HRCI PHR – Business Management and Strategy – The HR and the Strategic Planning Process Part 2

11. Organizational Life Cycle and Structure (4)

Mature organizations have worked out the issues around production and scheduling and begin to stabilize. New products and services may be introduced and demand often fluctuates between the various products and services offered by the company. HR continues to standardize policies, process and practices, and as the organization grows larger, it is naturally becoming more bureaucratic in its role in a mature company. HR continues to be responsible for creating training programs to increase efficiency, effectiveness and productivity.

A strong focus is on compensation policies, and it may need to redefine its strategies for supporting the employee and remaining flexible and cost effective at the same time. So in this maturity stage, the challenge is bureaucracy. Division of labor involves extensive departmentalization, several small jobs and work descriptions. Centralization happens among a team of top management. Extensive formalization of several sets of rules and procedures happens, and internal systems including matured control, budget, planning, financial and HR systems are extensively used. You.

12. Organizational Life Cycle and Structure (5)

An organization enters in the decline stage for various reasons, including poor reactions to market forces, internal inefficiencies and bureaucracy, or the inability to manage through trends that have made the company’s products and services unattractive or unwanted. Management may respond with drastic measures to try and turn things around if unsuccessful, costcutting measures usually include reducing the workforce through layoffs, early retirement, and attrition. The key challenge HR professional face at this stage is resistance to change.

As the company shrinks, fewer employees take on more responsibility. The decision making is centralized and relatively streamlined in its efforts to turn the organization around. Things tend to become more flexible, with fewer rules and procedures to follow. The organization focuses on controlling cost and wants its employees cross trained to take on multiple roles and reduce employee cost. So this is how it looks the organizational life cycle to decline in this stage, change resistance is a challenge. Fewer employees take more responsibilities. Centralization involves streamlined decision making flexible formalization involves fewer role rules and procedures and internal systems includes cost controls and cross training.

13. Organizational Life Cycle and Structure (6)

Now, as I mentioned earlier, every organization has a unique structure which reflects the organization’s spot in its life cycle, evolutionary history, internal politics and reporting relationships. Organizational structure is a critical factor in a successful, successful organizational strategy. So management should regularly review the structure to determine whether it supports organizational strategy or not. If it doesn’t, adjustments should be made to better support the strategy. HR professionals should be familiar with the elements of organizational structure so that the right mix and extent of these elements can be included in the strategic planning process and implementation stage.

These elements include specialization of work, departmentalization, extent of centralization or decentralization, degree of formalization, chain of command, and span of control. Specialization of work refers to the degree to which organizational processes are divided into tasks and tasks are subdivided into separate jobs. Work specialization is aimed at enhancing efficiency and employee satisfaction. However, the repetition of highly specialized jobs can result in boredom and frustration for the employees. So it is important to find a balance between personalization and variety in the task the employees perform. Departmentalization is the way jobs are grouped together so that common tasks can be coordinated. Organizations can departmentalize in many different ways, functional, divisional or matrix.

14. Organizational Life Cycle and Structure (7)

One of the most common is the functional organizational structure. This type of structure generally works well for small organizations or large organizations with simple operations. Also, single location operations are well suited for a functional structure. Employees are grouped by task or function such as operations, sales and marketing, finance, HR and It. This structure involves a wide span of control, centralized authority, high degrees of specialization and low standardization. Now, over time you will see functional organizations display similar characteristics such as a strong focus on technical quality, a resistance to change, especially if one function must change based on the needs of another and difficulty coordinating activities between functional areas. The advantages of functional structures include effective communication between individuals within the departments, improved teamwork and generally quick decision making. The key disadvantages include poor communication between departments and a focus on departmental rather than highlevel organizational goals and needs. So this would be a hierarchical structure in which the top level consists of Board of Directors, next level comprises of CEO and the third and last level is grouped by Operations, Sales and Marketing, Finance, Human Resources and It.

15. Organizational Life Cycle and Structure (8)

Divisional structures group various employees into strictly defined divisions such as bilocation, product line or service. Divisional structures usually involve narrow spans of control and a low degree of staff division. Over time you will see division organizations display similar characteristics a strong focus on flexibility, less of a focus on technical quality as compared to functional structures and difficulty coordinating the activities between divisions. Advantages of divisional structures are that they provide clear employee accountability and encourage hands on problem solving. They also encourage teamwork and support delegation of responsibility.

A potential disadvantage of a divisional structure is that it can result in a lack of employees who are sufficiently specialized to train others. This type of structure can also result in the duplication of tasks across divisions and potential conflict between divisions over scarce resources. So the divisional structure is a hierarchical structure in which the top level includes the board, next level comprises a CEO and the third level includes retail, banking, consumer finance, mortgage, business and investment and insurance products. This might be an example. Each of these is further grouped by marketing and sales, product, customer service, technology and human resources.

16. Organizational Life Cycle and Structure (9)

And finally, a metrics organizational structure combines aspects of functional and divisional structures to gain the benefits of both. This results in a dual chain of command with some employees reporting to two managers from two different departments with neither manager having superior authority. The Spanish of control in a metric structure can range from wide to narrow within the same organization. Advantages of this type of structure include better access to resources and shared expertise and improved technology sharing.

Potential disadvantages are that it may be expensive and difficult to explain and it can result in employees having conflicting priorities when reporting to more than one manager. So the metric structure illustrates the levels of management with different control. The chief executive officer is at the highest level. To use an example. The next level constitutes of a project director and the vice presidents of various departments such as operations, Finance, Manufacturing and technology. There are other project managers, such as ABCD under the project director. There is an instance in the metric that depicts the overlap of control from two supervisors over an employee indicated by a red triangle, let’s say.

17. Organizational Life Cycle and Structure (10)

In a centralized structure, decision making is restricted to high levels of management. Centralized decision making is recommended when conflicting goals and strategies exist between operating units. Economies of scale result from organization wide decisions or when organization wide policies and compliance are necessary. In a decentralized structure, decision making authority is provided to lower levels of the organization.

Decentralized decision making is recommended when operating units perform distinctly different activities, when little or no need for collaboration between the operating units is apparent, when operating units perform competently, or when conditions encountered by operating units require quick decision making and adaptability. From an HR perspective, in a centralized structure, corporate headquarters set policies and coordinates HR activities. Decentralized structures often lead to greater employee satisfaction and faster decision making and problem solving. Now, as you probably noticed, I used the term span of control several times in the previous videos.

Span of control simply refers to the number of employees reporting to a manager. In addition, organizations can have a flat organizational structure that has a wide span of control, or a tall or hierarchical organizational structure that has a narrow span of control. Flat organizational structures are more democratic than those with hierarchical structures. There is a greater level of communication both up and down the chain of authority, and employees are encouraged to give feedback. Key characteristic of flat organizations are, again a wide span of control.

Many employees report to a single supervisor, work and supervision is generally simple, and employees generally interact directly with their supervisors. A crew from an office cleaning business will usually have a flat structure and managers with a wide span of control. An organization with a tall structure would usually have a tight chain of command orders filtered down from the top, and employees are typically expected to comply without question. Key characteristic of organizations with a tall organizational structure are a narrow span of control. Fewer employees report to a single supervisor, and tasks are generally complex, or employees are poorly trained or inexperienced.

To use an example, a company involved in genetic testing may employ a tall organizational structure, and the testing lab manager may have a narrow span of control. So the flat organization illustrates a wide span of control. The first level consists of supervisors. Many employees report to a supervisor, employees are skilled or work, and supervision is simple, and generally they directly interact with supervisors. The tall or hierarchical organization illustrates three structures and has more levels than a flat organization. There is a narrow span of control as the supervisors have few employees to report him. Thus, the levels of control increase, the task are complex, or employees are poorly trained or inexperienced.

18. Organizational Life Cycle and Structure (11)

Okay, review time again. Let’s try some questions. Knowing what stage of the organizational lifecycle an organization is helps planners identify and respond to challenges associated with each stage. Match stages of the organizational life cycle with key characteristics startup, growth, maturity and decline. These are the options and these are the targets. Employees multitask and no internal systems are in place. Mineral management, divorce and budget and performance systems are in place. Extensive departmentalization with several smell jobs and work descriptions. Extensive and mature internal systems exist. Employees are reluctant to multitask and internal systems focus on control, and this is the answer for you to compare. An organization in the startup stage of the life cycle is relatively small and geared towards surviving, growing and getting customers.

Several tasks are overlapping and employees hired during this stage must be able to multitask. Internal systems are almost nonexistent and there are very few rules and procedures in place. This stage is centralized around the entrepreneur. The growth stage of the life cycle brings delegation challenges that require companies to maintain initial employees while attracting more employees by developing staffing policies and support structures. Several departments, especially in sales, operations and research and development, necessitate formal rules and procedures as well as internal control systems for budgets and performance. The maturity stage of the organization lifecycle characterizes extensive departmentalization and creation of several small jobs and work descriptions. As the organization grows larger and must demonstrate significantly more concern for internal efficiency and install more control mechanisms and procedures, HR should review policies, support employees and revigorate the workforce. The final stage of the life cycle is the decline stage.

Here the organization faces change resistance challenges as employees are asked to take on more responsibility and the organization focuses on controlling costs and cross training employees to take on multiple roles in an effort to turn things around, rules and procedures might become more flexible. HR professionals and strategists should be familiar with the elements of organizational structure so that the right mix and extent of these elements can be included in the strategic planning process and implementation of strategy. Match each key element with its description. Here we have the options specialization of work, centralization of decision making, degree of formalization of procedures and policies, chain of command for employees, span of control for managers and these are the targets. Tasks are subdivided into separate jobs. Departments don’t have a lot of autonomy, there are many formal requirements, the lines of authority are rigid, managers have responsibility for many employees, and this is the answer for you to compare. The civilization of work refers to the degree to which tasks in the organization are subdivided into separate jobs.

Once an organization’s tasks are divided into separate jobs, these are grouped together. Centralization is the extent to which decision making is vested into a higher management level. A high degree of centralization can be useful for coordination between two units with conflicting goals and strategies. However, extreme centralization can hamper productivity and efficiency of operations and decision making. Formalization determines the degree of adherence required to formal procedures and policies. When determining the appropriate level of formalization, it is important to consider organization, culture and employee needs. Executives, managers, supervisors and subordinates are connected through the chain of command or lines of authority. Although some organizations still enforce strict chains of command, others encourage employees to communicate with high level management and executives. Span of control refers to the number of employees reporting to a manager.

A narrower span of control is used in organizations or departments where closer supervision of employees is required for task to complex for the abilities of subordinates. Giving managers wider spans of control can help managers make decisions more effectively as well as reducing cost. Organizations with a flood structure have a wide span of control and organizations with a tort structure have a narrow span of control. The span of control depends on the number of employees each supervisor has and how complex the tasks are for the employees. Here you have the options cleaning equipment company, retail clothing company, microprocessor company, and technology company. And here you have the targets wide span of control and narrow span of control. This is the answer for you to compare. The clinical equipment and clothing companies in the examples have a wide span of control. Organizations that have a wide span of control with many employees reporting to a supervisor are typified by a flat structure. Employees are skilled or work, and supervision is simple. Employees generally interact directly with senior managers.

The microprocessor and technology companies in the example have a narrow span of control. Tall or hierarchical structures companies have a tight chain of command and employees are expected to complete task without question. Large organizations are typically characterized by this structure and have a narrow span of control. Fewer employees report to a supervisor and either a task are complex or the employees are poorly trained or inexperienced. At a tactical level, common types of organizational structures include functional, divisional and metric structures. Each has a different departmentalization match. Each example for the type of organizational structure it describes sometimes may be used more than once. Options are the following functional and divisional and metrics and these are the targets a medium sized manufacturing company is operationally effective but faces some interdepartment communication challenges.

It staffs its department with specialists for relevant functions. A clinic equipment company reorganizes its structure to include four departments organized by task to allow for greater operational control. At the senior level, manufacturing company structure is based on the products. This structure provides clear accountability and teamwork and ensures the company remains competitive. And while working on a client software project, an employee of the custom solutions department also reports to the project manager, a member of another department. And now let’s see the answer. Staffing departments with specialists according to the task or functions of the department, such as operations, sales and marketing, finance, HR, and it is an example of a functional structure.

Functional organizational structures are the most common business structures and work well for small organizations or large organizations with simple operations. In this example, the cleaning equipment company has grouped the departments by task, which is an example of a functional structure. Employees could be grouped into operations, sales and marketing, Finance, HR and It departments. For example, divisional organizational structures group various employees into strictly defined divisions by location, product or service. And in this example, the manufacturing company has grouped employees into product divisions. A divisional structure is often used by large organizations, debt encounter, diverse competition and opportunities. This is an example of a mass rigs organizational structure which combines aspects of functional and divisional structures to gain the benefits of both. Under this structure, employees may report to two managers from two different departments with neither manager having a superior authority.

19. Cost-benefit Analysis and Life Cycle Planning (1)

There is both a predictive and retrospective value in doing costbenefit analysis. First, you can use the analysis to help in the decision-making process to determine if the anticipated value of a purchase or other action will outweigh the projected cost. Also, as a post decision measure, you can determine if the actual value exceeded the actual cost. For a costbenefit analysis to provide the most useful information, most or all of the relevant cost and benefit should be quantifiable using a common unit of measurement, such as dollars. When this isn’t possible, best estimates are often used.

This may not provide the most accurate data, but it’s often still very useful information. Once we have defined the objectives of our analysis, the three basic steps of a cost benefit analysis are step one list and add all cost. Step two list and add all benefits and step three compare cost with benefits and make a decision. As I said, the first step in a cost benefit analysis is to list and calculate the potential direct and indirect and opportunity cost involved. Direct costs are the obvious and easily identifiable financial cost, such as the cost of machinery, equipment, materials and labor. Indirect costs are not identified directly with particular activities.

These are usually based on estimating or prorating shared resources such as a portion of property, plant maintenance, depreciation, or overall administration cost. Additional and direct cost may include employee training, safety and other activities associated with a decision. Opportunity costs are the net benefits that are sacrificed by not choosing another competitive alternative. For example, opportunity cost for a decision to liquidate an investment to purchase new company vehicles would be the increased value of the investment lost by not choosing to keep it in place. An example of intangible opportunity cost is a decision to outsource one or more administrative functions which may result in the loss of control or security risk. Here, the cost are the benefits of the alternative decision to keep the function in house.

20. Cost-benefit Analysis and Life Cycle Planning (2)

The second step is to list and calculate all the potential financial benefits. Tangible and intangible examples of tangible benefits include increased revenue and profits, lower cost, reduced effects and rework timesaving’s, higher productivity, lower maintenance cost, and reduce employee turnover. Intangible benefits, also known as soft benefits, include non monetary gains and benefits that can’t be easily qualified for financial reporting but are very important to the organization. These include increased customer satisfaction, better product or service quality, new market opportunities, increased employee morale, better company reputation, better vendor relationships, and improved market position.

The third and final step in the cost benefit analysis is to compare total cost against total benefits to determine whether the benefits outweigh the cost and if the purpose of the cost benefit analysis is to compare attractiveness of various alternatives, you need to do a total cost and total benefit calculation for each of the alternatives available here. You subtract the cost from the benefits for each of the alternatives to determine the surplus for each of those alternatives. Then compare the surplus for each alternative to those of the remaining alternatives to identify the most appropriate option. Relatively simple calculation you can use in these situations is called the cost benefits ratio. Now, the cost benefits ratio is found by dividing the total value of the benefits projected or realized by total, projected or actual cost. For example, if you were to realize benefits totalling $15 million in value on total cost of $5 million, your cost benefit ratio would be $15 million divided by $5 million or a three to one ratio. You.

21. Cost-benefit Analysis and Life Cycle Planning (3)

Now, in this video, we may get into a few areas unfamiliar to Hrfox. First, we are going to look at return on investment. For an organization, return on investment determines how many dollars are received for everyone invested after all costs are recovered. The return on investment is the net profit, expressed as a percentage of the total investment made. From a business perspective, it makes good sense to have a healthy return on investment for every project or activity.

But also remember, although an ROI analyzes is a good financial measure, strong business decisions should take into account a number of applicable cost and returns. Now, the basic ROI formula is ROI or return on investment equals the value received from an investment minus the cost of the investment, then divided by the cost of the investment. For example, let’s calculate the ROI on a project with the total benefit of $150,000 and the total cost of $100,000. The ROI in this project would be calculated as $150,000 minus $100,000 divided by $100,000. Or, doing the math, 50,000 divided by 100,000 equals an ROI of 50%. Now, remember, there are also situations where the company makes a bad decision and the cost exceed the value. Here would have a negative ROI.

For example, on a project generating $85,000 of value with a cost of $100,000, the calculation would be $85,000 minus $100,000 divided by $100,000. Again, doing the mass negative 15,000 divided by 100,000 gives us an arrow of negative 15%. Next, a breakeven analysis determines the point of time when total revenues associated with the investment are equal to the total cost. This can be shown in terms of dollars to express the level of revenue necessary to breakeven and after which profit is realized.

To calculate the breakeven point, you divide the total cost by the total savings and multiply that figure by the appropriate time increments, generally in months or years. The formula for calculating the breakeven point is breakeven equals cost divided by savings times time. For example, a program with a cost of $75,000 you can use a pen and paper to remake these calculations and see if it works. Is expected to generate savings of $100,000 in one year. The breakeven point is calculated as step 175 thousand dollars divided by $100,000, which then equals zero point point 75. Step two, taking zero point 75 times twelve moles, which gives us a breakeven point of nine months.

22. Cost-benefit Analysis and Life Cycle Planning (4)

Now let’s take a look at some review questions. The key to a good costbenefit analysis is to make sure that you include all the costs and benefits and properly quantify them. Match activities to the steps in a costbenefit analysis. Some steps are used more than once. Here we have the options step one list and add cost. Step two list and add all benefits. Step three compare cost with benefits and make a decision. And here we have the targets calculate totals for equipment and materials, estimate lost savings from tax breaks and loss of internal expertise from outsourcing, add potential increased revenue and reduced employee turnover. List advantages of increased customer satisfaction and lower product defects and compare surpluses among all decision alternatives and recommend a plan of action.

And this is the answer for you to compare. The first step in a cost benefit analysis in a business situation is to list and calculate the potential cost involving a decision. Direct costs are the obvious and easily visible financial cost associated with decision alternatives. Examples of direct costs are the cost of machinery, equipment, materials and personnel. Step one includes listing and adding all indirect or opportunity costs involving a decision. Indirect costs are things such as infrastructure, maintenance, machinery depreciation and administration expenses.

Opportunity costs are the net benefits that are foregone by not choosing another competitive alternative and other intangible cost such as the cost for an outsourcing decision that results in a loss of organizational expertise. The second step is to list and calculate all the potential tangible and intangible benefits. Examples of these benefits include increased revenue and profits, lower cost and potential savings in hiring costs by reducing employee turnover. Step two includes listing all tangible and intangible benefits such as non monetary gains and benefits that cannot be sufficiently quantified. Examples of intangible benefits are increased customer satisfaction, better product or service quality, higher workplace morale and better vendor relationships.

The third and final step in the cost benefit analysis is to compare total cost against total benefits associated with each decision alternative and determine whether the benefits outweigh the cost. You can determine the cost benefit ratio by dividing the total value of benefits by total cost. Step three is finalized by recommendation of a brief action plan. Calculating the return on investment and the breakeven point are two financial measures important for finding out the effectiveness of business investments in a variety of organizational projects and programs. Match the financial measures to their descriptions. Each measure matches to more than one description. Here we have the options determines how many dollars are received for everyone invested after all costs are recovered. Calculated by subtracting the cost of investment from the value received from the investment and dividing the result by the cost of the investment.

The total revenues or returns associated with the investment are equal to the total cost and calculated by dividing cost by savings and multiplying the results by an appropriate time period. And here are the target. ROI and breakeven point. And this is the answer for you to compare. ROI determines how many dollars are received for everyone invested after all costs are recovered. One way of calculating it is by subtracting the cost of investment from the value received from the investment and dividing the result by the cost of the investment.

The amount of net profit is expressed as a percentage of the total investment made. From a cost benefit perspective, it makes good business sense to have organizational activities and projects that offer a healthy return on investment. A breakeven point is the point in time of a business operation at which the total revenues or returns associated with investment are equal to the total cost. To calculate a breakeven point, divide the total investment cost by the total savings and multiply that figure by a peer period of time most relevant to the investment.

23. Budgetary Planning and HR Information (1)

Budgetary planning and HR information ensure that the department’s budget is aligned with the organization’s strategy. This is why I told before, budgetary, planning and HR Information HR’s role in supporting the organization wide budgeting process is discussed. Company management at every level must deal with budgets in one way or another, virtually every day, and HR professionals are no exception. As you know, a budget is the financial blueprint or action plan for an entire company, a division, or a department, which is then expressed in monetary terms. Budgeting is used as a tool for allocating and controlling scarce financial resources and translating strategy plans into measurable goals. Ongoing budgetary control involves monitoring how budget plans are actually working in practice. For example, if the HR department’s actual spending is exceeding its budget, the cost and related activities should be reviewed to determine their validity, and any necessary corrective action should be taken. HR professionals should ensure that the proposed department’s budget is aligned with the organization’s strategy. The best way to ensure this is to present rather relevant data. For example, if an organization strategy requires hiring additional workers, HR must include the necessary funds for recruiting and hiring activities in the HR budget. In addition, the cost for supporting the additional employees should be calculated and included.

24. Budgetary Planning and HR Information (2)

There are three commonly used budgeting methods incremental budgeting, formula budgeting and zero based budgeting. With incremental budgeting, the proposed budget is based on a previous budget. New funding is requested and may result in incremental changes in the budget from the previous year. For example, upgrading an HRIS platform human resource information system would result in an increased budget from the previous year. In formula budgeting, as specific formula is applied usually across the organization to all items in the budget.

Often an average cost may be applied to comparable expenses and general funding is changed by a specific amount of percentage. For example, the HR department may be required to cut their budget 5% for the next budget cycle, zero based budgeting begins, as you might assume, at zero. The budget process requires all expenses to be justified against current organizational goals, department needs and available resources. Then all objectives and operations are assigned. A priority ranking and available resources are allocated. At the organizational level. Budget planning generally involves six important activities. It starts with setting quantitative budgetary goals which are based on the organization’s financial goals.

This includes projected sales figures, expenses and targeted budget allocations. Next, department managers set departmental objectives which support organizational objectives. Managers base their budget proposals on a number of factors including the relative budgets of other departments and industry norms. Then, an estimate of resources and expenses is done through forecasting and estimating resources and expenses. This usually requires the use of quantitative and qualitative methods. Next, department managers draft their individual department budget. Together, these individual department budgets become the basis for the company wide budget.

Then, individual and companywide budget drafts are reviewed to ensure that they remain in line with the organizational budgetary goals and any necessary adjustments are made at that time. And finally, the budgets are approved and funds are allocated. So this is the budgeting process. There are six steps in a budgetary process which include establishing budgetary goals followed by set department objectives, estimate resources and expenses, draft individual and master budget, review and implement changes, and approve and allocate budgets.

25. Budgetary Planning and HR Information (3)

In addition to financial input, the HR department provides important human capital planning information to support the organization’s overall budgetary planning. The basic information needed to complete the human capital planning includes the total number of current employees, employee breakdown by department gender and ethnicity, information for compliance purposes and the key skills, knowledge, and attitude mix and inventory according to role and function. The resulting human capital projections provide information regarding how many employees will be needed short and long term, which department or business units are likely to have changing needs, what knowledge, skills and attitudes will be important, and what cost will be associated with meeting these needs.

For example, the cost of hiring, orientation, wages, benefits and other items in a departmental budget system. HR is responsible for preparing the budget for that department, and they often assist other departments in human capital areas of their budgets. Human capital planning is a strategic issue, and a detailed understanding of the makeup and assignment of the workforce is critical for many organizations. Human capital is the largest resource cost in the entire company. Understanding human capital requirements will ensure that the adequate financial resources are available and allocated to meet human capital needs throughout the organization.

Apart from human capital projections, HR also provides information on a number of important issues and areas. For example, information involving all employees in the organization includes wages and benefits, payroll taxes, traveling and accommodation costs, insurance premiums such as group life, medical and dental and labor relations. Cost information about cost or expenses specific to the HR department include outsourced services like HR Is, administration, recruiting and payroll capital requirements like hardware and software needs, as well as office equipment, training and development for the HR team and other administrative cost. You.

26. Budgetary Planning and HR Information (4)

So here’s the next set of review questions sequence the steps in an organization’s budgetary process. Here are the options quantitative goals are set for the whole organization for the budget period. Department’s budgetary goals are aligned with organization objectives. Quantitative and qualitative methods are used to forecast revenues and expenses. Departments prepare the first draft of individual budgets, individual and master budgets. Draft adherence to original budgetary goals is insured. Senior management approves alignment of budget with strategic plan and goals. This is the answer for you to compare. The first step is to establish quantitative budgetary goals based on organizations financial goals for the whole organization for the budget period.

This includes probable sales figures, expenses and targets for allocation of resources for various functions. In the second step, departmental’s objectives are set. Department managers are instrumental to the achievement of organizational objectives when during budget planning, managers base their budget proposals relative to other departments in the company and also based on industry norms. In the third step, quantitative and qualitative methods are used to forecast revenues and cost. This is one of the most important budgeting activity for departments. It requires the use of quantitative or qualitative methods or combination of both. In the fourth step, departments prepare the first draft of individual budgets and then the sum of all departmental budgets becomes the basis for the master budget. The master budget is the budget plan for the entire organization. Review and implementation of any changes in draft budgets form the fifth step of the budgetary process in which individual and master budget draft are reviewed to ensure they adhere to original budgetary goals. If necessary, the budgetary plan is altered where appropriate based on these reviews. The final step is that once senior management is satisfied that the budget has been planned in accordance to strategic plans and organizational goals, it is approved.

Resources are then allocated to individual departments to execute the budget. The HR department provides important information to support the organization’s overall budgetary planning. Match type of HR information that supports organizational budgetary planning with an example that you can use. There are more than one example of some types of HR information. Here we have the options human capital, HR function, creation and allocation of related expenses. And here we have the targets the skill mix and inventory based on employee roles and functions, number of employees required over the next fiscal year, salaries, allowances and benefits that data on all employees office supplies and equipment for the HR team and It hardware purchased through It department and assigned to HR. And this is the answer for you to compare.

It is essential that you have access to human capital information about the current workforce deployment in the organization. The base information that would be needed to complete human capital planning includes total number of employees and which departments they work in, gender and ethnicity data and their skill mix and inventory based on their role and function. Human resource is a strategic issue and a detailed understanding of the makeup of the workforce and its deployment in the organizational is critical.

Knowledge of Human Capital information allows HR to project how many people will be required in the coming years and which departments or business units will require them. HR provides information involving all employees in the organization for budgetary planning purposes. This information includes compensation, payroll taxes, traveling expenses, fund contributions, insurance premiums, and safety and security cost. HR provides information about its specific cost and expenses to contribute to budget planning, including outsourced services, office supplies and equipment, training and development for HR staff, and administrative cost. Important data that HR provides for budgetary planning purposes includes information relating to other departments such as It, hardware and software, and liability insurance.

27. Business Management and Strategy – HR and the Strategic Planning Process

Congratulations. You finished the business? Management and strategy. HR and strategic planning process course. In this course, our focus was on how strategic planning provides an understanding of where the company is today and its direction for the future. We explored strategic decision making at each stage of the organizational lifecycle and how various types of ratio analysis can guide those decisions. We completed this course with a discussion of how HR supports the organizational budgeting process, a key strategic planning activity, by providing important human capital data. So in topic one, the strategic planning process and the role of HR, we identified key stages in the strategic planning process. We looked at examples of activities from each stage, and you gained a better understanding of the alignment of specific HR actions to the strategy plan. Organizational structure is a critical factor in a successful organizational strategy.

In topic two, organizational Life cycle and structure, you gained a better understanding of the key characteristics associated with each stage of the organizational life cycle and identify the various elements of the organizational structures. For a costbenefit analysis to provide the most useful information, most or all of the relevant cost and benefit should be quantifiable using a common unit of measurement. In topic three, cost benefit analysis and lifecycle planning, I explained how HR can conduct simple costbenefit analysis and calculate return on investment and even the breakeven point. Be sure that the department’s budget is aligned with the organization strategy. In topic four, budgetary, planning and HR information, HR’s role in supporting the organization wide budgeting process was discussed. That’s it. Thank you for watching and see you in the next course. You.

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