Creating a budget for your HR department can be challenging. You want to make sure you maximize your budget so you can hire the best people, have benefits people love, and tackle the legal side of HR. Budgeting doesn’t have to be as restrictive as we make it out to be, though. We understand that we can make a small budget work in our daily lives, why can’t we do the same in HR? Today, we are sharing five personal finance lessons you can apply to your HR budget so you can get your budget in shape for 2020.
1. Find Ways To Save And Spend Less Than You Can
You’ve probably seen the personal finance lesson, “spend less than you make.” This lesson of having extra money leftover at the end of your paycheck is easily one of the best lessons to utilize in HR. Human Resources can be expensive, but there are some ways we can save our company money.
Earlier this month, we talked about five ways to save money on your HR budget in 2020. Utilize those ideas to make the most of your allotted HR budget. If you can find a way to go in under budget while meeting your recruitment goals, your department will save the company money.
That money you save this year can have a profound impact on the profitability of the company. Working smarter with your money allows you to have a bigger and better budget year after year. One year of smart saving will set you and your company up for years of success.
2. Change Your Company’s Mindset About What You Can Do With The Money You Have
When it comes to personal finance and the lessons you learn from it, money mindset is everything. When you have a negative mindset, you are training your brain to shut down and see the negative in every situation. You can apply this same lesson to HR.
Think about how creative your team could be if they saw the positive side of things? In his book “The Happiness Advantage: How A Positive Brain Fuels Success In Work And Life,” Shawn Achor often talks about how a negative mindset blocks creative thinking. You are limiting your possibilities as a team when you shut down and only see a small budget.
When you bring more positivity and creativity into your HR department, you’ll begin to see all the possibilities right in front of you.
Shawn Achor calls this “The Tetris Effect,” based on a study by Harvard Medical School’s Department Of Psychiatry. The department paid 27 people to play Tetris for multiple hours during the week. What they found is that the people in the study begin to see the shapes from the game in their day-to-day world after they stopped playing the game. Tetris was affecting their everyday life.
So, how does this relate to the negative mindset around your HR budget? The Tetris effect can be seen in everything we do. If we are trained to see the negative, we’ll keep seeing the negative. If we are trained to see the positive, we see that. By training your team to understand that your budget can be used creatively, they’ll begin to find ways to creatively spend your budget while meeting (and exceeding) company targets. You’ll make a more significant impact on your company by keeping your team positive and open to any ideas that come their way.
3. Set Clear Goals Behind Taking Finances Seriously In HR
If you’ve ever tried to save in real life, you know how challenging it can be. Saving for the sake of saving can often feel draining or next to impossible. It’s essential to see the big picture behind all the sacrifices you are making. If you can’t take a step back, it’s easy to spend all your money on things that you find exciting right now.
You can apply this same principle to your HR budget. If you don’t have clear goals besides “saving money,” you’ll find that it’s not as easy to stick to your budget as you’d like, especially in a small company.
Why do you need to save money, budget wisely, or invest in something in particular as a department? Let your team know the “why” behind your HR budget decisions, so they have more incentive to align with your budgetary decisions.
4. Check-In With Your Budget Often
Complacency has no place in your budget. In personal finance, it’s often so easy to avoid looking at your budget and assessing what’s happening with it. A huge personal finance lesson that most people need to understand is checking in with their finances more often.
Budgets only work if you make check-ins with them. Set up time monthly and quarterly to go over your budget. Make sure you are on target to meet or save on your current HR budget.
Reality doesn’t always match expectations, but you should always try to analyze budget issues before they become budget problems. While mid-year check-ins with your money are the norm, try checking in more often, so you can course-correct before you waste your entire yearly budget.
5. Don’t Be Afraid To Make The Investments Necessary To Improve Your Company (Within Reason)
Last, but not least, in personal finance, we understand the need to invest in ourselves. Even when money is tighter than we’d like, we might invest in a night out with friends or a course that will make us more successful in our career paths.
As a department, you have to be willing to invest. Whether that’s investing in a new onboarding system or a unique recruiting opportunity. Making smart investments are crucial.
Now, this doesn’t mean spending without care. You have to invest within reason. Do your research to understand why these investments are necessary, so when you advocate for your HR budget, you’ll get the money you need to succeed.
Personal finance and your HR budget have more in common than you think. A lot of the personal finance lessons you learn in your daily budgeting can be applied to your company’s budgeting practices. We hope that you got a lot out of today’s blog post as you consider next year’s HR budget.