Budget: What is involved in developing an HR budget?

Budgeting involves the systematic collection of information and data so that the finances needed to support an organizations objectives can be projected. Most organizations have some sort of process for developing a budget. Two common methods are: Incremental budgeting--using the current budget, a new budget is developed by making adjustments upwards or downwards to each item based upon expectations. Zero-based budgeting--every item included in the budget must be justified before being included; therefore, the process begins with a clean slate. Budgeting requires the collection of many forms of data. From a human resource perspective, the data needed to create a new budget include the following: Number of employees projected for next year. Benefits cost increases or projections. Projected turnover rate. Actual costs incurred in the current year. New benefits/programs planned. Other changes in policy, business strategy, law or regulation that may impact costs. While there are many items that may or may not be included in an HR departments budget, below is a list of some of the most common ones to consider.

Selection and Placement Recruitment advertising Agency fees Temporary help Employee referral program Skills testing Drug testing Background checks Recruitment-related travel College recruitment giveaways Printing costs--applications, recruiting brochures Web development/maintenance Applicant tracking system costs

Training and Development External programs Registration fees Travel expenses Certification exam costs Internal programs Consulting fees/trainers salary Program materials Food and beverages Supplies for attendees Audiovisual rentals

Compensation and Benefits Employee salaries Payroll costs Overtime Incentive compensation Health, dental, vision Life insurance Short- and long-term disability insurance/funding Pension/401(k)/profit sharing Cafeteria plan administration Telecommuting expenses Survey reports

Employee and Labor Relations Recognition program Service awards Attitude survey administration Performance appraisal software Attendance incentives Employment attorney fees Outplacement expenses Suggestion program awards Labor relations expenses (attorneys, consultants) Diversity management program administration Health, Safety and Security Employee assistance program Smoking cessation Fitness facilities Safety training/promotion Workplace violence prevention/training Revenues

Other Strategic planning (data/consultants) Charitable donations HRIS administration HR databases/subscriptions/memberships/books Intranet design and maintenance