Setting up a HR budget is crucial in ensuring that a company can meet their goals while spending wisely. Some companies do this through better resource allocation, some begin with evaluating the budgets they’ve made in previous years, to see what can be done differently as well as to identify the HR-related challenges ahead of time.
With ever-evolving work cultures globally and more so shifting landscapes with the pandemic, the challenges faced by the HR Directors and Managers changes in tandem too, which makes keeping up not an easy feat.
Fortunately, with the engagement of cutting-edge HR technology and digital tools, companies can make use of their versatile and robust features to their advantage, and plan against these events ahead of time. Investing in HR technology and digital tools not only aids HR Directors and Managers in their planning, but also largely improves employees’ experiences, giving a huge boost to the transformation that the company may be long due for.
A survey recently run by Links International found that about 62% of respondents’ companies used HR technology and digital tools to manage their workforce and related works – a sign that more companies are embracing automation, to run their businesses and operations. This includes planning of their budgets.
Let’s take a dive into how you should be planning your HR budget for the new year.
Why Is It Crucial to Create a Plan for 2023?
In this day and age, integration has been made very simple with the ability to link two or more systems together, and the result is a single source of data – rendering running of businesses and their operations much simpler (and more compliance)!
- Prioritise talent retention & engagement
According to a report by CNN, talent retention and engagement was a recurring challenge in 2021 and 2022. It is learnt that this trend is likely to continue, and HR Teams must be prepared in the upcoming year. Hiring the right talent for the right roles is difficult and retaining them is yet another level of challenge.
The main point of employee retention is to remember that your employees drive the organisation in many aspects. Allocating a healthy amount of this HR budget into implementing a sound and sustainable talent retention strategy is critical in preventing unnecessary high turnover rates and boosting existing employees’ overall morale and confidence to the company.
In an Employee Retention Statistics report by Vantage Circle, it was learnt that 77% of companies chose to focus on employee experience, as part of the strategy to increase retention. In order to provide a safe space that employees can continue to better and challenge themselves professionally at work – and thereby enhancing employee experience – HR teams can choose to embrace and invest in HR technology and digital tools, as part to streamline various HR functions, while offering a centralised user interface. As new roles and industries continue to be introduced into the market, it all falls back to employees to push these changes – making it crucial for companies to carry a strong employee retention strategy.
- HR Outsourcing to help elevate you and your teams’ roles
If growth or expansion is one of your company’s main goals, your HR budget will also need to allocate for initiatives that can successfully attract and manage talents.
Over the last decade, the trend has it that engaging a professional HR outsourcing provider has successfully assisted companies to attract, manage, and even retain candidates and employees. By using a centralised user interface or an HCM system and mobile applications for employee self-service, these features provide a more than helpful HR engagement since the team is elevated from the mundane and less value-added outsourced tasks. This way, companies can eliminate the risks of turnover where it can be prevented.
- Focus on learning and development for employee reskilling and upskilling
The embracing and investment do not only begin and end at HR Technologies, digital tools, and outsourced services. Companies most should allocate a portion of their HR budgets to Learning and Development.
Learning and Development is not only in the form of seminars and in-house trainings There’s more than that! To further enhance your employees’ learning and development opportunities and experiences, you may instead consider investing in a platform that allows employees to gain quick and bite-sized knowledge from wherever they may be, at their own pace. There are plenty of cloud-based systems that hosts webinars, one-to-one sessions with mentors and superiors, including user-intuitive digital feedback forms to be accessed at any given time and these will truly remove the inertia and barrier for reskilling and upskilling for your employees. Afterall, it’s your employees that make sure the business runs smoothly, making it essential to invest in them where you can, if you budget for it!
- Plan well for future unexpected circumstances
Last but not least, as we now know, being bolstered against the effects of unexpected global events is vital to ensuring your businesses pull through. When Covid-19 struck, many businesses and operations had to shut down after not being able to sustain themselves and a part of this reason is the insufficient bolstering.
One of the quickest methods to knowing and understanding your deficits and surpluses is through a specialised HR technology and digital tools that can give you a birds-eye overview of sensible insights, data points, and statistics of your current organisational styles.
For example, you might want to consider the differential work arrangements to offer to your employees – work from home, work on-site, hybrid or fully remote, and evaluate after a planned and measurable period how it has worked for you so far. Analysing this lets you know if you have enough to continue accommodating to any one or more of these arrangements, or if something must change.
In addition, you may also look at your employee attritions comparatively to the current job market (Q3 Hong Kong Job Index) to be in sync with making working arrangements. You do not want to be caught off guard at under or over preparation and a logistical nightmare upon return or remote arrangements is communicated to employees.
How Do You Prepare an HR Budget?
Preparing your HR budget can be carried out in a few simple steps:
- Structure Business Goals and Review Past Budgets – What are your immediate, mid-term and long-term goals next year? What is the must vs. good to achievable? Depending on how quickly and how much the company is looking at, you can allocate your HR budget more accurately. Study your past years’ budgets to see what went wrong and what worked. Once you have done so, you will gain clarity on what should be prioritised next year and where else budgets may be reallocated for even better yields.
- Aligning Departmental Budgets – To ensure that everything is aligned with the company’s budget, it’s important that you’re taking into consideration budgets from all departments. This will save you from unplanned costs where can be avoided with advance and regular communication from these departments budgeting sessions.
How Does Choosing the Right HR Tech Make It Easier to Plan a Budget?
Designed to make workflow for HR Teams smoother and a common underlying goal aligned with the company’s directives, HR technology and digital tools are products and that can achieve just that. Having extensive, robust, and scalable HR Technology and digital tools will give you a quicker and more accurate overview of this company’s directives and vis-à-vis the HR Team’s pace throughout the year.
What are the must-haves in your HR budget?
We have put together a concise checklist on the ‘must-haves’ for your HR budget.
How many of these do you have in your current budget? Start ticking!
Recruitment and hiring
- Hiring Agency / Job advertisements
- Employee referral programmes
- Interviews and background checks
- HCM software management
- Onboarding procedures
Training and development
- Venue rental
- Travel and accommodation
- Materials and supplies
- Trainer/expert/consultant fees
- Costs of programmes/software
- Food and beverage
- Addressing skills gaps
Salaries and other benefits
- Employee salaries
- Overtime pay
- Payroll system management and maintenance
- Insurance & healthcare
- Other statutory contributions
- Retirement plans
- HR Information Systems
- Payroll Systems
- HR Vendor
- Employee/employer appraisals and surveys
- Upkeep of recreational areas in the office
- Company trips
- Fitness facilities
- Safety trainings
The crux of this all is that, while the HR budget is traditionally designed to save costs, it has evolved to empowerment of the HR Teams in true investment to attract, managed and retain the very people driving the organisation, i.e., your employees.
If you are looking for more insights or exploring a professional service for recruitment, payroll, visa applications PEO/EoR services. Contact us today for more information!