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As the end of the year approaches, businesses enter a critical phase of financial reporting and budgeting that lays the foundation for the year ahead. For departmental leaders, this process involves a delicate balance of analyzing the current year's performance, forecasting for the next, and aligning financial strategies with overarching business goals. Staying ahead demands a keen understanding of industry trends, compliance requirements, and the intricacies of cost management.
Here,14 Forbes Human Resources Council members share essential strategies leaders can employ to effectively navigate the complexities of year-end financial reporting and budgeting.
1. Start Early
This year we kicked off our planning process in April, with a June 30 deadline. We achieved what we wanted to within our deadline; however, we agreed we'll start mid-March next year to give ourselves more time. Start with the high-level, top-down strategy, business drivers and goals. Then, complete a bottom-up forecasting process with all of the details included. - Andrea Davey, Scout Talent Group
2. Understand Goals And Objectives
First, thoroughly understand the strategic goals and objectives of the organization and know how the present budget performs relative to established KPIs. With this expertise, carefully evaluate which people initiatives and expenditures best align with desired business outcomes. Finally, leaders should emphasize cost-effective people solutions without sacrificing culture, quality or impact. - Will Gaines, Super Store Industries
3. Include The Entire Team
This allows the team to share in accountability, as well as serve as a means to allow complete input and transparency to occur. They understand our budget for the next year and our confines within it. It has worked exceptionally well in developing our needs versus our wants and making the biggest impact within our means. - Cathy Smith, Fairfield Chair Co.
4. Adjust According To Plan
Start with financials. Then, review the department business plan—what is being planned incrementally, and what new, different areas are we expanding into? Taking those projections, consult and collaborate with your lead business partners to understand the people's needs, development, recruitment and additional headcount to meet the plan's needs. - Gordon Pelosse, CompTIA, the Computing Technology Industry Association
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5. Identify Areas Of Overspending And Underspending
One of the best ways to plan for upcoming budgets is to look back over the year and identify areas of overspending or underspending. Leaders should also get feedback from employees on key tasks, which may have been added or removed from their workflows, that have an impact on budget increase requests or diverting budget funds to other key areas to align more with company goals. - Laura Spawn, Virtual Vocations, Inc.
6. Be Strategic About Investments
Think strategically about investments to mitigate the risk of prioritizing short-term financial gains without considering long-term strategic initiatives. Align any departmental spending with strategic goals and objectives and work to influence internal stakeholders and key decision makers. - Jennifer Rozon, McLean & Company
7. Be Flexible From The Outset
It will make it much easier if you need to pivot and make adjustments further down the line if you are flexible. Business cycles are much shorter than they used to be and being able to react to changing market conditions or unexpected events is critical when it comes to budgeting. - Kim Pope, WilsonHCG
8. Involve HR To Determine The Health Of The Workforce
A company's largest expense and determinant of success is a healthy workforce. To increase leader budget readiness, HR delivers actuals and projections for the number of employees, comp and benefits, turnover, new programs, policy change, business strategy dependencies and law or regulation costs. HR also identifies over or under-investment and labor innovation and optimization opportunities. - MJ Vigil, DispatchHealth
9. Focus On The Data
Rely on data to provide full visibility into cash flow, revenue targets, resource allocation, costs and skills requirements. Perpetual analysis of business and talent data is key to the formulation and ongoing optimization of business and talent strategies that best serve the changing needs of the business. Use a scorecard to report performance metrics and inform adjustments required before year-end. - Laci Loew, XpertHR (a division of LexisNexis Risk Solutions)
10. Analyze Variances And Identify Key Factors
Involve stakeholders in this process to gain diverse perspectives of the outcomes. Consider industry trends, regulatory changes that could impact the business, adapt strategies and make necessary adjustments to stay competitive. Continuous monitoring and evaluation are essential to ensure the organization's sustainability. - Kimika Banfield, Arootah
11. Weigh Your Needs And Wants
I believe in changing things up and making sure you know your needs and wants—especially how they vary yearly. Because of this, I am an advocate of zero-based budgeting. Start with listing what you absolutely need and list your wants based on your budget projection. This is extremely valuable if your budget increases or decreases through the year. - Nakisha Dixon, Vercara
12. Refresh Quarterly
Rather than creating a budget once a year, refresh your forecast quarterly to strategically allocate funds enabling evolving changes in the business environment. - Britton Bloch, Navy Federal
13. Cross-Collaborate With Leaders Across Departments
Collaborate with leaders in each department so they can offer input on budget priorities and how to reduce costs. As much data as leaders review, department heads can offer first-hand insights into their operations and budgetary needs. Through transparency and communication, leaders can also build relationships so departments are more likely to understand the organization’s financial priorities. - Niki Jorgensen, Insperity
14. Engage Decision Makers
Engaging decision-makers early ensures their input and buy-in, fostering collaboration and alignment throughout the process. This proactive approach allows leaders to anticipate challenges, make informed decisions and develop comprehensive financial reports and budgets that reflect the goals and priorities of their departments. Where can we provide value? - Joseph Soares, IBPROM Corp.
