Today’s HR budget is multifaceted, largely due to HR’s shift from a traditional operational role to strategic business partner. No longer viewed as simply “personnel,” HR now consists of many aspects, all of which must be considered when planning the department budget. While there is no fixed rule concerning what should be included in an HR budget, here is a list of the five most common elements.
1. Compensation and Benefits
Out of all HR programs, compensation and benefits programs typically are the most scrutinized, according to Bloomberg BNA and 59 percent of surveyed organizations reported holding frequent assessments of their wages and salary and benefits programs.
In the budget review for compensation and benefits, consider including:
- Wages and salaries
- Salary and promotion increases
- Overtime pay
- Bonuses and commissions
- Medical, dental and vision insurance
- Life insurance
- Disability insurance
- Retirement plans
- Employee travel
- Benefits plan administration
2. Training and Development
Spending on training expenditures in U.S. corporations and educational institutions rose to $70.6 billion in 2015, a 14.2 percent increase in just one year, according to Training magazine. Clearly, employers are seeing the value of employee training and development.
Common HR budget considerations for training expenses are:
- E-Learning, video tutorials and classes
- Consulting fees
- Employee turnover
- Travel and meal expenses
- Seminars, workshops and conferences
- Certification exams
- Subscriptions
- Ongoing training, such as certifications
3. Employee Retention
One of the toughest issues many organizations face today is how to retain their top talent – which makes developing an effective retention plan a fundamental HR function. The cost of the retention plan included in the HR budget may cover:
- Awards and paid time off to reward high performers
- Fun activities at work, such as holiday parties, games and competitions
- Gifts to acknowledge personal/family milestones, such as marriage or childbirth
- Voluntary benefits and perks, such as college savings plans and retail store discounts
- Work-life balance incentives
4. Health and Safety
The Occupational Safety and Health Act (OSHA) requires that employers provide a healthy and safe workplace. In your HR budget, think about including the cost of fulfilling OSHA requirements and other programs designed to enhance employee well-being, such as:
- Employee assistance programs
- Safety promotion and training
- Fitness facilities
- Smoking cessation programs
- Workplace violence prevention
5. HR Technology
HR’s progression to strategic business partner has escalated the demand for HR technology. According to CB Insights, in 2015, investors plunged $2.4 billion into HR tech vendors, a 60 percent jump from the previous year. HR tech tools that allows your workforce to take ownership of their information, enroll in benefits, view pay stubs, request time off, enroll and track their training courses will alleviate the HR team.
An HR budget should take into account how technology can streamline:
- Benefits administration
- Compensation structures
- Employee retention
- Onboarding and off boarding
- Performance management
- Recruiting
- Training and development
Be sure to examine the operational and financial impact of your preferred HR technology, because your tech solutions should be delivering real-time data and agility to facilitate improvements for success.
