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Bring HR Into the Annual Budgeting Process When it Starts—Not When it Ends

Include HR in the Annual Budgeting Process at the Start. Here’s Why.

It’s probably a characteristic of getting older, but I’m sitting here in what used to be my study, wondering how on earth it is that we’re already in October.

This room is no longer my study. With the arrival of builders, our kitchen has disappeared and everything from the kitchen (except the appliances, of course) is now in here. Shelves that were once neatly arranged with books, files, and my beloved CD collection now host a chaos of bottles, tin cans, cloths, teabags, mysteriously vast quantities of tea, and a tottering pile of biscuits—proving the well-known theorem that if you give two builders a large tin of the things on Monday and replenish it each day, you’ll be very poor by Friday.

Fortunately, my darling wife Finony (pronounced Fye-know-knee, because my late Aunt couldn’t pronounce Fiona like everyone else) had the wise foresight that clearing the kitchen before the builders turned up to take it out might be a good idea. So, my unread books and un-listened-to CD’s—even the Supertramp ones—made way for the kitchen items. By the time the cookie-gorging builders arrived, they were able to get on with the job, distraction-free.

Which is what we’d all do, right? We’d make sure the path was cleared so that people could do their job. But wait.

In a budget cycle—where people are frequently the largest component—at what point is Talent Acquisition brought into the conversation to recruit the necessary talent to fulfill the budgeted outcomes? Usually, it’s not soon enough. 


The mad scramble post-budget approval

In the annual budget cycle, it’s not uncommon for continuity operations to get budgets settled relatively early in the autumn, while Investment (also known as Change) program distribution often goes down to the wire at the beginning of the fiscal year, and frequently steps over it. 

What follows is a mad scramble. Picture this: You follow up your budget approval by assigning, hiring, or buying in temporary staff to hit the headcount necessary to deliver on the investment. You do that individually because there isn’t time for any scaled-up recruitment effort to kick in. Besides, lead and onboarding times mean that you might not have a full team until the year is a third gone already, so your project is already glowing bright red for delivery risk. 

So, you spend yet more time sourcing further teams of people that you can just about afford because you didn’t spend the money at the beginning of the year (because of the lead times). This gives you more days to get the job done, but causes a headcount surge you later have to reduce by the end of the year. By that time, you’ve already been fighting for next year’s budget for months and you’re wondering how it’s Christmas again already. 


Human resource planning doesn’t have to be so painful 

If that sounds exhausting and frustrating, that’s because it is. It’s also expensive, because nowhere in this cavalry charge will you find any sense of scale that could realize eye-popping amounts of cost avoidance. It’s hugely disruptive as well, with equal amounts of time spent in team building and dismantling. It’s also very demoralizing for employees who see people being drafted in at short notice to provide the skills that they themselves could have but don’t. 

It doesn’t have to be like this. 

Talent Acquisition (TA) directors frequently tell me that January is a period of absolute dread: A tsunami of demand and constant hiring manager follow-ups overwhelm them—ironically with many of these positions never being filled or closed. What if TA directors were part of the annual budget setting and approval process, instead of being on the receiving end of a pile of requests after the fact? 

If TA directors were armed with lead-time and onboarding metrics that people analytics technology (such as ours—at least one plug is obligatory) can readily deliver, they could swiftly and easily identify proposed initiatives with hiring plans that are unrealistic and likely to fail. If they could also deploy metrics on employee attrition, retirement and the like that are sufficiently granular, they could begin to predict—with some accuracy—resource risk before it even emerged. 


Save the headache by bringing in HR sooner

Now, does excessive resource risk mean that a project should be shelved? Of course not, if the benefit profile is sufficient. But the very act of engaging HR and resource procurement at a far earlier stage creates the time and the space to respond to the challenge, not just in the ramp-up period, but throughout the year, because people don’t just conveniently switch roles on January 1. 

HR has a number of other roles to play because it’s not just about bringing people in from the market: It’s about identifying the need early enough in order to source people from within, from simple secondment through to complete re-skilling. What you already know—or could know—about your people could make the biggest source of talent the pool that you already have. At a stroke, you’re sending a signal to your people that their careers lie at the heart of your resourcing strategy.

Resource planning is a year-round initiative, and businesses need every talent available to them to harmonize their efforts to make it work. A pragmatic, informed, and collaborative team of all the talents—finance, TA, business and team leaders, L&D, procurement, planners, you name it—aided by technology-enabled, insight-driven decision choices transforms this annual cycle from a series of opaque, reactive peaks and troughs into a virtuous circle of continuity, clarity, and proactivity. 

But, for the avoidance of doubt, this does not mean that Finony will be getting a new kitchen every year. 


On the Outsmart blog, we write about workforce-related topics like what makes a good manager, how to reduce employee turnover, and employee burnout. We also report on trending topics like the Great Resignation and preparing for a recession, and advise on HR best practices like how to present headcount data to your CEOmetrics every CHRO should track, and connecting people data to business data. But if you really want to know the bread and butter of Visier, read our post about the benefits of people analytics.

About the author: David Edwards

David Edwards heads Visier's Workforce Planning Advisory Practice, helping our customers develop best-practice approaches to implementing the workforce planning function, in which Visier People: Planning plays a pivotal role. David has an extensive background in professional services leadership, program management and workforce planning, and has served in that capacity for many years in one of the UK’s leading financial institutions. When he’s not living and breathing the topic, David – who lives in Hampshire, England, with Finony, his wife of 36 years, and his very yappy dog – enjoys gardening, singing in a soul band, running and not playing golf.

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