HR Strategy

How to Forecast Your HR Budget and Staffing in the Coming Year

By

Paycom HR

| Feb 6, 2014

No one said forecasting talent and your budget was easy. It’s extremely difficult to try to see into the future and anticipate what your organizational budget and staffing needs will be in the coming year. It is, however, a necessary evil of planning for the future of your human resources department. Not only is it imperative to plan for spending but also it gives you a sense of what your department’s priorities are, what challenges you may face and what your staffing needs will be. In order to do so successfully, there are several strategies you can utilize along the way.

Get organized

The best place to begin is with your previous year’s budget. To get a panoramic view, include the last three to five years’ budgets so you get an idea of averages over time. This will be one of your biggest assets when it comes to forecasting trends and allocating additional dollars. Look at the budgets and P&L for the different locations and divisions you are responsible for. What’s the percentage of overall spend based on your revenue for HR, recruiting and hiring? Categorize wins or losses for the year by using metrics such as hiring conversion, source of hire and turnover to determine where future opportunities may lie.

Many of us tend to rely on opinion or even our memories to evaluate the last year, but the best measure of success is quantifiable numbers that you can use to plan for the year ahead. Since one of the most difficult things about forecasting the next year’s budget and staffing needs is just getting started, gather everything you’ll need in one place and take the first step towards forecasting by looking at the past. It makes the process a bit easier to have what you need at hand.

Evaluate

After you’ve gathered the year’s data, the next step is to look at it critically and see what needs to be changed and what was successful. It can be easy to develop a bias, especially when it comes to your work, but if you can avoid it, you’ll have a better view of what improvements you can make in the next year. You may also want to take a look at what your competitors in the industry have done in the past year or even analyze trends in your region.

I like to keep a detailed journal by month of lessons learned, recommendations and ideas to implement for the coming year. This way I can pull from these seemingly random thoughts to research and build a strategy and budget for the New Year.

This is also a great time to hear from your team to get an idea of where their passions currently lie and which areas they saw strength or weakness in within the last year. While it can sometimes be hard to let go of the reins, there is nothing better than passionate people with ideas. Use this to your advantage.

Think ahead

Talk with your executive team to see where their focus will be in the next year. In order to create a balanced hiring plan and strategy, it’s vital that you know what initiatives the organization will be focusing on. The HR department’s role is critical to the success of your company, so it’s important to have a seat at the table when discussing organizational planning. Ideally, the executives within your organization are well aware of the behind-the-scenes benefits and return on investment you bring.

Thinking ahead starts months in advance by building relationships with key stakeholders in company leadership meetings. I recommend having a monthly HR scorecard with key statistics, metrics and data by month, department or division to help facilitate conversations, relationships and learning about how HR impacts the overall business strategy.

Lean on your business as well as HR peers outside the organization to help identify industry trends and regional quirks, affirm gut feelings or suspicions and brainstorm. Supporting data is the best way to follow your gut so to speak. This is the perfect time to gather a few friends in the industry to talk about what they’re seeing within their organizations. Aside from being able to gain some serious insight and great ideas, meetings and conversations with your peers can be inspiring and affirming. It’s amazing how a bit of perspective from others in the industry or in the area can help you plan for the year ahead.