Managing funding is no small feat for HR managers. While extra funds can open up amazing opportunities for boosting workplace culture, employee engagement, and talent development, it also brings a unique set of hurdles. Let’s take a look at some of the common challenges HR managers face when it comes to funding and how to tackle them head-on.
Aligning with strategic objectives
With your funding, you may need to prove that your HR projects align with the company’s big-picture goals. If the connection isn’t clear, getting the green light might be tough. Make sure your HR initiatives directly support the company’s strategic objectives. Show how your projects can drive innovation, enhance customer satisfaction through better employee performance, or cut costs by improving retention rates.
For example, suppose your company aims to become a leader in customer service within the next two years. As a HR manager, you could propose a comprehensive training program focused on enhancing customer service skills across all employee levels. To make your case, highlight how improved employee training can lead to better customer interactions, higher satisfaction scores, and increased customer loyalty, which all support the company’s strategic objective. You could also provide data from similar programs that resulted in higher customer satisfaction and retention rates.
It’s also crucial to emphasise hiring the right people, not just filling positions for the sake of it. Ensuring that new hires are a good cultural fit can lead to better team cohesion, higher morale, and greater overall performance. By prioritising cultural fit, you can create a more engaged and productive workforce, which aligns with long-term strategic goals.
If your initiative involves an external company, like Hive, for example, which is an employee voice platform that helps HR leaders make data-driven decisions with their employee voice, you can leverage success stories from other HR leaders to illustrate the potential impact. We have a great range of customer stories to show other HR leaders the kind of success they could achieve when they invest in a platform like Hive. Look for a business case with other external providers to show decision-makers the impact your investment could have.
Managing budget constraints
Even after you secure funding, budget constraints can limit what you can do. Unexpected costs or shifting company priorities can put a strain on your budget.
Prioritise your projects based on their impact and feasibility. Develop a flexible budget plan that can adapt as needed. It’s important to regularly review spending to ensure funds are used wisely and consider cost-effective alternatives to achieve your goals.
Top tip: Set up a contingency fund within your budget for unexpected expenses, allowing for smoother adjustments without disrupting key initiatives.
Demonstrating impact and ROI
This next challenge is a big one. Measuring the success and ROI of HR projects can be tough, especially for initiatives with long-term or indirect benefits. Without clear metrics, it’s hard to know if you’re spending wisely. Decision-makers want to see the impact of their investments. Hiring good cultural fits and reducing turnover are key ways to show a good return on spending.
When new hires align with company culture, they’re more engaged, productive, and loyal, which reduces turnover costs. Track metrics like employee retention rates, engagement scores, and performance improvements to provide clear evidence of ROI. For example, if you’ve implemented an onboarding program to hire and integrate culturally fitting employees, measure its success by monitoring turnover rates and employee satisfaction. Lower turnover and higher engagement will demonstrate that your investment is paying off.
We recommend you set up solid tracking and evaluation systems from the start. Use both quantitative and qualitative data to measure the impact of your HR initiatives. Employee surveys, performance metrics, and retention rates can provide valuable insights. Create a dashboard that regularly updates key metrics and progress indicators, making it easier to track and present results to stakeholders.
If your initiative involves an external party, they may have ROI stats they can give you to help with gaining the investment needed for your project.
Take Hive for example. We have a ROI calculator so that any potential customers understand how much their employee turnover is costing them. So they know how much they could potentially save by using Hive.
* Based on the UK average employee turnover rate of 15% (source: Monster.co.uk)
** Number of employees likely to leave multiplied by £49,500 which, reported by Gallup, is the cost of satisfactorily replacing a leaver based on 1.5x the UK average salary of £33,000.
Top tip: Implement regular pulse surveys to gauge employee satisfaction and track changes over time. Pair this with performance data to show how happier employees are contributing to better business outcomes.
Navigating organisational politics
Navigating company politics can always be tricky, especially around what, where and when you’ll spend your funding. In fact, it can be one of the hardest challenges to overcome. Different interests and priorities within the organisation can create roadblocks.
Build strong relationships with key stakeholders. Clearly and consistently communicate the value of HR initiatives and understand the concerns of other departments. Transparent communication and collaboration can help build support for HR projects.
Develop a stakeholder map to identify key influencers and decision-makers, and tailor your communication strategies to their interests and concerns. You can also hold regular meetings with department heads to understand their priorities and show how HR initiatives can support their goals. For instance, demonstrating how a leadership development program can help IT managers improve team performance can win you allies.
Adapting to changing needs
The workplace is always evolving, and HR needs and priorities can shift rapidly. Getting that funding you’ve always wanted can be just as challenging as having limited funding. So it’s important to stay agile and flexible with your HR initiatives.
Regularly review and update your strategies to keep them relevant and effective. Engage employees in the planning and feedback process to stay responsive to changing needs.
Implement a feedback loop with employees to regularly gather insights on emerging needs and areas for improvement. That can be surveys, alway-on listening tools, or offline channels like asking for feedback in one-to-ones.
The takeaway…
Managing funding as a HR manager requires strategic planning, clear communication, and flexibility.
By building a strong business case, aligning initiatives with company goals, managing budgets effectively, demonstrating ROI, navigating organisational politics, and staying adaptable, HR managers can overcome these challenges and use funding to drive real, positive change in their organisations.
