Guest blog by Sally Brand
HR budget is often a challenge. There is stiff competition for ‘the pot’ and often business cases from revenue driving departments are, on the surface, seen as a better investment. However, if people genuinely are business’s greatest asset (as so many exec teams, experts and thought leaders agree), and they want to develop and maintain a strong, productive workforce, than investing in people is essential.
Now, more than ever, employees expect a contemporary approach to HR. A key part of this is technology; to support their day to day roles and wider career aspirations. If HR budgets are well managed and outputs tracked, the financial and cultural returns to the business can be huge too.
Over the years I have worked with many HR professionals to help them put together budget proposals and argue persuasively for the resource they need to bring about necessary change. I have seen first-hand that there is a knack to getting the desired results and that some HR professionals secure what they need every time, whilst others are all too often left frustrated.
These are seven key insights that will support effective budget negotiations:
- Get the Board on board – demonstrate how the HR budget supports overall business goals. Be prepared to show what the return on investment (ROI) looks like. For example, when helping to put together a business case for a change project or for digitising ‘the people stuff’ via Talent Toolbox, explore how this fits in with the company strategy, what the business outcomes will be with key measures of success, and how these will be tracked. This might include the costs savings from reducing labour turnover, the value of improved communication and innovation, the benefits of internal leadership pipelines and so on….
- Be highly commercial in approach – rightly or wrongly, other functions are often sceptical about the value that HR brings. This is not ideal, especially if you want an increase on last year’s budget! Have a concise business case based on your company’s specific needs, backed up with relevant financials, appropriate case studies and stats which you can draw on, if the detail is requested It might be necessary to prove your worth via a few quick wins to gain credibility.
- Use business language – avoid HR jargon and keep it simple. Avoid using terms that don’t resonate with decision makers. For example, if your CEO is left cold by the word ‘training’, avoid it like the plague. Be in the business, understand business, talk business.
- Get feedback from the wider business about the issues they are facing and use this to support your case. For example, if employees are complaining that they waste time completing paper based performance reviews, with few outputs, show that you have listened to what the business has said and highlight how the HR budget can support better results that will have a real impact on the bottom line.
- Get the timing right – sense the mood of the board and prioritise requests and timings to align with this. Getting the timing wrong or asking for too much at once can be detrimental. Have a cohesive and timed plan, negotiate budget for phase 1 and use the outcomes to negotiate the budget for phase 2 and beyond.
- Be confident and don’t be afraid to ask challenging questions (framed in the right way, of course!). Paint them a ‘What if…’ picture. “What if our employee retention improved by 10% and we were seen as one of the top employers within our market? My research shows we’d be likely to see tangible savings such as X and Y”
- Always talk context and strategy (the why and the what) way before diving into tactics (the how)
Use these strategies to provide ‘ammunition’ for securing the HR budget that you need this year.