Best practices for budgeting and planning for the new year

With everything on your plate in order to wind down the current year, it can seem overwhelming to think about planning and budgeting for the next one. Taking a little time to consider these matters before Dec. 31, however, can save you headaches down the road and set you up for success come Jan. 1. Getting your company's affairs in place for the next year doesn't have to be a stressful experience. Just follow our best practices for budgeting and planning for the new year:

1. Look to the past before looking ahead 
All the time spent in the fourth quarter measuring progress toward sales goals and calculating employees' holiday bonuses doesn't occur in a vacuum – the knowledge and insights you gain from end-of-year tasks can be lessons for the new year. Review the past 12 months from an HR perspective to see what worked and what didn't. Maybe you had low engagement with open enrollment in September, or your recruitment efforts weren't as successful as you wanted them to be. Take note of these observations and use them to inform your budget- and strategy-setting for the year ahead. 

hiringIdentifying your company's hiring needs is an important consideration as you head into the new year.

2. Identify opportunities for professional development 
While evaluating your recruitment needs for the new year, also take stock of current employees who are primed to advance. Perhaps a star worker has exhibited promising leadership qualities, expressed a desire to move to a new department or wants to pursue a professional certification in an area related to his or her role. Make note of these opportunities for career development and plan to follow through with them in the new year. Not only is proactive professional development good for your company, but it's important to employee job satisfaction. 

3. Set recruitment goals 
Before you can establish your budget for the coming year, you need to determine your hiring goals. Use talent management software and speak with managers and department heads to get a sense of personnel gaps and if there are any specific skill sets the company could benefit from that are lacking in the current workforce. Record these recruitment goals and begin crafting outreach strategies to achieve them. Be sure to account for other recruitment-related costs besides salary in your budget draft, such as for advertising vacancies and flying in remote candidates for interviews. 

4. Get clear on your budget 
An annual budget can take on a vague, amorphous quality, which isn't good because that makes it harder for your company to spend its resources on what matters most. It pays to flesh out the framework of your budget ahead of time. Make sure all stakeholders are on the same page about what structure the budget will take. The Society for Human Resource Management notes that budgets usually fall into one of two categories: incremental or zero-based. Incremental budgets use the current year's budget as a template with each item adjusted based on future estimates. Zero-based budgets, on the other hand, are built from scratch, with each item having to earn its place. Reach a consensus on which type of budget is ideal, then move forward. Cold hard facts should win out in your budget over hopeful wishes, so depend on the data collected by your HR technology to determine what's in the budget and what's out of it.