The article discusses strategies for planning an HR budget for 2024, emphasizing the need for advanced HR technology and digital tools to enhance employee experience. It highlights the importance of focusing on talent retention due to high attrition rates in Asia and adapting to changes in the workforce market. The article stresses compliance with labor law changes and the need for a data-driven approach to budgeting. It outlines key budget components, including recruitment, training, salaries, HR technology, and employee well-being, to ensure a comprehensive plan for organizational growth and success.
As companies brace themselves for 2024, many HR teams are busy preparing comprehensive budgets for the coming year. Fortunately, with a host of cutting-edge HR technology and digital tools available, companies can plan a budget with more resources at their fingertips to better plan for the year ahead, significantly enhancing the overall employee experience.
In terms of a direction for 2024, companies are encouraged to channel more efforts towards talent retention, given the high attrition rates across Asia. In an effort to further empower their workforce and improve organisational culture, having the right HR tech is also a crucial consideration.
On that note, let’s look at how to create your 2024 HR budget and what to include in it.
What’s Most Important in Your 2024 Budget Plan
Keeping up with recent advancements for your workforce:
Understand how the talent market in 2023 will differ from 2024’s and plan for your manpower accordingly.
Consider if there has been a new shift towards or an increased use of AI tools to enhance both employee experience and candidate experience. According to analytics and advisory company Gallup, higher employee engagement translates to increased profitability – 23% more, according to their research.
Compare the workforce flexibility levels in your company with that of the overall job market – bearing in mind that there is a greater inclination towards a more flexible workforce, in terms of temporary and contract vs. permanent staffing.
Consider any increase in costs due to inflation, as salary (and potentially benefit) increments will have to be made accordingly.
A greater focus on talent retention:
To be able to maintain a robust and healthy workforce means to prioritise talent retention. With high employee attrition rates and talent retention being a top HR challenge in 2023, a key focus for businesses should be on how to retain their workforce better in 2024.
After conducting a thorough review internally, consider looking into programmes, practices and systems that can improve employee satisfaction, provide stronger employee assistance programmes and support, as well as streamline the overall HR experience for your employees.
Remaining compliant with labour law changes:
Given that 2023 has been a year with many labour law developments across various countries in APAC – such as Malaysia’s massive overhaul of its Employment Act and Singapore’s introduction of the COMPASS framework for Employment Pass applications – it is highly crucial for companies to remain compliant with upcoming labour law changes in all locations, particularly those with a presence in multiple countries.
Compliance can come in the form of adhering to minimum wage hikes, new tax brackets, increased number of leave, and so on – all of which can incur additional costs and would need to be accounted for in the HR budget. Additionally, remaining compliant with labour laws ensures there are minimal legal and financial repercussions, leading to a more prudent budget.
How Do You Prepare an HR Budget?
When you plan a budget for HR, some crucial pointers to have in mind when listing down what to include are:
Building a Strategy for Smart Expansion: Consider your company’s expansion plans for 2024 – if any. Coming up with a solid plan if you want to expand in 2024 is crucial, and you can consider a low-cost and minimal-risk option such as an employer of record. According to an article by Yahoo! Finance, in 2023, the worldwide EOR market reached a value of USD 1890.29 million and is projected to grow at a compound annual growth rate (CAGR) of 12.07% over the forecast period, ultimately reaching USD 3745.43 million by 2030.
For companies with multiple locations, when revising the budget, HR will look at which locations are now more mature and stable compared to last year to allocate the budget more evenly.
Investing in The Right Software and HR Tech: Get acquainted with the latest AI trends in hiring and find out how the right tools can enhance your journey of finding the right people to join your workforce.
Integration Options for Different Business Sizes: Speaking of knowing what works for your company size, if you’re a regional company, you’d likely work with a payroll outsourcing provider to streamline your regional payroll. Revisit your current service to see if its integration capabilities are still suited to your business – depending on if your headcount has been expanded or downsized recently.
A Data-Driven 2024 budget: A budget that is tailored heavily based on data allows for better foresight, less errors and allows you to make better informed decisions for your businesses. A report by McKinsey Global Institute shows that data-driven organisations are likely to be 19 times more profitable, and 6 times more likely to retain those customers. You can use data from previous budgets to get insights on what to do differently this time.
What are the must-haves in your HR budget?
If you’re wondering what a complete 2024 budget should entail, the following list can serve as a general checklist of what to cover:
Some resources to use when you plan a budget for HR:
Having a wealth of handy information can help you plan a budget more efficiently. If you’re looking for resources on the latest HR developments across idea, here are a few you might want to look at. Resources
Guide to Hiring in Asia – A compilation of in-depth guides for various countries across Asia on how to compliantly hire employees in each country.
In conclusion, having an HR budget is essential for companies as it provides a structured financial plan to effectively manage and optimise their most valuable asset – their workforce. It ensures that resources are allocated for hiring, training, and retaining employees, ultimately contributing to organisational success and growth.
Looking for a HR provider that can offer you HR outsourcing, advisory and HR tech services? At Links, we look forward to providing you with complete HR solutions to drive your organisation. Contact us today for more information!
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