Journals

Budgeting

Interview Question: What are the critical factors that must be considered to budget for the following HR department.

There are 5 employees of which 2 are on pregnancy leave. There will be 2 new hires the coming year. 2 of the employees are earning at their high range of their salary and 1 earning at his mid range of his salary.

My answer:

Should consider incrimental budgeting, using current year's budget to make assumptions for next year, some basic items are easy to budget using historical cost and adjust by rate of inflation. Should also consider activities or programs that will be happening the next few years to set long term objectives and appropriate amounts necessary to match the goals of the organization. Special needs for capital assets should be considered such as replacements for damaged or old equipment. Since 2 of their employees are earning near their high range of their salary, it suggests that these employees are near reitrement and may need to set aside funds for thier retirement packages. More money may be needed next year resulting from the return of the 2 employees on maternal leave. Assuming maternal leave is usually one year. Salaries should be adjusted by the rate of inflation.

Posted by SquallAngel at January 8, 2004 12:34 AM | TrackBack