What is a Variable Labor Budget Assumptions Model?

Variable Labor Models are considered planning and forecasting tools and are used by budget managers and HR leaders to automate employee budgets with drivers for wages and benefits. Some of the main functionality in this type of input form is that it is parameter driven and can be populated by business entity, department and position type. Examples of assumptions that can be entered are: Minimum hours, Wage rates, Timing of annual increase, Increment threshold, Productivity ratio, and Maximum hours. You find an example of this type of input form below.

Purpose of Variable Labor Assumption Models

Hospitality companies use Variable Labor Assumption Models to provide a dynamic way to capture drivers of labor costs and automate human capital modelling. When used as part of good business practices in FP&A departments, a company can improve its budget process and speed, and it can reduce the chances that budgets are inaccurate due to hardcoded wages and assumptions.

Example of a Variable Labor Assumption Model

Here is an example of a Variable Labor Assumption Input Form with various drivers.

Example of a Variable Labor Budget Assumptions Model for Hospitality Companies

Example of a Variable Labor Budget Assumptions Model for Hospitality Companies

You can find hundreds of additional examples here

Who Uses This Type of Input form?

The typical users of this type of input form are: Budget managers, HR managers, department heads.

Other Reports Often Used in Conjunction with Variable Labor Assumption Models

Progressive FP&A departments sometimes use several different Variable Labor Assumption Models, along with Employee payroll budgets, human capital planning models, profit & loss budgets, historical financial statements, budget analysis dashboards and other management and control tools.

Where Does the Data for Analysis Originate From?

The Actual (historical transactions) data typically comes from enterprise resource planning (ERP) systems like: Microsoft Dynamics 365 (D365) Finance, Microsoft Dynamics 365 Business Central (D365 BC), Microsoft Dynamics AX, Microsoft Dynamics NAV, Microsoft Dynamics GP, Microsoft Dynamics SL, Sage Intacct, Sage 100, Sage 300, Sage 500, Sage X3, SAP Business One, SAP ByDesign, Acumatica, Netsuite and others.

In analyses where budgets or forecasts are used, the planning data most often originates from in-house Excel spreadsheet models or from professional corporate performance management (CPM/EPM) solutions.

What Tools are Typically used for Reporting, Planning and Dashboards?

Examples of business software used with the data and ERPs mentioned above are:

  • Native ERP report writers and query tools
  • Spreadsheets (for example Microsoft Excel)
  • Corporate Performance Management (CPM) tools (for example Solver)
  • Dashboards (for example Microsoft Power BI and Tableau)

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