Budgeting is a key management function that occurs every year in your organization. The budgeting process involves the systematic collection of information and data so that the financial resources needed to support an organization’s objectives can be reasonably estimated. The biggest challenge to developing a budget is trying to meet the 2013 wage forecast. Typically, senior management will forecast sales as well as the operational and capital expenses necessary to support their business goal and objectives.
In today’s marketplace, consumers are looking for companies who are innovative and offer top notch customer service. Because consumers are looking for the very best service in addition to great products, it’s important for a business to invest in its employees, as they are the most valuable resource to making the business a success. Remember, employees are the largest contributor to a business’ success in today’s marketplace.
During the budgeting process, senior management may be quick to cut your funding unless you can demonstrate how important the human resources department is to achieving the annual goals of the business using the 2013 wage forecast; and demonstrate to them how each of your department’s functions contribute to achieving the requisite ROI.
From a human capital perspective, the data needed to develop a new budget for the 2013 wage forecast include the following:
– number of employees projected for next year;
– new benefits/programs planned;
– estimated wage and benefits cost increases;
– projected turnover rate;
– actual costs incurred in the current year;
– other changes in business objectives and strategy; and
– regulatory changes that may impact employee expenses.
When developing your next budget, keep these proven budgeting tips in mind:
1. Human Resources is Essential to Success
Make the connection between human resources and a company’s goals. Senior executives may not always see this, so make sure they understand how important the human resources department is to achieving success.
2. Demonstrate Return on Investment
Have spreadsheets, done meticulously, to show how every dollar invested in the departments within human resources will pay out to other areas of the business. Also be sure to detail profitability.
3. Showcase Value of Added Line Items
Show how programs, such as an employee assistance program, create value and save money in the long run.
4. Consider Including an Unimportant Project or Program
Including a project that is unimportant that you can remove from your budget during negotiations with senior management. It will show them that you are willing to take cuts in some areas and are a team player.
5. Get Finance Onboard
Meet with the finance department early in the budgeting process, so you have a teammate in the battle with executives. Outline the budget for them and make it clear that good human capital planning can help the business achieve its goals.
6. Know your budget
No one can understand your budget better than you. When the budget committee asks questions, you need to know them without having to search for the answers. Be sure to utilize a 2013 wage forecast to ensure your organization is properly aligning its budget with current market value.
7. Start Early
Every department likely will be presenting their budgets to senior management, so make sure that you aren’t the last. Plan to be heard early in the budget meetings, before discretionary funding is allocated.
Using the above tips will help you prepare a better budget for your human resources department that is in line with the 2013 wage forecast, which will benefit your organization by furthering its business objectives. WageWatch offers cost-effective salary and compensation survey reports that will help you with budget planning by providing important information such as competitive salary ranges, turnover rates for key positions and employee benefit packages. To learn more about our services, please call us at 480-237-6130 or contact us online.