By Tony Deblauwe
I’ve been asking fellow HR colleagues what their outlook for
2010 is. Given the fact that many of their client groups are completing financial
planning for the New Year, it’s interesting to see what the outlook is. And of
course, forecasting whether HR budgets in the United States will be increased
or decreased during 2010, depends on many factors – the largest being the
overall state of the US economy.
Let’s look at some data points. On September 3rd, 2009 the US Bureau of Labor Statistics reported that non-farm business sector productivity during the second quarter of 2009 increased at an annual rate of 6.6%, up 0.2% from original estimates made by bureau analysts. This represents the largest productivity increase since the third quarter of 2003. So what does mean to HR? Well, it trickles down into an impact on businesses which in turns impacts HR budgets.
Why HR Budgets Are
Cut
Every two years, the Society for Human Resource Management puts out a workplace forecast report that is based on a broad survey of HR professionals. Among those professionals polled on various topics relevant to budget management, 51% cited corporate downsizing and bankruptcies as a major factor in budget cuts. 49% cited the increase in off-shoring of white collar jobs.
The current economic slump, with its’ multitude of job losses, low consumer confidence, and sharp decrease in retail activity, is of course the largest contributor to budget cuts.
Other Contributions to
HR Budget Control
The good news is HR cost control is improving across the board, thanks to advanced technology and better, more streamlined processes. By revisiting these processes and making improvements, cost savings can be found.
Another major contribution to HR budget control is the increase in off-shoring and outsourcing lower value administrative jobs like answering general telephone calls and emails. By spending less on staffing low level positions, companies are better able to fund HR positions for higher qualified workers. Since those workers are not saddled with low level tasks, they can make the most of the more, important demands of an HR department, such as working to retain key employees.
How to Make the Most
of Your HR Budget
If your company does not have a clearly defined mission, values and purpose statement in place for HR, develop and implement a plan right away. This is a path toward streamlining processes, and ensuring that all members of the department are on the same page. It’s important HR revise or re-word what their strategic intent and contribution is because the working landscape has changed. The same old, same old ways of working in HR has to shift.
One example that shows value and connection to business is to set a policy for motivating employees into place.
· Reach out to department heads and get feedback about important HR functions. If you have a means to survey employees, do so. This is a crucial step toward understanding what people want. During an economic downturn like we are currently experiencing, try to find out what programs or low-cost benefits might increase employee satisfaction.
· Complete a survey to gauge initial feedback and determine next steps.
· Be sure that HR’s goals for motivating employees are in line with those of the company’s employee development policy.
· Develop a plan for implementing motivational procedures. Be sure to include guidelines and set procedures.
By finding out what will best motivate your company’s employees to succeed, and by developing or re-thinking processes to support the needs of the business, you can cut through the fluff and help your HR department thrive. The bottom line is, if you’re on the side of helping your business succeed in 2010, your HR department is likely to thrive also.
More resources to help:
Workforce planning
EAP
Program ROI
Building HR ROI
Forbes
article – Boosting Morale on a budget
Creating
a training budget
2010
Recruiting budget themes
City
of El Paso sample slidedeck for HR budget
