Staff related expenses are one of the highest and most complex costs in an organization. So, it’s essential that business leaders, CFOs and human resources (HR) teams align current and future talent costs with strategic goals across an organization. That’s where headcount planning is valuable —and when integrated with the rest of the budget —you can leverage sales or other budget assumptions to plan who needs to be employed, when and related costs.
Introducing the headcount driver
The latest release of Phocas Budgeting and Forecasting introduces the headcount driver to assist finance teams to integrate human resources planning within the business budget process.
Finance needs the numbers to budget fixed and variable staff costs (salary, bonus, commission) plus the related benefit costs. These forecasted expenses are the foundation of every business budget, so they need to be accurate and reflect the bonus period and staff changes. HR requires talent forecast information to plan future recruitment.
Bill Stalker, the product manager for the new headcount driver says because the tool can integrate with other financial data such as sales, it dynamically updates when changes are made. Now, your largest cost item can be driven by or drive other parts of your modelling.
“The tool simplifies the headcount planning process.
People can manage talent planning all year round so they can plan for bonus payments, plan for merit pay and plan for extra people." Bill Stalker - Product manager, Phocas Budgeting and Forecasting
How it works?
The way the headcount driver works is to either manually enter HR information or upload from a flat file (text, excel or .csv) then the Budgeting and Forecasting software allows the user to build a customized model that reflects the way salaries per staff member is set up in your business.
The benefit of the headcount driver is that when a change to one formula is made, this integrates across the entire process and where several remuneration plans are built, the headcount driver can differentiate automatic updates in one region only (for example, updates to superannuation payments). The tool is useful for companies who have a global workforce with different compensation and benefits structures depending on the employment laws in each country.
The headcount driver can be used across industries and built to match your needs. For example, in sales organizations that have intricate pay models where some benefits are based on percentages of salary or a manufacturing business where the number of production employees is directly dependent on sales budgets. All these structures can be accommodated within the headcount driver tool.
Compensation and bonus payments are sensitive information, so the developers have incorporated world-class encryption to secure your data.
“Our aim is to give people peace of mind that they can store their HR data in the cloud with confidence. We have used 256-bit RSA-OAEP public key encryption to ensure the sensitive information is highly secure.”
Bill Stalker - Product manager, Phocas Budgeting and Forecasting
The headcount driver also has the same workflow features found in the Phocas Budgeting and Forecasting software so that HR and finance teams can carry out talent planning remotely or cross-functionally. Budget owners continue to have centralized control and can assign input into the budget process where useful or necessary.
As businesses globally continue to grapple with the scarcity of talent and the rise of wages, the need to manage and forecast a remuneration strategy that is closely aligned to organizational strategic objectives is paramount. The headcount driver tool brings staffing costs plus benefits into the budget process so your business stays on top of its cash flow and can meet targets with the right talent.
For more information about the Phocas budgeting and forecasting software, download the free eBook: Modern financial planning and analysis