HR BUDGETING

Human Resource Budgeting and Best Organizational Practices

[Name of the Institute]

Human Resource Budgeting and Best Organizational Practices

Introduction

Human Resource Budgeting refers to the process of formulating operational budget for the human resource in an organization. Formulation and establishment of an organizational budget for the human resource requires considerable attention in making the investment in the human capital. Company's resources, when employed for human capital, needs to ensure that the investment made by the company in accumulating quality human resource which foster future business and profitability for the business. The strategic role of human resource department is to employ human capital, which caters the strategic role of the business. The duties and responsibilities, which are assigned to company employees, should fulfill the strategic objective of the business when combined. The ultimate objective of any business is the accumulation of profits, so when a company is investing in employing quality human resource it should consider it is lucratively.

There are a number of allocations for the human resource budgeting, this includes employee salaries, social security fees, reimbursement of expenses, fringe benefits, travel and transfer allowances. On the other hand, budget allocation for training employees, cafeteria and daycare for employee children can also be included in HR budgeting (Milkovich, Boudreau, Milkovich, 1994). However, the budget allocation may vary from one company to another on the basis of company policy, budget processes, nature of the business or company accounting systems. In this paper, we will highlight the importance of HR budgeting and best practices of different organizations in the United States.

Following are some of the best practices which can be initiated and implemented by different organizations when allocating their budgets for the human resource.

Budget development and Corporate Strategy

As we have discussed earlier, the organizational budget should be established in relation to the overall company objectives. These allocations in the human resource department should be focused on the attainment of strategic goals. When organizations combine the concept of SHRM with budgeting, they make sure that their investment in human capital and the employee performance should comply with the established strategic objectives. Budget development is more effective when it is linked with the corporate, strategic objective, but how this link can be created? Those companies, which apply best practices in human resource budgeting, considers the importance of communication (Boudreau, Ramstad, 2007). Communication plays a crucial role in establishing a link between the human resource budgeting and organizational strategy. The top management will communicate the corporate strategy, goals, and objective to the HR department and the department initiates the recruitment, training and selection, keeping in view the strategic objective. Companies like Google heavily invest in human capital, like SEOs, keeping in view its corporate strategy for extensive research purposes.

Design procedure which allocate resource strategically

One of the most serious concerns is the establishment of procedures which are not only cost efficient but also cater the company strategy. Companies invest huge amount of their resources in the hiring o their employees. Posting advertisements and informing the general public about a particular vacancy, ...