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Plan your personnel budget

Everyone who runs a business knows that to plan the budget of the staff is of paramount importance. Considering that employees themselves are directly involved in the production and delivery of goods (or services) which are then sold, they fall within the factors which, by means of the activity, both generate value for customers, and for the company. To understand how to manage and control the costs of the staff you need to consider a few key elements, which will  be explained below.

Plan for them

Plan for them

Normally you think that this stage of the business life can be delegated to the adoption of a new generation of management software or the skill of a consultant. In fact, those described above are only the means which lead to the end, or to the results of being even more effective if supported by a good basic strategy. To thoroughly analyze the costs of personnel control means in fact to have a clear idea on one of the most significant items of expenditure for a company, which also allows you to get a run of cash flows that is more consistent and linear.

So, before proceeding with the planning of specific budget for the staff, you must have developed a business strategy that is clear and transparent. In particular, it is necessary to assume a path in which the organization and differentiation of responsibilities, policies and procedures for recruitment of human resources, the funds allocated to training and compensation, as well as retain, constitute a perfect synthesis of the various areas of job. If even one of these items stride with the other, the entire company’s mission and objectives are likely to be irreparably compromised.

Your company's human resources

Your company’s human resources

You see, therefore, how strategic choices and decisions regarding the staff are related. The analysis of the so-called production plan must necessarily start from a preliminary calculation: you have to determine with a fair degree of approximation, the number of people required to carry out various tasks in different departments, so as to achieve the expected output. This in turn requires the possession of certain data, such as the number of actual hours worked by each employee or an estimate of the time required for each resource to cover a particular stage of production.

After you have carried out a quantitative estimate of personnel costs related to the production stage and that directly affect the final good or service, you have to analyze all those items that could be described as indirect. That is, you must quantify the costs of management, staff, administration and bodies of all areas similar to those just mentioned. It often happens that the costs relating to these funds are even higher than those of the staff working with production activities. However, it is absolutely necessary to minimize the cost of such facilities, since the contribution of people committed to creating value for the customer, in this task, is minimal, or at least not decisive.

By +Nikos Kontorigas

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