Some HR professionals dread putting together budgets. But even for those who harbour no ill will toward this annual task, the work can sometimes feel overwhelming. Because HR teams are responsible for a wide range of business activities, it can be difficult to make sure that every item is accounted for in your budget. Even with a well-developed human resources budget template, you may still miss some items that are unique to your company.
But the human resources budget planning process does not have to be impossible. In addition to looking at several human resources budget examples, you should take the time to think through all of the aspects of your role as an HR professional. Here are some examples of items you should include in your HR budget.
The Company’s Goals and Current Stats
When it comes to human resources budget planning, the only way to start is by gathering information. First and foremost, you need to understand your company’s goals for the coming year, including:
These goals can help guide the budgeting process, giving you targets for allocating funds.
You should also gather all available information about your expenses, especially as they relate to fixed costs. Knowing how much you are paying for salaries, benefits, training/development programs, and other regular costs will help you outline the items for your budget. This process will give you an idea of how much you have to spend on other, more fungible items.
Recruitment and Placement Costs
Recruiting and hiring are often considered to be the lifeblood of human resources, mainly because they are the most visible role that HR professionals play.
Any human resources budget template worth its salt will have line items under the recruitment and hiring budget. Here are some of the more common things that you will likely need to include in your budget:
These last two items are essential. According to PricewaterhouseCoopers, 58% of companies use technology in their hiring process, with 74% planning to increase their spending on tech.
In an increasingly digitized world, paper-based human resources practices are rapidly fading. Those who do not spend sufficient time and resources on their technology are doomed to fall far behind.
Skills testing is an area in which companies would do well to spend their resources. eSkill’s Talent Assessment Platform offers companies a means to cut their hiring costs, shorten time-to-hire, and better understand their staff’s knowledge and skills base.
Shockingly, 40% of HR leaders are unable to say for sure what skills their employees possess. Skills testing allows these managers to evaluate a candidate’s skills during the application process, creating a candidate profile that tracks their strengths and weaknesses. Skills testing helps to ensure that they can find the candidates with the best compatibility for a job — a trait we call JobFit.
Training and Development
While employee development programs often get less attention than hiring, they are an equally important activity. According to the Work Institute, more than 22% of voluntary job changes occur because employees are looking for better career development opportunities, making this one of the leading factors in turnover rates.
Training and development costs include several items, such as:
Skills testing can help make your training more efficient. With the candidate profile generated by skills testing as part of an initial application, you will have a roadmap for targeting your development efforts long after the job is filled. The eSkill dashboard lets you see at a glance where an employee is strongest and where they need more training.
For instance, a candidate applying for a programming job can take a skills test combining the Programming Design Patterns and Python tests. If the results show they have a good handle on design patterns but need more training on Python, you can tailor your training program for that employee to get them the skills they need.
A Budget Is a Plan, Not a Promise
Budgets are only an educated guess at what might happen. It is almost guaranteed that you will encounter things that force you to alter your plan. While human resources budget examples can help you set up your budget, make sure that you are willing (and prepared) to roll with the changes as they come. You should not expect to be perfect, but you can strive to be as accurate as possible.
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