Human Resources Planning Capstone Project

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Human Resources Planning

Budgeting

* Components/elements included in an HR Budget * Consider all HR facets such as Selection and placement, training & development, compensation and benefits, employee relations and employee engagement, health, safety and risk management * Cost reduction strategies.

Both the cost and the range of functions taken on by a Human Resources Department are directly dependent on the size of the company. Smaller companies tend to make fewer distinctions between programs that the Human Resources Department oversees while larger companies make clearer distinctions between different functions. However they are packaged, however, and whatever the title of the individual who carries out the assignments, Human Resources Departments in general oversee the types of functions that are described in the section below. As Human Resources Departments become increasingly comprehensive in the services that they provide as a supporter of the needs of both employees and managers and as the primary mediator between the two, the responsibilities of Human Resources Departments are only likely to grow in scope and complexity.

The first task that a Human Resources Department faces when considering any change in programmatic offerings is one that it shares with any other department: It has to assess what budgetary constraints that it will have to work within. No reliable budget can be created without first collecting the relevant data in as accurate a manner as possible and so one of the most important tasks that any Human Resources Department can do is to gather these data and then to produce a workable budget. Once this budget is in hand and only then, the department can (in concert with other departments and with the supervision of the company's executives) rank his priorities in terms of what the department will be able to stay within the allotted budget. This is profoundly simple but also profoundly true.

Among the most important data that a Human Resources Department must collect are the number of employees that the company will employ over the next year (or however long the budgetary period may be). The budget must also include a breakdown of the different types of employees and what the turnover rate is likely to be in each of these categories. Ways to reduce employee turnover is one of the most effective cost-reduction policies that a company can implement and thus must be kept in mind throughout the budgeting process that the Human Resources Department carries out.

The Human Resources Department budget should include complete information on the human resources of the current and several past years because these data will provide the basis for the most accurate predictions for future costs. Future costs must include any planned or potential cost increases in either salary or benefits. Some of these future costs can generally be predicted with a good degree of accuracy because they are usually based on established company procedure. For example, if the company provides a two percent cost-of-living-allowance and intends to keep this in place, then the increased cost can be easily calculated. However, most future costs are not so easily or so accurately calculable (How to find recruiters in your midst, 2012).

Coverage the health insurance costs for employees is also relatively easy to predict accurately, especially for larger companies that negotiate their entire annual healthcare contribution on a yearly basis with the insurance compan(ies) with which the company has a contracted relationship. On the other hand, estimating future healthcare costs for the employee can be harder since the individual worker has far less control and less warning when changes in healthcare coverage will be made, thus often allowing only a few weeks for what can be an extremely important financial decision. One of the other expenses that a Human Resources Department must therefore make plans for in its budget is staff time to be available to help employees either singly or in groups become knowledgeable about what changes are likely to be coming and to provide that best possible tools to employees so that they can make informed decisions. While Human Resources Departments tend to be seen as on the "side" of the company's executives and officers, a well-run HR Department can fairly represent all the parties involved in a company's workings.

This service will not only improve relations between workers and the company's management but will also in particular reduce turnover. Given that another one of the ways in which many companies are trying to reduce cost across all departments is to reduce health coverage, employees are especially sensitive to changes in this set of benefits and if they feel that they have been left in the dark they are more likely to turn their attention to other companies.

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How the company compensates its employees, including wages as well as benefits, is part of the whole business strategy that the company will pursue, and so this area of Human Resources Department budget planning that must be especially well coordinated with other departments. Again, this is so simple as to be obvious; this fact does not, however, mean that it is universally adhered to as a policy.

Another significant issue that Human Resources Departments have to consider in establishing a budget for their programs is how upcoming laws and regulations may affect the company. An excellent real-world example of this is the new comprehensive federal healthcare law. This law affects employees in fundamental ways and thus requires the Human Resources Department to use staff time to determine exactly how the company will be affected as well as providing information (through meetings, individual appointments, emails and other internal forms of communication, etc.) to help employees learn about and understand how the new law will affect them as it phases into effect.

Upcoming changes in regulation that affect whatever industry the company is in must also be considered in the budgeting process. For example, if all employees must undergo additional safety training, then the Human Resources Department must organize the training on an either in-house or external basis and budget monies to cover the time and tasks when employees are in the training. (These needs in staff time might be filled through hiring temporary workers or by paying overtime or a combination of both.) Increased or changed regulation might also require the company to hire individuals with different training, expertise, or education than are currently available in the company's employment pool, thereby requiring the Human Resources Department to recruit new workers (How to find recruiters in your midst, 2012).

When selecting new employees for any reason, the HR Department must budget for a range of tasks and functions. These begin with advertising the new position including paying for 'headhunters' to provide a gatekeeping function so that the HR Department can limit the time its staff have to spend in assessing candidates who do not match the requirements closely enough to be considered seriously ( Ulrich, 1996).The HR Department may also have to plan to cover the cost of temporary workers until a permanent employee can be hired. The costs of temporary workers can be relatively low for many hourly workers but may be very steep for highly skilled workers. Indeed, it is far from unlucky that in some cases a key employee cannot be reasonably replaced temporarily, which may require an HR Department to help create "go-arounds" for that individual so that the company's business as a whole are not slowed down or compromised (Ulrich, 1996).

Once a pool of suitable candidates has been selected, some of the costs that the HR Department must budget for are staff time for conducting interviews or for the costs of skills testing if this is relevant and for drug tests if the company considers this to be important. Most companies conduct background checks on at least some of its employees so that these need to be budgeting also. There are also a number of recruitment-related expenses for higher positions in a company. For example, a candidate for a part-time clerical position will not be flown in for an interview and provided hotel and restaurant coverage; however, this kind of cost must be covered for higher-up employees. One of the ways in which an HR Department can reduce costs is to limit the number of candidates that it brings in by conducting as-thorough-as-possible background checks before inviting candidates to interview in person. Reducing recruitment costs in any reasonable and ethical way possible will help an HR Department reduce both short-term and long-term costs for a company given that even in capital-intensive industries the best recruitment processes can be central to a company's financial success (Human resources reports and essays, 2006).

The Human Resources Department must also budget for a range of training and development programs that address everything from new company policy to the type of new laws and regulations discussed above. Again, to some extent such trainings can be thought of as ways in which to reduce overall costs, although there are certainly some costs associated with them. However, well-designed trainings can also allow….....

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