Published: Jun 11, 2019

Written in collaboration with Rachel Rapoza.

Every year, organizations go through a headcount planning and budgeting exercise to align their workforce to their forecasted demands for the upcoming year. For some organizations, particularly in the healthcare, public sector, and retail industries, this exercise requires access to robust workforce analytics to ensure accurate forecasts. To streamline the process, many organizations leverage a position-based workforce structure. 

Positions versus jobs: While a job-based organizational hierarchy means that a job only exists with an active employee, a position-based hierarchy means that job roles are independent of employees. In other words, job-based is a one-to-one relationship between jobs and employees, but position-based is a one-to-many relationship. This allows organizations to budget at the position level and apply specific position attributes that employees inherit when they fill a position. 

For instance, a town recreational center may have the position of “Lifeguard” and have 20 full-time and 10 part-time employees within that position.  When an employee is in that position, they are assigned specific attributes such as the lifeguard pay grade, cost center, credential requirements, and other labor costing information. 

While a position-based structure can streamline headcount planning and budgeting, many HR professionals still struggle with the process. In fact, 60% of HR executives say this is one of their weakest capabilities. So we’ve come up with 5 tips to help you improve your headcount planning and position budgeting process.

Skydiving group getting in positions and creating formation - headcount planning and position concept

1.    Analyze overtime data

Overtime can be a huge expense for some organizations – and a huge source of insight into workforce trends. 

When budgeting, review your overtime costs per position for the last 12 months compared to the last 3 to 5 years. It is important to understand:

•    What positions had excessive overtime spend
•    What was the cause of this overtime (significant increase in demand, seasonal spikes, turnover, injuries, unplanned leave, etc.)

When should you increase a position’s budget? You may find that a certain position has excessive overtime because of a consistent increase in demand. For example, a hospital may find an increased demand for orthopedic nurses because they just hired two top-tier orthopedic surgeons. 

When shouldn’t you increase a position’s budget? Another position may have excessive overtime, but for a different reason – high turnover. High turnover may be common for that role (for example, a retail stocking clerk), in which case, your organization should focus your efforts on recruiting and reducing time to hire.

2.    Review employees with multiple roles

Taking a close look at the data for your employees with multiple positions will help you identify trends for more accurate budgeting and better cost control. If one position consistently exceeds budgeted hours, it could be a source of excessive overtime costs. And this could be a sign that additional budget or a different staffing model is needed to fill demand. 

Unfortunately, some organizations don’t have the ability to easily track an employee with multiple roles and make sure their time is allocated to the correct budget – which impacts their ability to pull historic data to accurately forecast budget needs. Leveraging an automated human capital management system with robust position management capabilities should enable them to easily track employees with multiple roles. 

3.    Understand seasonal spikes

Don’t forget to take into account seasonality when budgeting for positions. Although you may only be hiring temporary employees during peak seasons, it can completely throw off your budget if you don’t account for that. Assessing your past seasonal hiring needs will be key in helping you to project next year’s seasonal hiring needs. This is where an automated HCM system is going to come in very handy, as you should be able to easily run reports to get the information needed to understand what your historical hiring patterns have been. Taking this a step further, you should also be able to pull in specifics around the skills, certifications, and the times during the week where staffing needs peaked. Within an automated solution you should also be able to easily project your scheduling needs and budget based on all of that data.  

4.    Don’t forget to budget for certifications

More and more companies are paying for their employee’s certifications as it can be a win-win for both. If you are currently paying for any of your employees’ certifications or are thinking about starting up a program to subsidize employee certifications then you need to take that into account when budgeting for any new or existing positions. You should be able to tie into and track the certifications required and associated costs by position within your HCM solution. This will help easily pull those certification costs into your total budget for next year.

5.    Reduce the budget impact of compliance penalties

Did you get dinged with any penalties due to noncompliance? Well, now that you’re in the midst of personnel planning it’s a good time to ensure that you avoid additional fees by documenting all of the skills, certifications, forecasted number of employees needed during peak and non-peak times, etc. Again, an automated HCM system will help give you insights into all of this and more.

Conclusion 

Overall, it will be really important to put together a strategic plan to ensure that you take into account all the factors that you need to budget for positions needed in the coming year. Look back at historical data around overtime, labor costing, seasonal spikes, certifications, and compliance to get a full picture of what your needs were over the past year and better forecast the number of employees you’ll need in the year to come. If you’re curious to see how position management and the other components available in a unified HCM system can help you manage costs and improve your bottom line, check out our value calculator and get an idea of the advantages you can gain for your organization and your employees.