Every team wishes they had more resources to better meet functional responsibilities, whether those resources take the form of additional budget or additional headcount. Additional headcount is usually good news, but manual workflows and obscured labor cost data in the IT budget planning process put a damper on things.
Currently, there are too many steps in the planning process that require discretionary decisions made by budget owners who likely aren’t financial experts. This, coupled with a lack of transparency into the fully burdened cost of added headcount until late in the planning process make hiring decision-making difficult. The starting point is to eliminate some of the manual calculation when a budget owner requests new headcount and to provide transparency into fully burdened costs associated with that headcount in the initial planning stages.
Here are three tips to optimizing the headcount budgeting process within your organization:
1. Centralize your cost data
A single source of truth is vital for better decision-making and accurate cost planning. Stop relying on spreadsheets saved on your local machine or outdated Excel files passed around via email. It’s critical to make standard salaries for different roles available to hiring decision makers. Setting automated rules for salary allocation based on those rates takes the guesswork (and potential errors) out of headcount cost planning.
2. Build the fully burdened labor cost into the plan
Hiring managers might not be considering all of the additional costs to the business that go beyond a base salary. They also may not be up to date with federal taxes and healthcare requirements. These rates, whether fixed or percentage, should be built into the planning process to automate the fully burdened cost calculation. Hiring managers receive instant feedback and transparency during the headcount planning process, allowing them to make better business decisions within their budget.
3. Plan by headcount, not by general ledger line item
IT budget owners have no appetite to become experts at translating decisions into all of the correct accounting systems records. With the right labor resource planning capabilities, budget owners should only need to add a role as a unit to their plan and all the associated financial line items will be auto-generated.
This new process not only simplifies the labor cost planning process on the budget owner side, but it also makes the process much easier on the IT Finance team by enabling:
- A more accurate view of hiring plans and their budget impact
- Compensation allocation rules for greater control and fewer errors
- A single view of current and planned headcount across all teams
- Simplified data management with integration of HR system data for current headcount detail
For a more detailed look at how Apptio can help simplify labor cost planning and forecasting, watch this video on Apptio IT Planning Foundation.