Human resource expenses to consider for your next HR budget
The human resource department has become more and more important as work cultures across the world have shifted towards a more employee-oriented approach.
Not only is the department responsible for the hiring, training, and retention of staff but it also plays an important role in keeping the company running smoothly. Therefore, in carrying out their duties the department does incur several human resource expenses.
Consequently, like with any other department, the expenses the human resource department incurs must also be managed by a budget.
HR expenses and payments for the upcoming year must be accommodated in a budget that is specifically designed for the human resources department. Without a well-made budget, it will be impossible to keep a cap on and manage how much the department spends.
There are some expenses that you must take into consideration when creating a budget for the human resources department.
Expenses to consider when creating the budget
1. Salaries and benefits
One of the most important tasks of the human resources department is ensuring salaries are paid to employees in a timely fashion.
This department is also responsible for deciding and giving out the extra benefits the employees enjoy besides their salary.
This could include employee insurance coverage, transportation or accommodation allowances, free meals, and so on. All these expenses make up an important part of the HR budget.
When creating a budget for human resource expenses you must take into account the salaries and benefits that have to be paid.
2. Recruitment expenses
The human resource department also incurs significant expenses when running recruitment drives or campaigns.
In fact, many argue that recruitment is one of the most expensive activities that the human resources department must participate in.
This includes paying for job opening advertisements, employee onboarding expenses, and various other associated administrative costs.
Recruitment is critical to the growth of a business and therefore a portion of your company’s HR budget must account for and take into consideration all the expenses associated with recruitment processes.
3. Employee training expenses
There are many roles in business for which companies typically recruit freshers who need to undergo a certain degree of training.
Forms of staff development, such as employee training, are important to ensure your business both retain employees and in-house teams have up-to-date skillsets.
However, if not budgeted properly employee training costs may pile up and end up putting a significant dent in your company’s finances.
4. Employee retention expenses
Retaining top talent is important for a company that wants to grow consistently.
Moreover, having a high employee turnover rate, i.e. if employees join and leave your company too frequently, can become quite expensive for your business in the long run.
To prevent this from happening the human resources department must undertake employee retention strategies. This may include offering improved salary packages and benefits, investing in building positive company culture and so much more.
5. Office and administrative expenses
The human resources department of a company is also responsible for ensuring that the day-to-day operations of the office are running smoothly. While office administration may not seem like a lot at first but can pile up into a sizeable amount in the long run.
Office and administrative expenses that the human resources department has to handle must be accounted for in the HR expenses budget.
6. Harnessing HR technologies
Traditionally, much of the work that HR personnel had to do was managed manually. However, modern-day human resources departments make use of several software systems to keep operations running smoothly and efficiently.
While some of these software may have free versions most of them are likely to be paid versions. The money that has to be spent to get and keep this software onboard is definitely one of the most important human resource expenses to account for.
7. Employee engagement expenses
To ensure a positive company culture and boost employee morale the human resources department is also tasked with conducting employee engagement activities. This may include workplace parties, team-building activities, team lunches, and so on.
Organizing and running all these activities does have costs associated with it. Therefore, you should also consider employee engagement expenses as a part of your HR budget planning.
8. Unforeseen expenses
Like with any other project, department, or campaign, even for the human resources department there are bound to be some expenses that were unforeseen or unexpected. Whether it involves payment for damages, accidents, or new purchases, unforeseen expenses are almost certain to come up.
It would make sense to keep some wiggle room in your human resources budget to account for such expenses.
Easily manage your HR expenses
Why does the HR department need expense management software?
Any business department that regularly deals with large numbers of expenses knows how difficult it can be to manage these expenses.
The same applies to the human resources department and its expenses as well. As we have seen in the previous section, the human resources department has to work with a large number of varying types of costs and expenses.
With so many expenses to be handled accurately and seamlessly the reporting and managing of it all can be quite challenging, especially when you are using traditional or manual forms of expense management.
On the other hand, having expense management software at your disposal can make all the difference.
The human resources department needs expense management software because this software can significantly lighten the workload on the department and at the same time drastically improve the rate of efficiency and reduce the frequency of errors and discrepancies when managing human resource expenses.
Check out our article to know the key benefits of having an expense management software
How can Volopay help streamline the HR process?
As an expense management software, Volopay comes with a full set of features that can make managing your HR expenses a breeze.
With Volopay at your disposal, you can significantly improve the efficiency and accuracy of your human resource expense management system. Some of the features that make this possible include:
Unlimited virtual cards
With Volopay you get a feature that lets you issue an unlimited number of virtual cards. The best part is that these cards can be issued at no additional cost whatsoever.
This means that you can create individual cards to help manage all the different types of expenses and projects that the human resources department has to handle.
This includes generating one-time virtual cards such as gift cards, burner cards, special project cards, travel expense management cards and so much more.
You can even use these cards as recurring payment cards to pay for subscriptions to the various software the human resource department has to use.
Real-time expense reporting
When you make business expenses via Volopay all your transactions get tracked and recorded, in real-time as soon as they take place. This means you no longer have to wait till the end of a week or month to get the full picture of your company’s or human resource department’s spending behavior.
Each transaction and all its associated details are recorded in real-time automatically and instantaneously. This information is then consolidated and displayed on a dashboard from where you can get a comprehensive overview of all company spending.
Seamless integration
Modern-day businesses are likely to be working with a variety of software systems, especially human resource, and accounting software. These two departments benefit heavily from software services, however, it is often difficult to integrate these two software systems to create a uniform platform.
Volopay solves this problem. With Volopay you can seamlessly synchronize all your expense data and information with your pre-existing accounting as well as human resources software. With the help of accounting triggers, this process becomes even easier.