As I travel around the country teaching HR continuing ed classes, I talk with a lot of business people on airplanes, shuttles, restaurants, etc. What’s interesting is to hear what business people have to say about HR. Well…I’m here to tell you that “it ain’t good.” When I inquire as to why other professionals (Sales, Ops, R&D, Marketing, etc.) don’t have a high opinion of HR, these are the responses I get: “HR doesn’t have a clue…” “HR always says, ‘no’ to everything…” “HR adds so much bureaucracy to our organization…it takes FOREVER to get anything done” “HR…well I really don’t know WHAT those ladies over in HR do, except for handle orientations and benefits stuff…” “HR never seems to ‘get it’ that we’re trying to launch a new product right now…we can’t waste time attending benefits meetings right now…” “We all have to quantify our results…Sales does it, Operations does it, R&D does it, but HR just sort of bumbles along not really being held accountable.” “Our HR VP doesn’t even know how to read the P&L…she’s clueless.” “Oh..our HR people?? Please…spare me the conversation. Those people up in HR just don’t seem to understand what we do. The HR Director wanted to implement a new computer system for doing reviews, succession planning, and all the bells and whistles. I’m all for that, but the damn thing was going to cost us $110,000! We’re in full crisis mode right now trying to make payroll every month, let alone incur a capital expenditure!”
You see??? These are comments from a cross-section of business professionals that I have met on airplanes, in airport lounges/restaurants, etc. The common denominator is that HR seems disconnected, and HR’s value is simply not visible to them. It is apparent that they “don’t get” HR and what HR does for their organizations. Which means that HR is not doing a good enough PR campaign to promote the good things it’s doing. And, a root cause may be that HR just isn’t aligned with the organization’s big picture goals. In order for HR to showcase what HR has done to contribute–HR has to know how to impact the financials. And, HR has to know how to time its initiatives and capital expenditures.
In this month’s RPC Performance Digest, I talked about the need for financial management education within the HR profession. The reason I wrote about that this month is that I’ve encountered a significant number of professionals who truly do not know how to read a P&L or a Balance Sheet.
So, the topic for this blog is HRD 2010: HR Accounting & Finance 101. What this means is that senior HR leaders must partner with their training & development folks in 2010 to build a basic accounting/finance curriculum. The goal: Increase HR’s knowledge of how to analyze and interpret financial statements. My suggestion would be to give a simple test to HR professionals. Give them a copy of the company’s current financials and ask them to answer some important questions. Score the tests–implement new financial analysis curriculum–and then give another identical test, just using a different quarter’s financials. The effectiveness of the training will be evident.
This past year has taught us all a lesson about how volatile business can be. Huge organizations fell…millions lost jobs…and lending came to a screeching halt causing the worst economic meltdown we’ve seen since The Great Depression. So, considering that HR is the group responsible for all things “people” and labor costs are among the highest expense lines on a P&L, suffice it say HR has to get smarter in this area…
Also, here is a fact: 80% of the HR profession is comprised by women. And, most of the members of the profession have climbed up through the ranks from more administrative roles–not leadership roles or finance roles. Therefore, a knowledge gap in analyzing and interpreting financials does indeed exist.
As I shared in this month’s RPC Digest, 20 percent of the HR professionals I interact with in classroom education (HR certification programs) indicated that they did not know how to read a company’s financials. That means that HR doesn’t know how to read an annual report–or other financials such as a Balance Sheet or a Statement of Cash Flow. If HR doesn’t speak the language of money and finance–how will HR ever get that seat at the table??? Answer: it won’t.
So, HRD practitioners: 2010 is the year of Accounting and Finance curriculum for HR. And, HR professionasl, 2010 is the year that you take ownership of your career development: get financial knowledge!
I wish all of my readers a very joyous holiday season and a very HAPPY NEW YEAR!!
Warmest holiday wishes,