How To Budget for Human Capital Initiatives with 6 Easy Points

The entrepreneur’s or HR professional’s responsibility is to align the HR budget with strategic business goals within organizational guidelines and procedures. Budgeting involves the methodical collection of information and data so that the finances needed to support a business’s objectives can be forecasted. New businesses have no prior financials to use for evaluation; therefore, forecasting and estimating will be needed for the initial HR budget. From an HR perspective, the data needed to generate a new budget includes the following forms of data:

1. Number of employees projected for the year.
2. Benefits cost projections.
3. Projected turnover rate.
4. Any actual costs already incurred in the current year.
5. New benefits/programs planned.
6. Other policies, business strategies, laws or regulations that may affect costs.

Forecasts may be simple or complex and, based on actual costs or projections, depend on the nature of the operating costs and the data available. Managers or business owners preparing an HR budget for the first time will need to collect every source of obtainable data to make knowledgeable projections.


Information taken from SHRM.ORG