Building your people budget: How finance and human resource professionals can collaborate to support workforce planning

April 27, 2025

Drew Maginn

Of all the budgeting exercises an organization must undertake, workforce planning can often be one of the trickiest. Many organizations operate in a constant state of change, navigating between periods of growth and decline that directly impact the number of people they employ to allow them to stay productive and competitive. Fortunately, workforce planning doesn’t need to be the sole responsibility of any one department. When it comes to finding the right staffing complement, several departments can contribute to the planning process, and finance and human resources have plenty to offer to guide the conversation.

What type of data can finance and human resource departments bring to the table?

Before starting any workforce planning exercise, it is important to understand what data is available to create a shared understanding of your current workforce and which departments are responsible for managing and providing this information.

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From a finance perspective, this could include:

Employee compensation: Employee wages (full- and part-time), overtime costs and incentives (e.g., bonuses).
Employee benefits: Costs related to health benefits, retirement plans and other employee perks (e.g., car allowances, wellness benefits).
Variable pay: Variations in payroll expenses linked to different workforce needs, such as seasonal employees or temporary support during peak business periods.
Revenue: Organizational revenue including year-over-year comparisons.
Human resource departments can add to this data set by offering additional insights into areas such as:
Employee turnover: Voluntary and involuntary turnover.
Employee morale: Employee satisfaction scores, often collected through annual engagement surveys.
Employee absences: Availability of your workforce including usage of vacation days, sick days and leaves of absence.
Employee performance: Performance data and output of employees.

However, having access to this type of data doesn’t necessarily mean that everyone immediately knows what to do with it. By sharing, analyzing and reporting on this data with your planning team, you can start to decode what type of workforce challenges or opportunities are present. Certain data trends may suggest your workforce needs adjustment. Below are some indicators that you might need to grow or shrink your current team.

” Proper workforce planning is critical to the success of any organization. ”

Understaffed? Signs your workforce might be too small

Increased overtime and use of temp staff: Trends in overtime payments across multiple departments or unusually high use of temporary staff may indicate workloads are not manageable.
Absences are on the rise, vacation days are building up: Organizations with employees managing excessive workloads and high levels of stress may begin to see a rise in the use of sick days or extended leaves of absences or a trend in carrying over vacation days, which offers a different type of financial risk to the organization.
High turnover of high performers: A certain amount of turnover can be healthy for an organization, but it’s important to stay aware to which employees are leaving. If multiple high performers are beginning to jump ship, it might be time to step in to understand when and why this trend started, and how it can be avoided in the future. Organizations may tend to “reward” these performers with additional responsibilities, which can further the cycle of burnout and drive them to look for roles elsewhere.
Employees aren’t engaged: Whether communicated through engagement surveys, performance reviews or other channels, any indications of a dissatisfaction, stress or unhappiness may be a result of employees feeling overworked and overwhelmed. These feelings can be driven by multiple factors, including lack of recognition (monetary or otherwise), frustration by perceived obstacles to success (organization bureaucracy) and overall workload and compensation relative to contribution.
Missed revenue targets: When employees and departments that have traditionally performed are failing to meet their revenue targets, this may be a sign of a workforce that is stretched too thin.

Overstaffed? Signs your workforce might be too large

Revenue is down, payroll is up: A growing payroll (including benefits and incentives) needs to match up with increased revenue and productivity gains.
Unnecessary use of overtime: While overtime can be a sign of understaffing in some instances, consistent use of overtime when operations are stable or in decline could signal an inefficient workforce.
Decline in productivity and performance: Can cause performance metrics, such as sales per employee, revenue per employee or overall employee performance ratings, to fall behind benchmarks set in previous years.
Lack of career progression: A general lack of opportunities to progress may force some employees, especially high performers, to look elsewhere for career growth. Engagement surveys, performance review feedback and exit interviews may suggest that your team might be too large, limiting chances for employees to see themselves growing within your organization.

Keeping finance and human resources connected

Given that finance and human resources have a lot of offer each other in the way of workforce planning, it is always worthwhile to establish ongoing connection points between these departments:

Open the lines of communication: Whether through regularly scheduled meetings or annual planning sessions, finance and human resource professionals need to make time to review data to understand their current and future workforce needs.
Strive for integration of data systems: To make the best use of the data available, it is important that data is collected and stored in a way that works for both departments. Adopting shared platforms, such as an enterprise resource planning system, is an ideal way to combine data for real-time analysis. If this isn’t possible, simply saving data in an integrated, accessible folder structure is a great starting point.
Commit to cross-training and skill building: Provide employees in each department with ongoing training to understand the data being shared and how it can be applied to workforce planning.

Proper workforce planning is critical to the success of any organization. However, some organizations may fall short in this area, not due to a lack of information, but rather a lack of engagement between departments. Workforce planning is best accomplished through a collaborative conversation between many departments, and this conversation simply cannot occur without input from finance and human resource professionals. By ensuring that all voices are heard and have a seat around the planning table, you are more likely to have an engaged workforce that truly reflects the needs of your organization.

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