The new year is a time for new beginnings, new goals, new benefits, and, potentially, a new budget for your HR initiatives. This budget will hopefully drive more optimized processes and experience, enable you to protect your company from liability risks, and enable better engagement and retention through better investments into your workforce. Whether you’re a budgeting pro or just getting started here are 10 useful tips to approach thinking about a robust HR organization budget in 2020:
1. Align the budget with business objectives
A great HR budget is fully aligned to the strategic goals of the business. Whether you need to budget for a new ATS (applicant tracking system) to keep up with hiring goals for the new year, or you need to upgrade your HRIS to accommodate more international hires, the items in the HR budget should address the needs of the business.
Jessica Miller-Merrell, the founder and Chief Innovation Officer of Workology, describes, “You want to make sure your requests align with the business, and you can tie your requests directly to business deliverables. For example, a new training program can reduce turnover costs and boost sales by helping to create better-trained staff that are more engaged and less likely to leave the company.”
2. Evaluate key processes and workflows
Not all budget items will result in an overall increase in spending. When you’re preparing your budget, this is a good time to evaluate existing HR processes and identify opportunities to create efficiencies. Reviewing current workflows can help you identify investments that will actually save money in the long-term. For example, you might budget for an investment in automated benefits administration now, in order to reduce manual processes and save time and money for the benefits team later in the year.
3. Review your benefits portfolio
The company benefits package has become an important competitive differentiator in the war for talent. When developing your budget, it’s a good time to consider which benefits will help to attract and retain employees now and into the future. Whether it’s a new wellness program or an automated benefits enrollment platform that makes it easier for employees to understand and select their benefits choices, improvements to your benefits portfolio should be an important component of your annual budget.
4. Identify systems integration opportunities
Integrated systems help cut down on double-entry and help HR teams collect and store data more efficiently. Perhaps your budget will include a new onboarding system to integrate with the HRIS, or background check software that integrates with your ATS to help speed the talent acquisition process.
5. Investigate compliance practices and solutions
You don’t have to work in HR for long to get a sense of the myriad compliance regulations that impact everything from hiring to employer benefits to employee leave policies, and more. It can be a challenge to navigate the many federal and state laws that regulate HR activities, so the budget process is a great time to identify experienced partners that can help you make sense of compliance risks and manage them effectively.
6. Upgrade your infrastructure
Do your HR software and technology tools serve you well, or do they make your job harder? It may be time for an upgrade if the latter is true. Even if you feel some of your HR software is tolerable, eventually, it will fall out of pace with your growing needs. Your budget should include regular technology upgrades so that you have reliable systems and work tools that will enable the HR team to produce quality work.
7. Find the best solution providers possible
As your needs change, it will become necessary to reassess, and sometimes replace, current service providers. Not only do you want to work with service providers who partner with you to meet your goals, but you want competitive pricing and a relationship of trust. As your budget takes shape, be sure to include any new investments related to changes in service agreements and providers.
8. Figure out your human capital needs
Unemployment is low, and many companies are hiring. With a growing workforce comes a growing need for HR talent to support it. If your organization has big plans for hiring, it makes sense to consider the hiring needs of the HR team as well. When setting the budget for HR talent, remember that hires can come in many forms, from full-time HR generalists and specialists, to consultants and part-time contractors that help out during busy periods.
9. Understand the impact and ROI of your investments
What did you invest in last year that paid off in a positive ROI? Which investments lost money and had little impact? Maybe you invested in a learning program that resulted in more productive employees. Or perhaps you started a commuter plan that didn’t quite work out financially for you or your employees. When you carefully consider and anticipate the ROI of key investments, you’ll have a healthier and more realistic budget.
10. Revisit and revise
Budgets aren’t meant to be created and then set aside until the next budgeting process. On a periodic basis, it makes sense to revisit the budget and determine if you’re on track or not, or whether there are adjustments that you can make to the budget to better allocate dollars.
Here’s to an Impactful 2020
In 2020, the HR Leader has a great opportunity to influence the business and create better experiences for employees and candidates. With a budget that takes into account the processes, partners, and technology that can lead to success, the future is bright for HR, the organization overall, and the entire workforce. Happy Budgeting!
Do you have any tips for human resource budgeting? Send us a note, and we'll include in our 2021 post!