Businesses rely on human capital to achieve objectives, as people constitute the key vehicles for achieving general business goals as well as carrying out process improvement initiatives.
Human capital resources constitute significantly – the total annual expenditures of most businesses – in form of wages and salaries.
Despite improvements across most businesses in Nigeria, especially in communication, information technology (ICT) and other technological ways of doing businesses, the importance of manpower cannot be ignored.
Manpower budgeting is not just the mere control of expenditure on manpower, but the thoughtful allocation of these resources, taking into cognizance skill, competence and other quality imperatives.
This is more important in Nigeria considering the competitive nature of most businesses and the avalanche of manpower that sometimes make selection, profiling and allocation of quality manpower painfully cumbersome.
Manpower budgeting should not been seen as a mere subset of operational budgetary process – in capturing the quantity of resources as expressed in operational costs – wages and salaries.
It should focus on the quality of resources (to justify costs) as expressed in skills and experiences needed for business performance and growth.
It is the aspect of quality, in addition to the costs, that makes the allocation of manpower a crucial management decision in a typical business environment.
It is also pertinent, because some of the services offered by human capital in some business environments may not be easily ‘inventoried’ and may be ‘un-codified’. This scenario may be a capacity constraint for some businesses, which would require thoughtful allocation and optimisation of resources.
Therefore, allocation of human capital in form of manpower budgeting is not just a routine annual exercise but a strategic decision that requires skill and competence in the assignment of these resources to business activities and tasks.
It is a process that ensures that employees with the right skills are at the right tasks and at the right time. Anything short of this could lead to sub optimality of resources.
This is important in a service driven environment, and in sectors where there are shortages of quality resources, because resource shortages in addition to other business vulnerabilities usually increase the chances of business and performance failure.
Thus, manpower budgeting is not about hiring and retaining people, just because they have the time and are looking for work. It is about aligning personnel who have the knowledge and skills that fit into the systems and processes of the business and its long term vision.
Manpower budgeting recognises resource requirements, skill sets, development and training, continuous improvement, in addition to general manpower costing as critical aspects of the allocation process.
The key concerns and objectives of manpower budgeting, apart from manpower costing, may be grouped as follows:
• To serve as a vehicle for responding to the dynamic demands of the business – through the prompt deployment of human capital resources to appropriate tasks, as need arises.
• To build a quality human capital stock positioned for tasks, activities and processes, as required in a dynamic and improvement driven environment.
In a dynamic and process improvement business environment, manpower budgeting may provide the executive management with information on the various kinds of human resources available for improvement and also the categorisation of the resources.
Manpower budgeting does not end with the completion of allocation. Monitoring and determining the actual utilisation of resources are crucial. This enables the management to make adjustments in resource efficiency and effectiveness/productivity.
Manpower budgeting in some businesses is loosely integrated into the entire budgeting process. But this practice should be reviewed and probably decoupled.
It requires originality and a strategic mindset to attract the impact, traction and intelligence needed for learning, business growth, and performance.
The integrity of the allocation process and its deployment as a tool for business performance rest on the validity of data employed and the experience, thoughtfulness, foresightedness and discipline exercised by the top management.
Mere extrapolations from previous year’s expenditures to determine and estimate the next year’s resource requirements are pedestrian and may not deliver desired outcomes.
Every manpower resource needs to be justified (in quality, cost and other imperatives) for its expenditure to continue.
It is therefore a serious exercise. It should not be used to gain organisational legitimacy or perpetuate disruptive management hierarchy and control over manpower resources.
Such will alienate the process, make it lose credibility and ultimately degrade its strategic potency. It should focus more on efficiency and productivity, especially for a business that intends to build its strategy around its core competencies.
Despite the benefits of manpower budgeting, there are weakness: It hinges on ‘estimation’ and on future time period – which reflects ‘expectation’.
Within the period, there could be illnesses, deaths, promotions, resignations, and even shocks in the business environment that could alter the operational stability and calculus of the business.
This could diminish its potency as a tool for planning. However, such a situation would require intervening decisions in response to these variations, to restore the validity of the allocation process.
Despite the advantages of manpower budgeting, one key question remains relevant: how significant is manpower budgeting for a Nigerian business among other equally competing indicators required for business performance?
This question is crucial and could provide impetus and gravitas for better methodologies and techniques for improving the allocation and utilisation of these resources.
It may also support ‘localised’ ways to appropriately integrate manpower budgeting into other key indicators needed to improve business performance.
Manpower budgeting is an essential tool for business performance. Its degree of significance would constitute a subject for rigorous inquiry and analysis.
However, one of the imperatives for a robust manpower budgeting is: only resources that can be justified in the present and in the future (in terms of costs, character, quality and other key attributes) are employable. Nothing more. Nothing less.
• Churuba is Managing Consultant, Sprog Consulting chijioke_hotmail@yahoo.com
