October 1, 2018 9:00:00 AM EDT

3 Pitfalls of the Budgeting Process for CHRO

Making a budget can be difficult for any industry, any department. But however difficult, it’s a necessity to running a good business. Some would argue it’s a necessity to run a good household as well. For Human Resources, there are additional struggles in budgeting. HR is a department without direct income potential. That often makes budgeting a challenging endeavor. You can always reach out to one of the best Pittsburgh HR consulting firms here at Aspirant for help with this. But here are some tips for what to avoid if you are doing it on your own.

Three of the pitfalls you come across in budgeting for Human Resources are:

CHRO Budgeting Pitfall 1: The Status Quo

Otherwise known as, “that’s the way we’ve always done it.” Clearly, it’s an easy trap to fall into; after all, it worked before, right? You just take last year’s data, maybe you google something like, “what percentage is healthcare supposed to rise in 2019?” and then you pick a percentage to increase by. So, last year’s numbers, plus 7%, equal this year’s numbers and then you move on.

It’s time to break that habit. This is your opportunity to improve the issues you’ve come across throughout the year. Think of what you’ve wanted to change; what you wish could be different. Gather up the numbers of what it might take to initiate that change. Write out why you think it’s worth it and how it will benefit the company.

CHRO Budgeting Pitfall 2: The Vacuum

You have great ideas for next year’s budget. You can see where more staff is needed and where you are overstaffed. You’ve got opinions on the right program or software that’s needed next. You’ve got this all figured out. So, you do it. You stay late, come in early, do all the planning and number crunching and come up with your perfect budget. But you never consulted anyone else. I’m not referring to HR consulting, but to your colleagues.

In your enthusiasm over your great ideas, you forgot that other people have great ideas too. Coworkers can also contribute to a well-rounded budget plan. They may offer a perspective that you weren’t aware of. Ask around and see if people have suggestions. If they don’t, tell them yours. It’s always good to gain support for your ideas, or get constructive feedback. Break out of the vacuum and remember you are part of a team.

CHRO Budgeting Pitfall 3: The ROI

There is a great idea of what should be in the budget for next year. It will solve some internal pain points and help everything come together, but does it cost you more money than it makes or saves? Where is the money for this new idea going to come from and why is it worth the cost? You should always do the research and have the “why” of budgeting costs. Will it help the company grow, work more efficiently, or cut costs? Will it provide a better service to customers?

Just because something is a good idea, doesn’t mean it’s the right idea or the right time. Everything that’s in a budget should add value to the department and/or company it’s budgeted for. You need to be willing to put in the work to prove your ROI before the company will be willing to approve your budget.

Sometimes that can be a daunting task. That’s where we can help. As a Human Resources consulting firm, we’ve assisted others with budgets numerous times. Reach out to Aspirant to help refine your HR budget process, (724) 655-4441.

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Judy Johnson
Judy Johnson

Judy partners with executives and leadership teams to engage and inspire employees in a way that delivers sustainable strategic results. She brings deep expertise and creative ideas to solve organizational effectiveness issues and closely collaborates in a way that builds internal capabilities. Judy has spent over 25 years consulting in a variety of industries, bringing her expertise in behavior to a wide range of organizational issues including organizational behavior change, leadership, change management, culture and engagement.