Budgeting

As an HR leader, you’re faced with the daily challenge of corralling a team that keeps your organisation working smoothly and continuously moving forward.

No matter what the challenge – employee relations, disciplinaries, redundancies – you and your team can adeptly handle anything your organisation throws your way…

…but what happens when, through no fault of your own, your budget runs away from you?

Circumstances beyond your control can conspire to put pressure on your budget. Just one issue gone awry can push your budget into a black hole when you least expect it.

(And with the eyes of the organisation on every department, the last thing you want is a budget black hole to your name.)

Fortunately, there are ways to mitigate against this and take back control.

Wrestling back control of your budget requires you to use hindsight and have a shrewd understanding of how the next year is likely to pan out financially both for your department and your organisation.

So that you can approach this year’s budget with confidence, we’ve rounded up a list of budget best practice tips which will help keep your HR budget on track:

1.Consider a broad time-frame

It may seem basic but it’s worth repeating. It’s vital that you leave behind the here and now as you form a budget for the year ahead.

Think beyond what your team really needs right now and take into account the entire year in order to avoid running out of money.

At the same time, look back over the last three to five years to analyse how each budget has performed so that you can learn from any mistakes and copy good budgeting decisions.

2. Rule out capital expenditures

Running alongside each department’s operational budget will be your organisation’s capital budget.

On occasion, HR expenses might belong in the capital budget, such as when there is an upgrade to equipment or software used by the HR team.

Ask your financial department for help identifying what may fit in the capital budget.

3. Identify immediate savings

If you know that one area of your operations has been sucking too much of your budget, then address that and any other similar instances straight away in order to free up some money.

Bear in mind how important it is to review every part of your department’s expenditure, no matter how long-standing an expense might be. Keep asking the question, “Does this expense still deliver a return for us?” and rigidly measure ROI and value for money.

4. Work out your goals

So that your budget has the greatest chance of approval, it’s key you decide what your department’s goals are for the next year.

This covers both aims for the department as a whole as well as the goals of the individuals within your team.

Also, take time to talk to senior figures from other departments to find out what their goals are so that you can adjust your budget accordingly and maximise the chances of approval.

5. Control legal spend

One of the areas that saps the most painful amount of money from HR’s budget is specialist legal spend.

Touching base with your trusted city lawyer for employment law advice from time to time is an expensive habit if you pay an hourly rate.

Add to the mix the amount you spend on a HR helpline and the cost of your subscription to an online resource hub and you’ll probably find a hefty annual total.

To ensure your budget isn’t ruined by unexpected legal costs and to be able to forecast your yearly legal spend far more accurately, it’s worth considering whether an ABS (alternative business structure) is for you.

ABSs are firms that were allowed into existence after the 2007 Legal Services Act in a bid to up competition in the legal sector and reduce prices as a consequence.

It may seem like a bit of a leap into the unknown if you’ve previously leaned heavily on traditional law firms for this support, but companies who have already made the jump are enjoying the benefits of equally high quality, fixed price employment law advice, when they need it.

6. Rally support

Once you’ve got your budget in shape, the approval process looms. To allow yourself the best chance of getting your budget approved straight off, introduce the reasoning behind your budget to the decision-makers who will be responsible for deciding its fate.

By informally conveying your goals and ideas in a conversational setting, you’re in a position to build up support for your budget and ensure that funding for essential goals isn’t cut before it gets to crunch-time. 

By taking these tips into consideration as you organise your next budget, you’ll be in a prime position to present your board with a HR budget that is future-thinking, strategic and, ultimately, impossible to reject.

To discover more about how we can make budgeting for your legal spend easier, try out our Legal Fees Savings Calculator here.

 


We are the HR and employment law experts from esphr. 

It’s our mission to advise and develop the employment law capability of HR professionals wherever we can, helping HR teams make a real commercial difference to their organisations. That way, you spend less time solving operational issues and more time actioning projects that drive far-reaching change in your company.

Call 0333 006 2929 or email info@esphr.co.uk today to discover exactly how we can help you.