Evaluate the HR Budget Planning, Proposal,
and Negotiation Strategy
From burden to boardroom: transform your HR budget to become a strategic partner.
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McLean & Company
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Introduction
HR budgeting doesn’t have to be a headache; instead, use the budget as an
opportunity to align your HR department with your organization’s strategy.
This Research is Designed For:
This Research Will Help You:
 HR professionals accountable for creating an
 Break the complex HR budgeting process into
HR budget.
 Business executives and HR leaders who
want to ensure that HR resources are spent
appropriately.
shorter, simpler stages.
 Link HR spending to your business’ goals and
future direction.
 Navigate smoothly through budget
negotiations in order to keep your stakeholders
satisfied.
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McLean & Company
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Executive Summary
Situation
!
Over 40% of organizations do not have a formal HR budget.
Those that do have budgets suffer from poor data and declining
resources.
Complication
?
Attempts at creating an effective HR budget suffer from a variety
of underlying challenges, including: a view of HR as overhead
rather than a business partner, a lack of time/knowledge to
create an effective budget, and a struggle to demonstrate the
value of HR investment.
McLean & Co. Insight
1. A well-defined process – such as the
one suggested by McLean & Company
– combined with a detailed project
timeline will alleviate the stress
associated with HR budgeting.
2. There should never be such a thing as
an HR initiative, just business initiatives;
every dollar spent in HR should help the
business achieve its goals.
3. Consult with stakeholders before,
during, and after budget creation for
best results.

Resolution
Use McLean & Company’s Blueprint as a simple and comprehensive guide through the HR budgeting
process.
This storyboard and associated tools will help you: determine the gaps between business needs and
current HR initiatives, use historical data to forecast next year’s HR operational costs, define HR projects
that fill business gaps and forecast their costs, and negotiate appropriately in order to maintain stakeholder
satisfaction.
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McLean & Company
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McLean & Company offers various levels of support to best
suit your needs
DIY Toolkit
“Our team has already
made this critical
project a priority, and
we have the time and
capability, but some
guidance along the
way would be helpful.”
Guided
Implementation
Workshop
Consulting
“Our team knows that
we need to fix a
process, but we need
assistance to
determine where to
focus. Some check-ins
along the way would
help keep us on track.”
“We need to hit the
ground running and
get this project kicked
off immediately. Our
team has the ability to
take this over once we
get a framework and
strategy in place.”
“Our team does not
have the time or the
knowledge to take this
project on. We need
assistance through the
entirety of this project.”
Diagnostics and consistent frameworks used throughout all four options
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McLean & Company
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Structure the HR budgeting process with the following five
steps
Prepare for HR
Budget Creation
Partner with Finance and create a timeline that
details the HR budgeting process and deadlines for
each step of the process.
Link HR Initiatives to
Business Goals
Understand the overall business strategy and meet
with key stakeholders in order to determine the gaps
between business needs and current HR initiatives.
Determine HR
Operational Costs
Determine HR Project
Costs
Create and Refine the
Budget Proposal
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Use historical data to forecast next year’s HR
operational costs.
Meet with the HR team to define HR projects that fill
business gaps; select the appropriate projects and
forecast their costs.
Revise budget based on stakeholder feedback and
communicate the finalized budget to stakeholders.
McLean & Company
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Sample
Slides
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McLean & Company
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According to McLean & Company’s Trends and Priorities for
2014, HR budgeting should be a major area of focus
Compared to other HR functions,
HR budgeting ranked low in both
effectiveness and priority.
• Only 31% of respondents
rated their HR budgeting
practices as either “Effective”
or “Very Effective.”
• HR budgeting ranked dead
last in terms of priority.
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Effective
Ineffective
29%
• Only 29% of respondents
stated that HR budgeting
would be a major priority for
the upcoming year.
Ineffective
60%
12%
Effective
• Out of the 31 HR functions,
HR budgets ranked 16th in
effectiveness.
Effectiveness of the HR
Budget
Overall Effectiveness of
the HR Department
31%
However, HR budgeting effectiveness was
strongly linked with the effectiveness of the
HR department as a whole.
40%
88%
McLean & Company
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McLean & Company’s Blueprint will help solve your budget
problems and increase your credibility with the business
This Blueprint provides solutions to each of the five main budgeting issues
identified earlier.
Underlying Challenges
1 HR is viewed as overhead
rather than as a business
partner.
2 The organization is focused on
cost-reduction rather than
making major investments.
3 HR lacks the time and/or the
McLean & Company’s Response
First, get a better understanding of the business, then link HR
spending to business needs.
Focus first on priority target improvements. In many cases, dollar
savings opportunities can fund current or future efforts. Reduce
HR operational costs in order to increase spending on projects.
sufficient knowledge to create
an effective budget.
Create a well-defined timeline that follows the simple budgeting
steps included in this Blueprint; partner with your Finance
department to understand budgeting concepts.
HR struggles to demonstrate
the value of HR investment.
McLean & Company’s tools will assist in linking required spending
to expected future gains.
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5 Business and stakeholders
lack an understanding of HR
spending.
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The business needs to be on board. Develop relationships with
other business units so that they understand how HR can help
them achieve their goals and to generate support for the budget.
McLean & Company
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McLean & Company Helps HR Professionals To:

Empower management to
apply HR best practices
Maintain a progressive set of
HR policies & procedures


Develop effective talent
acquisition & retention
strategies
Demonstrate the business
impact of HR


Build a high performance
culture
Stay abreast of HR trends &
technologies

Sign up to have access to our extensive selection of
practical solutions for your HR challenges
Learn About Becoming a Member
"Now, more than ever, HR leaders need to help their organizations maximize the
value of their people. McLean & Company offers the tools, diagnostics and
programs to drive measurable results."
•
– Jennifer Rozon, Vice President, McLean & Company
Toll Free: 1-877-281-0480
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