Leadership insights on “Budgeting for Growth”
I was invited to a attend a seminar conducted by a local chapter of a management group. The conference was on “Budgeting for Growth”, where experts and industry leaders shared their views on optimizing budgets for marketing, infrastructure, information technology and HR. Since my interest is in HR, I captured and am sharing the viewpoints of a cross-section of the audience on budgeting for HR:
CEO of a logistics company: “Our IT budgets are managed by the IT department who spent it mostly on hardware and support besides investing marginally on software purchases. Our VP – HR is exploring online systems which would allow him 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: “We use a large ERP solution to manage all business functions and our IT budgets are linked with it. 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 success with an appraisal implementation and plan 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 headcount since my managers take local hiring decisions.”
MD, specialty restaurant chain: “We have grown immensely 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. Recently, we purchased an Internet based software that allows data to be captured and presented neatly as dashboards to me. Employee related decisions are taken quickly and we have also been able to implement a rewards program using it. 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 on-boarding 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 developing HR is typically seen as an afterthought. Many industry leaders – the most notable being Jack Welch of GE, have emphasized the need for 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 plan for any budgets in advance.
A typical phased approach for implementation of such a solution was discussed and agreed upon by most organizations, as follows:
- Software to manage recruitment and on-boarding 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.
- A Performance Management system that can help set targets, track achievements , evaluate competencies and measure performance of the employees.