Leadership insights on Budgeting for Growth

I was invited to attend a seminar conducted by a local chapter of a management group. The conference was titled "Budgeting for Growth" where experts and industry leaders were invited to share their views on optimizing budgets for Marketing, Infrastructure, Information Technology and HR. Since my interest is in the area of HR, the viewpoints of a cross-section of the audience on budgeting for HR are shared below:

CEO of Logistics Company: "Our IT budgets are managed by the IT department. They spend it mostly on hardware & support besides investing marginally on software purchases. Our VP - HR is exploring on-line systems through which he would be able to explore employee profiles quickly. I have no budgets allocated for this."

MD of a Publishing firm: "My CFO feels that we have limited budgets for HR automation, but we may hire two additional executives in the HR department to manage the increase in workload as we expand. Additionally, our CFO is worried about hiring an expensive IT resource to manage any new HR system. We are in a dilemma!"

Director, Consumer Services Company said, "We use a large ERP to manage all business functions and our IT budgets are linked with that. We asked our HR Head to discuss their IT requirements with the ERP implementation team. He feels there are many niche solutions in the market which are far more adaptable to his specific needs. We have had recent successes with an Appraisal implementation and plan to continue to move further in this direction."

Owner of a small Retail Stores chain: "How can we think of HR automation at this early stage when we don't even have systems to manage our inventory. At the same time, I am afraid that I will lose visibility on budgets and head count since my managers take local hiring decisions."

MD Specialty Restaurant chain, "We have seen major growth over the past few years where our employee strength increased many times over. We had a resident HR expert who helped devise processes on spreadsheets to begin with. An Internet based software has been procured recently that allows data to be captured and neatly presented as dashboards to me. Employee related decisions are taken quickly and we have been able to implement a Rewards program also using that. I am happy with this decision."

Head HR of a FMCG company on his success story, "Our Company exploded suddenly in numbers. But we had planned in advance that we shall budget for a web based HR system to manage our employees operating from different locations. It was a smooth sailing since our Onboarding software had all details on company policy and even basic training packages to help new employees become productive quickly. We believe that growth depends on effective use of HR systems"

Post conference, an HR analyst revealed that, "The managements of most companies are more inclined to allocate dollars on Line Functions - where ROI is measurable".

While this is expected because the CEO's performance is usually measured on short term results, the focus on development of Human Resources is typically taken as an afterthought. Many industry leaders – the most notable being Jack Welch of GE, have emphasized on the need of managing people well and have themselves achieved it through state of the art HR software systems"

Is the implementation of sophisticated HR systems only available to big companies who can afford expensive ERP systems?

No, a web-based solution offered on the SAAS (software as a service) platform  can quickly get you off the ground, needs no expensive maintenance costs and has low cost per employee, with flexible payment terms. You need not even cater for any budgets in advance. No dilemmas whatsoever in planning automation of your HR function.

A typical phase wise approach for implementation of such a solution was discussed and agreed upon by most organizations. It goes as follows:

Phase-1          

-          Software to manage recruitment and onboarding with automatic update of employee data base.

-          A data-base with self-service facility for employees to manage their leave, view company policies and have a help desk for redress of grievances.

Phase-2

-          A Performance Management system that can help set targets, track achievements, evaluate competencies and measure performance of the employees.

Phase-3

-          Top-down alignment of goals across the organization.

-          Performance based Incentives.

Training Management, Succession Planning and 360 Degree feedback were also brought out by some of the CEOs as their additional requirements. These could be added to Phase 2 or 3 above based on specific needs.