Originally published on the TalentWise blog September 24, 2015.
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You’ve probably started fiscal year 2016 planning, right? You’re organized, and you know you’ve got a stigma to fight. Even folks outside of HR are aware that when it comes to budgeting, the HR department hasn’t historically received the same starry-eyed admiration that other revenue-producing departments get… are those stars or dollar signs in their eyes?
This perception of HR as a money pit, rather than a money tree, can present some challenges. So what can you do to ensure you present your smartest hiring budget plan? Here are some things you don’t want to overlook:
Ask for insight and input
HR can’t delay in asking for other departments’ input on their budget asks, simply because you can’t be expected to know everyone’s business well enough to accurately forecast needs. Reach out to your department leaders and start a conversation on what your teams need and muster as much supporting data as you can together to provide a strong case for your asks.
Build your case with real data
HR must secure a realistic budget to support the organization effectively, in spite of facing great challenges in defending the proposal. You can’t expect to ask for a comfy, padded budget without properly building your case—not even marketing gets away with that! Building a reasonable case for your anticipated budget should include gleaning support points from employee data, KPIs, and well-thought out projections that you and other departments have discussed and agreed upon.
Don’t neglect the details
If you’re thinking of simply increasing last year’s hiring budget based on forecasted growth… stop right now! Numbers alone can’t tell the whole story. The cost of hiring 40 new employees would be dramatically different than acquiring 50 new hires but terminating ten, even when the net change in bodies is the same. And how about the positions you’re slating for? Securing and compensating senior management roles will be more costly than hourly employees, as would employees who require travel versus those who do not.
Look around and look ahead
Are the positions you’re hiring for going to require bigger, more costly recruiting efforts? Or maybe a nearby competitor is shutting down in the next year, and you think you can snag some great talent with less effort. Think about how your local landscape and the greater health of the economy could affect talent competition. These kinds of considerations will help prepare you for a realistic budget and demonstrate thoroughness in your planning.
Show value in decreasing risk
You can’t skip compliance! Risk mitigation is a crucial part of HR’s value to the organization. If compliance is overlooked, the potentially resulting fines, time spent fixing errors, and harm to your brand image could be detrimental to the company. The dollars saved through risk mitigation is a great way for HR to show value and build confidence that your organization is adhering to necessary government and corporate policies.
You may never be completely prepared or comfortably padded for the unknown; however, analyzing your needs and the hiring landscape, mitigating known risks, and collaborating with the right departments can help you prepare for a successful budget proposal and that strategic seat at the table.
Spencer Czapiewski 