Those who work with budget, forecast and planning know that there are many challenges when it comes to staff budgeting, no matter if you make a budget per employee or FTE.
In this article we list the most common challenges and how they can be managed in a system for budgeting, forecasting and planning:
Salary Regulations
Salary Regulations in Different Countries
Currency Management
Salary Revision
Role-based Security & Privacy
Time Constraints
Two common challenges when it comes to HR- and staff budgeting is managing pension regulations and calculating vacation salary debt. This is often managed in Excel, which makes it even more complex than it already is. In example, for a single employee it is manageable to set up a pension percentage based on age and salary in Excel, but it’s often very complicated and time-consuming – especially if the company has a lot of employees. Therefore, a lot of companies tend to make generalisations which later complicates the follow-up process.
At Planacy we usually recommend that you create a budget with as much detail as possible, but also generalize where it’s possible.
One of the perks of working with a system for budgeting and forecasting is that it’s easy to set up rules and regulations for what is to be budgeted in detail, or generalized. You can budget on well-known dimensions and with just the right amount of detail – and then drill it down on both individual- and account level. Since the budget and actual data is on the same level/dimension, both budgeting and follow-up is simplified.
If you have employees in several countries, the salary regulations might be difficult to manage since they can be completely different in different countries. In example: in some countries the social fee is based only on the monthly salary, while in other countries it’s based on both the monthly salary and pension. And of course, the percentages for these types of salaries can vary as well. When this is managed in Excel you need a number of different tabs that are all linked together – a process which is very time-consuming and increase the risk for errors. By setting up a set of rules at the administration level, you then only need to state which country an employee works in in order for these rules to be switched on automatically.
Currency management is yet another reason why it’s so difficult to manage HR- and staff budgeting in Excel. One of the strengths of using a system for budget and planning is that you can easily add a currency management process, and then you simply need to tell the system in which country an employee works. Also, you can of course choose if you want to budget your employees in the local currency of in consolidation currency.
When using Excel, a lot of manual work hours goes into updating the staff’s salaries, in example after a salary revision or when you’ve hired new employees. In a system for budget, forecast and planning, this is much easier to manage. In Planacy you can, from an admin perspective, budget a general percentage increase from the month of your choice – which simplifies the management of salary revisions. Of course, this can also be divided up based on employee categories. Budgeting in this way further enables you to easily create what-if analyses and add different salary revision percentages to see how it effects your result.
As you might know, it’s no longer legal to send salary specifications via email, but even so personnel budget files are often sent via email – which is practically the same thing as emailing a salary specification. The risk of sensitive files being sent to the wrong person is high.
Many people still work in this way since there’s no better solution in Excel, but in a modern system for budgeting and planning it’s easy to avoid with role-based security – and you don’t have to worry about sensitive information ending up in the wrong persons inbox.
Yet another problem when working in Excel is how much time is needed even for small changes. Take the current crisis brought on by Covid 19 as an example: the Swedish government presented a “savings package” that enables reductions in social fees during certain months. Of course, you want to be able to quickly adjust your budget to see which effect this might have on your company. The same thing goes if you for example want to know what effect temporary layoffs of a certain number of employees could have on your company’s result.
Adjustments like these can be made in Excel, but it’s difficult and time-consuming. You often have dozens of different Excel files where you have to add the same data and all adjustments.
In these cases, you save a lot of time by using a system for budget, forecast and planning. If you, for example in Planacy, want to change something you only need to make a few adjustments for it to impact all parameters – and if you instead want to set up a completely new budget it only takes a few clicks to do so.
I believe that it has been evident in this article that there are quite a few challenges when it comes to HR- and staff budgeting, especially if it’s managed in Excel. With a system for budget, forecast and planning, you can largely streamline your processes and at the same time increase security. Please feel free to contact us if you want to know more about how our platform can help you and your company with your budgeting challenges.
Read more about HR- & Staff Budgeting in Planacy
