HR is an evolving discipline, the roles that it plays and the services that it provides keep on evolving. Growth of HR can be divided into four stages. HR began as a department that was responsible for controlling and managing human resources within an organization. Furthermore, administration of payroll was another major function performed by it. In the second stage HR was recognized as a strategic department, it assumed the role of a business partner as it started providing services to businesses. It began providing services relating to recruitment, learning & development and total rewards. In addition to this organizational development was another area that was included among the functions of HR. In the third stage it became an enabler along with acting as a controller and service-provider/serving. It started attracting, enabling and managing talent. Programs of talent acquisition, succession planning, talent retention, talent coaching and leadership training were initiated by it. Furthermore, in this stage HRIS/HRMS was introduced in order to automate its operations. In the fourth stage, the current stage, it is acting as driver of business strategy by participating in plans that are relating to future. Talent management is becoming more organized. By keeping the developments that have taken place in the field of HR it may be stated that it acts as controller, service provider, enabler and driver of business strategies. Albeit it plays a crucial role in the growth of any business but still it is regarded as a cost center at the place of a producing department, thus when it comes to getting an HR budget approved the HR heads are being asked to reduce costs. This post discusses different ways in which cuts can be avoided during the course getting an HR budget approved.
Link Business Strategies and Goals with your Budget:
Always prepare such a budget that promises to spend in accordance with business strategies and goals. Linking business strategies with HR initiatives, that support delivery of strategies, is a good starting point for developing your HR budget.
Avoid Giving Vague Answers:
In order to avoid giving vague answers at the time of budget presentations backup your arguments with numbers and figures. CEOs and CFOs do not like to hear plain answers when they expect you to justify your stance with the help of numbers. Thus, always have facts and figures in hand when going for presenting budget. For example if they ask you to justify that why you are going to give 6 percent raise in salaries, you must be able to justify it. You must have figures relating to performance increases that have taken place due to talent management programs, reduction in turnover rate and how much cost in terms of recruitment you have saved due to it etc.
Be Clear about Variable Costs:
Variable costs are those costs that may vary during the course of a budgetary period. Different internal and external factors can increase or decrease such costs. You must have an idea about the factors that cause change in such costs and also know levels to which such costs can rise or dip. Previous years’ data can provide you useful information in this regard. Furthermore, knowledge of going to be changes in laws and economic conditions are also beneficial.
Use Previous Year’s Data to Support your Stance:
In order to get funds for the areas those are important in your opinion use previous data to support your arguments.
Projection of Results:
Projection of results in advance helps during the course of budget approval.
Stay in Contact with the CFO:
Develop a close working relationship the CFO of your company. Keep him informed about the initiatives that your department is taking and is going to take along with informing him about the milestones that you have met. It helps you to gain his support during the course of approval of budget.
Define the Value of Services:
Another approach is to define values of the services that HR provides. Value can be set in accordance with the market rate, discount can also be applied. With the help of this approach you can show that your department is not merely a cost center it is a producing department. Some HR heads generate invoice of every service that their departments provide and charge these costs to different departments/units.
Treatment of HR initiatives:
Each HR initiative that your department is going to take must be treated like a project. It must have a starting date, a deadline and milestones. It can be any service that your department provides. Adding different projects in a budget helps to get more funds for spending.
Budgetary Allocations to Different Areas:
HR Budgeting: Best Practices for Budgetary Allocations provides an idea about allocations that are made against different heads in an HR budget.
The above mentioned suggestions are helpful when it comes to prepare and getting an HR budget approved.