In HR, the more things change, the more things change, and that makes it difficult when you need to analyze your compensation budget and compare it to actual.
Tracking Compensation Budgets for a Dynamic Workforce
If your organization is like most, your workforce is in a constant state of flux. New people join the company. Others quit or retire. Some go on leave or change positions. Although this fluidity is needed to keep your business agile, keeping track of those changes in your compensation budget feels like trying to hit a moving target.
HR leaders usually create compensation budgets months in advance of the fiscal year so that anticipated costs are included in the general operating budget. Then, at the end of the year, you can compare your expected costs with the actual ones, and identify variances.
While some variances are expected, it is critical to identify what they were and why they occurred. This feedback will provide a bigger picture of the state of your business. For example, did you budget for positions that you were unable to fill? This may signal that more focus is needed on building a recruiting pipeline or helping employees fill a skills gap. Did you need to pay new hires in critical roles more than you anticipated? Your organization may need to review external compensation wage ranges or consider your entire benefits package to ensure it is competitive. Did your business acquire a new customer or project requiring ramping up the workforce? Even though growth is good news, it is essential to anticipate if the growth will continue, and if not, what will happen next.
As you comb through the differences between what you thought would happen and what actually did happen, you can help your organization strategize for the next cycle--but this only is meaningful if your budget is as accurate as possible. In many organizations, the budgeting process can be chaotic.
Challenges in Creating Your Compensation Budget
Even knowing how essential it is to have a solid compensation budget, it’s still a struggle to create one. In many businesses, compensation information is captured in various spreadsheets, organization charts, and separate HR systems.
Once you’ve gathered this information, you still have to make sure you’re referencing the same point in time on all of the sources and that you incorporate any new hires, terminations, or organizational changes. Piecing this data together takes time, and by the time you’re done, it may be outdated. Even if the information is timely, compiling the data from multiple sources makes the process subject to human error.
Ensuring accuracy in the budgeting process can be particularly tricky when your organization has open positions-- and what organization doesn’t? Most HR software is employee-based, which means information about a job is organized within the employee’s record. That information is available--as long as that employee stays in their position. But when they leave, that information can be lost, as that employee information tied to that position is altered.
Employee-based software also makes it difficult to organize your company by role or to identify where the personnel budget is being used.
With inefficient solutions, you can’t get a clear and complete view of your organization. As a result, it is nearly impossible to create a budget that uses strategic insights to improve accuracy.
Position Management Software for Improved Budgeting
HR professionals can avoid these critical accuracy issues and save time in the budgeting process HR software that uses position management. Unlike traditional employee-based software, position management software, like SyncHR, organizes job roles separately by employee and position, with a joining link.
This way, when a position is added, the budget is added, and the overall budget is updated. The employee’s salary is added to the actual in various areas, making it easy to report on both sets of data. Information is available by any type of variable, whether it is location, department, manager, or other.
Instead of trying to align spreadsheets and org charts with time tables, SyncHR consolidates and organizes this information so you can cut it as you need it and immediately see it past, present and future.
HR professionals are increasingly expected to use data-driven insights for their recommendations and decisions. SyncHR’s position management software gives you an enhanced ability to do this by displaying costs associated with your workforce at a granular level.
With this vision, you can track where your payroll goes by assigning salary range, cost center, funding source, and other attributes to each position. Using this, you can review how your budget is allocated and determine accurate cost control measures, no matter how and where employees move across the organization.
For many of us, budgeting may never be a fun exercise. But it is a vital one for measuring and analyzing the health of the organization. Software like SyncHR simplifies the compensation budgeting process, making it faster and more exact, giving you the information you need to make better business decisions.
Get started today, and see how SyncHR can provide an integrated tool that HR and Finance will love.
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