As business costs continue to be a primary concern for organizations amid an uncertain economic climate, understanding the importance and concepts of the budgeting process is more important for HR leaders than ever. However, every organization has unique processes and timelines that will impact how the budget gets created and how funds are allocated to various functions, programs, and initiatives. In response to HR leaders’ current and ongoing needs for direction on the budgeting process, McLean & Company has published its new data-backed industry guide.
Recommended: HR Tech Interview With Chris Havrilla, Vice President, Product Strategy,Talent At Oracle
The new HR Budgeting Guide will help HR leaders understand foundational budgeting concepts, identify the role of key stakeholders in the budgeting process, recognize HR’s role in organizational budgeting, identify opportunities to build HR’s role as a strategic partner, and more.
“Senior leaders’ perception of HR as a function impacts HR’s involvement in the organizational budgeting process,” says Grace Ewles, manager of HR Research and Advisory Services at McLean & Company. “Traditionally, leadership may view HR as a necessary expense rather than an opportunity to strategically invest in talent in support of organizational outcomes, such as productivity and innovation. As such, organizations that fail to identify the talent implications associated with strategic investments risk prioritizing short-term financial gains while ignoring long-term consequences.”
McLean & Company defines budgeting as “the process of planning how organizations spend their money to achieve strategic goals.” The resource further highlights three critical components of the budgeting process HR leaders must understand in order to be strategic partners, as outlined below:
In addition to the three components of the budgeting process, the firm outlines two key parts to business acumen that must be considered to increase HR’s effectiveness in the budgeting process. Business acumen entails using critical thinking, a solid understanding of the business and the wider industry, and financial literacy to make decisions. The two critical components of business acumen are below:
Recommended: HR Tech Interview With Brigette McInnis-Day, Chief People Officer At UiPath
- The knowledge of business fundamentals: Understanding key financial terms, specific organizational knowledge, and knowledge of the industry in which the organization operates.
- The application of said knowledge: Thinking critically to engage stakeholders and align HR activities with organizational priorities.
McLean & Company advises HR leaders that the budgeting process is much more complex than simply identifying costs and presents the opportunity to solidify HR’s role as a strategic organizational partner. Building a relationship based on mutual respect and understanding helps transition the finance department into an advocate for HR. The resource explains that the more that the finance department values how HR budgets are created and implemented, the more likely they are to see HR as a strategic long-term investment.
HR Technology News : HR Technology Highlights – HR Tech Daily Round-Up For 20th June 2023
[To share your insights with us, please write to sghosh@martechseries.com]