Planning for your HR department’s annual needs typically starts in October and runs through January. This includes planning around things like headcount and department budget.
The right strategy can make or break your employee attraction and retention efforts, and there are several considerations for HR professionals during this time.
This blog will focus on key elements of the HR annual planning process as we head into 2024, such as budgeting for base salary increases and benefits, promotions and merit increases, and new hires.
Budgeting Process
An integrated approach to budgeting ensures that HR initiatives are in harmony with the overall financial health of the organization. HR professionals should work with finance and department leaders to set realistic budgets that accommodate staffing requirements and the year ahead. Consider factors such as headcount, salary increases, training, employee benefits, and technology requirements.
Base salary increases are a pivotal component of HR annual planning, especially in today’s inflationary environment where the cost of living has increased. To attract and retain top talent, it's essential to stay competitive in the job market. In addition to accounting for individual performance and the overall financial health of the organization, research industry benchmarks and salary surveys to ensure your compensation is in line with market trends. Allocate budgetary resources for across-the-board increases, taking into account individual performance, market demands, and the overall financial health of the organization.
HR professionals should also review benefits utilization and cost data to understand trends and make informed decisions. This is where having quality HR data comes in handy. Conduct employee surveys to gather feedback on existing benefits and their preferences. Notably, healthcare costs tend to rise annually, so keep that in mind as you are setting your objectives and creating a plan.
Promotions and Merit Increases
Recognizing and rewarding high-performing employees is key to maintaining a motivated workforce. Develop a structured approach to promotions and merit increases by implementing performance appraisal systems. Provide clear criteria for advancement and tie merit increases to individual and team achievements. This not only encourages a culture of excellence but also aligns employee growth with organizational success.
Notably, inflation can affect the budget allocated for merit increases. HR must carefully evaluate the balance between recognizing employee performance and the organization's ability to fund these increases amid rising costs.
New Hires
Headcount planning involves forecasting the number of employees needed to meet organizational goals and objectives. Start by conducting a comprehensive analysis of current staffing levels, taking into account turnover rates, retirements, and any changes in business strategy. Collaborate closely with department heads to align staffing needs with their demands. Assess the need for new talent based on business goals and any emerging skills gaps. Collaborate with hiring managers to develop accurate job descriptions and set realistic timelines for recruitment.
HR annual planning is a complex yet vital process. By approaching the critical components of 2024 planning strategically and collaboratively, HR professionals can play a pivotal role in driving organizational success. As the workplace landscape continues to evolve, adept planning ensures that HR remains a proactive force, ready to meet the challenges and opportunities that lie ahead.