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Are you preparing your Annual Budget?

Here are a few tips when Budgeting for Staff Costs

Work out the different job roles and what drives the numbers

Example 1. In a call centre, the number of customer advisors will be determined by call volumes, which will largely depend on the number of customers.

Example 2. In a production plant, the number of machine operators will depend on production volumes, which will depend on quantity demanded.

In both examples, there will be a requirement for supervisors, managers and support staff. The number of supervisors and managers will tend to be linked to the number of direct employees (customer advisors/machine operators). Staff numbers for finance, personnel, legal and administration will vary according to factors such as: call/production volumes, head count, levels of automation and regulatory/statutory obligations.

Look for relationships between factors, e.g.

  • Ratio between number of direct employees and call/production volumes
  • Ratio between number of supervisors and direct employees

Remember to factor in:

  • Annual leave, sick leave, maternity/paternity leave, study leave
  • Seasonality
  • Sales promotions
  • Lead time to recruit and train new staff
  • Staff development/training

Also, consider strategic options to:

  • Employ temporary staff during peaks and troughs
  • Outsource specialist activities, such as marketing, IT support and management reporting

(B) Establish staff pay rates and “on costs”

In your budget calculations, staff pay rates will need to be revised to take account of any increases following individual appraisals or general company-wide arrangements. Take care to accurately reflect the timing of any pay increases.

Remember to factor in:

  • Any overtime costs (and that overtime rates may differ from standard rates)
  • Any commission or bonus entitlements
  • Employer’s national insurance contributions
  • Employer’s pension contributions (which will not always apply to bonuses)

For a free basic Excel Staff Costing template, end an email request to info@sflicker.co.uk