Key takeaways
- A budget is a negotiation, so HR leaders should follow it until the final decision is made.
- Department-level turnover and new-hire turnover expose the costs hidden by company averages.
- Bring actual spend, replacement costs and clear priorities to the budget meeting.
Every budget season, finance brings actuals, forecasts and a list of possible cuts. HR brings a plan full of good intentions.
Data from the PapaHR HR Index points the same way. Among HR professionals who completed our HR knowledge checklist:
- 42% say they can justify HR costs in their strategy (n=85).
- 28% say they know the full budgeting process, from analysing the previous year to justifying costs (n=82).
- 21% say they can calculate an employee's financial value to the company (n=71).
In our HR audit checklist, 51% say their company has an HR budget (n=84).
These are self-reported answers from HR professionals who took free checklists in PapaHR between June 2024 and October 2026. They are not an audit or a representative sample, so treat them as a signal rather than a measurement. Method: https://papahr.com/en/hr-index
The pattern matches what I have seen in more than 20 years in HR. HR is fluent in people. Budgets are decided in money.
“A budget is a negotiation, not a form. Follow it until the person whose decision is final has said yes or no.”
Mike Pritula, Founder, Mike Pritula Academy and PapaHR
A budget is not finished when you send the file
At STB, a Ukrainian TV channel, I once prepared the annual budget for people costs and sent it to finance. I asked whether they had questions or wanted to meet. They said everything was fine.
Later, finance sent me the company's approved budget with my department's part in it. It was not the file I had sent. The numbers had been changed at a meeting with the CEO and the CFO. When I asked whether I should comment, I was told there was no need: everything had already been changed for me.
I disagreed, and I had to meet the CEO one to one to ask him to reallocate costs between budget lines. I got the resources in the end, because I could justify them. But instead of clear planning, I got chaos. The lesson: a budget is a negotiation, not a form. Follow it until the person whose decision is final has said yes or no.
Two things HR should understand about budgeting
Start from last year's actuals. Finance will. If your plan starts from what you would like to spend rather than what you spent and what it achieved, you are arguing on their ground with weaker evidence.
Know where your people costs really sit. When I started working on total rewards at Wargaming, I asked my team to collect what we spent on each benefit. Not all of it was in the HR budget: some benefits sat in other departments' budgets, and we had to find them separately. Then we counted how many people used each benefit in a year, to see the cost per user.
The company hockey team turned out to be one of the most expensive benefits. At first the cost worried me. Then I saw that the team mattered far beyond the people who played: many colleagues came to watch, games against teams from other tech companies brought the company good press, and some very valuable employees played in it, so it helped keep them. I kept the benefit. Cost per user tells you where to look; context tells you what to keep.
How to show what hiring and retention are worth
Company averages hide the problems that cost the most. At STB I broke turnover down by department. The company average was 18%. One department was at 150%: in a year, it replaced its entire team and more. That one number focused my team, and we went into that department to change the business process that was driving people out.
New-hire turnover belongs in the same conversation. Before we built onboarding at STB, half of the people we hired in a year left. If you plan recruiting without that number, you plan for half the hiring you will actually need.
The arithmetic is simple, and you can do it with your own figures. An illustrative example: a department of 20 people with 150% annual turnover needs about 30 hires a year just to stay at the same size. A company that plans 40 hires while half its new hires leave within the year will end up needing up to twice as many, about 80. Multiply those hires by your own cost of hiring and onboarding one person, and turnover stops being an HR metric and becomes a budget line.
What to bring to the budget meeting
- Last year's actual HR spend by line, including people costs that sit in other departments' budgets.
- Two or three metrics broken down by department rather than company averages: turnover, new-hire turnover, time to hire.
- Your own cost of replacing an employee, and how you calculated it.
- Your priorities: what you would protect first if the budget shrinks. Make that call yourself before the meeting does.
Budget season is when HR's priorities either become real or quietly disappear. Bring numbers, and stay in the room until the decision is made.
Mike Pritula has more than 20 years of experience in HR, including roles at Wargaming and the Ukrainian TV channel STB, and is the #1 HR instructor on Udemy. He is the founder of Mike Pritula Academy, an online HR school, and PapaHR, an HR system for small companies. He is based in Kyiv.
