The upcoming new year is a time for beginnings - a new benefits plan year, new staffing goals, and a fresh new budget. As in previous years, you’ll need to set an HR budget that allows you to support your employees and meet your organization’s talent management goals. However, while setting your annual HR budget is nothing new, your 2021 budget will certainly be impacted by the unfortunate events of 2020.
With the arrival of the COVID-19 pandemic and the switch to remote work, organizations and HR teams have had to pivot and adjust policies and practices to meet changing employee needs. As a result, the budget you create for 2021 will need to include some new elements to help you support your workforce during these unprecedented times. To help you get started, follow these tips when crafting your 2021 HR budget:
Consider New Trends in Talent Management
The events of 2020 - the switch to remote work, economic fluctuations, and the focus on social justice - will impact the 2021 workplace, and therefore, the programs you offer to support the workforce and help employees be productive. Some of the key HR trends to expect in 2021 include:
- More positions will become permanently remote as employees increasingly favor working from home. The number of remote positions will double in 2021, according to the World Economic Forum.
- Organizations will need to find novel ways to keep the remote workforce engaged.
- Mental health benefits will be in greater demand as employees adjust to new ways of working.
- There will be a renewed focus on promoting equality through diversity and inclusion initiatives. 76 percent of employees and job-seekers now expect a diverse workplace, according to a new Glassdoor survey.
As you envision your 2021 HR programs to address these trends, it will be critical to consider the budget impact of each activity. Before you finalize your planning for those new initiatives and how much you’ll need to invest in them, take some time to gather insights from employees. An employee survey, focus groups, and discussions with senior leaders can all help you to prioritize key initiatives and see where you have support (and where more is needed) to make the most of each new initiative.
Review Your Employee Benefits Portfolio
Competitive benefits are critical to employee retention and an important differentiator for attracting talent. According to the 2020 MetLife Employee Benefit Trends Study, 69 percent of surveyed employees said having a wider array of benefits would increase loyalty to their employer.
To maintain an attractive suite of benefits, you’ll need to identify the must-have benefits enhancements and additions for next year’s budget. For example, if your employees continue to work from home due to COVID, you may want to consider adding benefits such as an allowance for home office equipment or even a mail-order snacks program. Other benefits enhancements you may want to consider adding to your budget include:
- Expanded mental health and wellness benefits.
- Reimbursements for online educational or fitness classes.
- An automated benefits enrollment platform to makes it easier for employees to understand and select their benefits choices remotely.
Plan for Changes to Your Recruitment Practices
2020 was somewhat of a roller-coaster ride for recruiting. Swings in unemployment caused by furloughs and layoffs impacted staffing levels, and it is estimated that 42 percent of the positions that were lost during COVID may never come back. In addition, an astonishing number of women have left the workforce, changing the face of the overall job-seeker market. These developments will continue to impact the war for talent, so you’ll need to budget for tools and resources to help you effectively recruit in 2021. Consider the following additions to your staffing budget:
- Tools for video interviewing and remote candidate selection.
- Remote onboarding platforms and new hire reporting tools.
- Recruitment partnerships to help you source “gig” workers such as freelancers and contract staff.
Identify Opportunities to Increase Efficiency
Budgeting is as much about saving money as it is about allocating spending. By looking at opportunities to achieve greater efficiency - for the HR team as well as your employees - you can free up resources for high-priority programs and also have more time to get things done.
Whether you anticipate a bigger or smaller budget for 2021, a great way to increase efficiency is through automation. Automation can allow you to provide more services to employees without necessarily spending more money. And, automation can help you regain lost time. In a recent CareerBuilder survey, HR managers said they lost an average of 14 hours a week manually completing tasks that could be automated.
Consider these automation measures to help improve your efficiency and stretch your budget dollars further:
- Cut down on errors by integrating payroll with your HR information system (HRIS).
- Automate benefits administration, billing reconciliation, and reporting, so you can better manage rising benefits costs.
- Explore self-service, chatbot, and other AI technology to put more information into the hands of employees and job candidates.
Include “What-if” and Contingency Planning
2020 has shown that the “impossible” can become reality, and in 2021, there will be bumps in the road that impact how you hire and manage talent. As a result, you should also craft a budget that leaves room for contingencies. While no one knows what the future holds, consider planning for the following contingencies in your budget:
- New needs for contract or consulting staff to support short-term projects or to backfill employees on leave.
- Technology enhancements to support remote performance management and employee development.
- A new or expanded employee assistance program (EAP) to provide more personalized support to employees and their families.
Setting a realistic budget takes more than assigning a new number to the same activities as the prior year, and creating your budget for 2021 is no exception. While the next year is sure to bring its own set of challenges and opportunities, you can get off to a great start by building an HR budget that will help you attract talent and retain your workforce in the new post-COVID world.