
Let’s imagine that you conclude that you will want to reduce the total headcount by 20% of the drop in sales, or 2%. Then you will need to reduce your headcount, on a global basis, by 8 heads (2% of 392).
Then I would treat product launches separately.
You already have 8 people working on New Product. Do you need to hire more? Let’s say that you need to hire 1 more, for a total of 9. You can do it like this:
Headcount 2019 392
Minus, HC reduction -9 (that is 8 plus one more to be able to hire one more person)
Plus, 1 New Product +1
Headcount 2021 384 that’s the 2% or 8 heads reduction you want to propose
Then, you will need to find good arguments as to why you need to increase your headcount by one, and why you cannot retrain some of the people who you are going to layoff so they can do the product launches job.
Regarding the numbers, this is highly subjective. That is why is so difficult. But there are no right or wrong numbers, the task is to find arguments that are persuasive.
How do I get the data for 2020?
McDonald’s hasn’t published the annual report yet. We will have some information on the quarterly earnings, but not all. I recommend using the latest annual report we have (2019) as the base for 2020.
Can I propose an increase in headcount even if the sales have decreased?
Yes, you can. But you need to have good arguments for it, because the company may be short on cash. If you were operating a small business, and your sales had dropped, where would you get the cash to hire more people?
On the other hand, there may be great reasons to justify it. For example, due to the economic downturn, it may be easier to gain market share. It may be easier to hire talented resources who normally would be more difficult. It may be cheaper to advertise.
Is it a must to propose a total increase or decrease for headcount? Can I propose an increase or decrease for each category first and then later add up for the total?
Yes, you can go line by line. But I always give students this tip: check your totals first. That is the first thing that the audience looks at. Frequently, we have solid arguments line by line, but we make mistakes on the total. When we do that, we lose credibility. Senior executives look first at the totals.
On the other hand, in many situations, it may be better to go line by line first instead of showing the totals first. For example, if your sales are declining by 10%, and you want to increase headcount, it may be easier to sell it by going line by line first.
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