With the end of each financial year, the HR leaders will need to partner with Finance counterparts to drive the annual budget and manpower planning process. A strategic HR leader would embrace these processes to gain credibility from the top executive team – a great opportunity to reposition and reinforce HR as a strategic partner. However, as most of the HR leaders are not finance experts and the budget process could be daunting, some of them may just abdicate their responsibilities and leave this strategic task to their Finance counterparts. Some HR leaders face difficulties in collecting relevant data for the budget process while others may have issues with knowing what data needs to be collected and where to start.
In most companies, staff costs make up the majority of fixed costs. HR typically collects the following for their finance counterpart budgeting purposes:
- Actual staff cost incurred in the current year
- Projected cost increase for next year
- Number of projected headcount for next year.
Budgeting will help the company to understand better the financial health to meet their planned manpower and other operating cost to fulfill the overall plan of the company’s business in the new financial year.