Personnel budget planning determines the financial resources available for Human Resource functions in a certain period.

The specifications relevant to the budget planning procedure are determined.

These include:

• The planning period for which budget planning is to be performed
• The organizational areas for which budget planning is to be performed
• The functional areas for which budget planning is to be performed
• The organizational provisions for performing planning (What is the time frame? How are decisions delegated? On which hierarchical levels are budget plans consolidated and approved?)
• Specifications for definite upper and lower limits for budgets in individual organizational or functional planning areas

When budget planning is prepared, several alternatives can be drawn up for the specifications. On the basis of an evaluation, a decision is made as to whether to adopt a particular draft as a binding specifications package, or to correct existing alternatives, or to create new ones.

A manager checks whether budget planning is performed by him or herself in his or her area of responsibility, or whether it is delegated in full or in part to lower-level managers. If delegation takes place, specifications are defined in more concrete terms.

A manager creates a budget plan for his or her area of responsibility.

Several alternatives can be created and evaluated for the budget plan. Finally, a decision must be reached as to whether to accept one of the alternatives, or to create more alternatives, or to correct existing alternatives.

The accepted budget plan is released for consolidation.

When consolidation takes place, various budget subplans are brought together in a comprehensive plan.

Prior to consolidation, a check is performed to ensure that all necessary subplans exist and that they meet the given specifications. If this is not the case, missing subplans can be re-requested and unacceptable plans can be referred back for correction.

Under certain circumstances, individual subplans may meet the specifications while the consolidated budget plan fails to do so. In this case, individual subplans can be referred back to the persons responsible to be corrected.

The completed, consolidated budget plan is released and then goes to the next decision level up for further consolidation or approval.

The budget plan is checked to ensure that plan values are appropriate, and that formal specifications have been observed. A decision is made as to whether the plan is approved or whether corrections are still required.

A manager checks whether a required correction is performed by him or herself in his or her area of responsibility, or whether it is delegated in full or in part to lower-level managers. If delegation takes place, correction specifications are defined in more concrete terms.

A check is performed as required or at regular intervals to determine whether the conditions are still valid under which the specifications for budget planning were defined.

A decision is made as to whether there is a definite need to act, and whether the specifications or the as yet unapproved budget plans must be corrected.