The Language of BusinessPosted: August 29, 2011 Filed under: for HR Professionals, GMSHRM, Tips, Training & Development Leave a comment
The language of business is money. As HR professionals we are surrounded by buzz words and phrases like “think strategically”, “what’s the return on investment” and “do more with less.” But what do these mean and how do I make them happen while I am recruiting for open positions, have investigations happening and presenting employee development opportunities? How does HR move from transactional to transformational?
On Friday, August 26, I had the pleasure of attending GMSHRM’s Global CFO Forum at the Sofitel in Miami. What a great learning experience! It was an intimate setting – about 30 in attendance – where 3 CFOs from global reaching organizations presented their business ideas on the value HR. For 2 hours they shared their thoughts and ideas of how HR can make a
positive impact to the bottom line and build value for the whole organization. Each panelist introduced themselves and shared their philosophy. One of the CFO’s mission hit home with me – “Lead people to deliver their best.” He also referred to HR as “Capitalists for change.” What a fitting description.
The key to moving HR into a more strategic role is finding positive ways to contribute to the financial results of the organization. Understanding that just because something is the right thing to do does not mean it should have the capital outlay for implementation. There must some sort of return for any decision. Many ideas that HR presents can have significant cost savings or even make money for a company. For example, the implementation of a wellness program not only can lead to a healthier workforce but reduce healthcare costs and decrease absenteeism. All 3 of the panelists agree that HR needs to look at every decision according to how it would affect the bottom line. Many HR people know how an idea will benefit the company; sometimes we just need to find the best way to communicate it. And using the cost savings and revenue driving terms of the idea will help HR navigate the idea to approval.
Easier said than done, right? A great place to start is by knowing, understanding and managing the HR budget. How much do you have? What do you want to do? What items are on your “need” and “wish” lists? Your CFO will respond favorably to an HR person’s ability to speak the language of business. Knowing how the company makes money, where the strengths and
weaknesses lie and most importantly that finance is the catalyst for the company’s strategy. What the CFO might not tell you is that without HR, the company will fail. Rest assured that HR is needed but the need can vary based on the strategic direction and slant of the HR team.
Another thing I learned was that there are times that we may need to present something 2, 3 or more times to have it become a hit. There might be a new training opportunity you want to implement or software that will help streamline operations. When you pitch it to the executive team, you might get shot down the first time. Don’t let this discourage a valuable idea. Some great ideas were denied before they were implemented. Ask for feedback when you are told no so when you can go back to the drawing board you know what will be needed to get something done. If a solid business case can be made and there is a positive effect on the profit and loss statement – even in the long run – you stand a better chance at getting what you need. So when you want to purchase a new HRIS program that will have significant upfront costs, be ready to show the actual savings it will bring to the company. It might take some time until you get it.
The CFOs also agreed that they look to HR for change management support. This includes training and developing employees and paving the way for change acceptance in the organization. HR should be on the front line of change efforts which include mergers and acquisitions. Most change projects fail because of a lack of leadership and failure of assimilation. HR should (and needs to) be equipped to lead the organization through change with the executive team.
The financial instruments of profit and loss statements, balance sheets and statements of cash flows are historical. They become strategic tools when they are used for forecasting the future of the company. The financial plan of an organization is a roadmap for the year and is subject to change. The HR team should be well versed in the plan and how they can
impact the various stages and milestones. If you don’t have a working relationship with your financial team, start working on it. The CFO is an important person to be connected with when working in HR. Take time to know your financial people and what makes them tick. You won’t regret it.
Don’t forget to CELEBRATE!