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Workforce Planning - Part 4 - Got your salary/wage budget sorted?

2018-06-11 Workplan Banner - part 4

The start of winter heralds a time of reflection and planning.  Businesses are setting budgets, reviewing the year that has been and considering what is ahead.  Your employees will be doing the same, especially if performance reviews and pay reviews are on the cards from June.

When it comes to your people, your employees, you need a workforce plan or HR Plan.  It doesn’t matter whether you have 3 staff or 20 staff, you need a plan that incorporates these four key aspects. 

  1. Business Change
  2. Employee Performance
  3. Capability and Expertise
  4. Salary/Wages Budgets

We will touch on each of these as part of our 5 part Workforce Planning blog series.  Read it and reflect, and use to develop your Workforce Plan. 

If it all sounds too hard and you need help developing your plan, please get in touch.  We will spend time with you to not only develop your plan but also help you bring it life.  Contact us on 021 069 1913 or advice.info@stapletonconsult.com

Part Four – Salary and Wages Budgets

Have you budgeted your staffing costs for the financial year and taken into account what changes are ahead?

Salary and Wages budgets are usually set based on last year plus 3% for any pay increases.  This has been reported as the standard across NZ for many years.  However minimum wage has increased again and there are more changes to come.  3% is not a lot to work with if your business is growing and are feeling the effects of repeated minimum wages increases.

For most businesses, salaries/wages budget will be the biggest cost centre.  It has the potential to make or break a business.  This is why staff related costs cuts are usually the first to happen when money is tight. So what are some of the things you need to take into account when working through a salary/wages budget?

  • Minimum wages increases
  • New positions required in the business
  • Change in Employee’s hours of work
  • Changes in ACC levies and other compulsory payments
  • Pay increases and change in market rates
  • Incentives and other discretionary allowances or benefits
  • Employee leave – paid and unpaid
  • Contractors and consultants required for specialist work
  • Employee performance and efficiency

You will notice that not all of the points above are within your control.  Having a 3 or 5 year Workforce Plan that aligns with your business strategy and financial plans is imperative to having accurate salary budgets.

Your Workforce Plan will include things like new jobs anticipated, cost to recruit, forecasted minimum wage changes, likely employee lifestyle changes and succession planning (i.e. retirement or parental leave), planned leave, allowances for unplanned leave, professional development.  If you are expecting change in your business, a Workforce Plan is a must.

If this sounds all too hard to do on your own, get in contact with us today.  We will work with you and your accountants to ensure your numbers are lining up with your plans.  Contact us on 021 069 1913 or advice.info@stapletonconsult.com