HR meets Finance: a story that goes beyond the numbers

22 Mar 2017

#TheFutureOfWork is here and you as an HR professional, no doubt, have your battle plan ready. At HRbuilders, we know that one of the most frequent criticisms is that HR can’t connect to the language of finance which defines how business operates. That’s why it’s key for our HR interim managers to sharpen their business skills.

Last week, we welcomed a full house of HR Interim Managers to our office boat for our monthly HRbuilders community workshop, this time around the topic of ‘HR Meets Finance’. A very popular topic so it seemed, the event was ‘sold out’ before we knew it. We boosted our HR freelance community’s business accumen and financial literacy, helping them to become more business savvy.

Luc Van Den Cruijce, CEO of FINANCEbuilders and central guest of the evening, is a true expert who could talk about Finance for days. This workshop focussed on three questions:

  1. What does your typical Finance Department look like?
  2. What does a budget cycle look like?
  3. How can HR pitch a successful Business Case?

1) What does your typical Finance department look like?

Luc started off with a welcome revision of the most fundamental finance vocabulary. What are Finance’s departments and sub-departments and what are their tasks and responsibilities? Going from AP (Accounts Payable),Inventory, G/L (General Ledger) Payroll and AR (Accounts Receivable) to Tax/VAT, Treasury and Controlling.

What task do controllers have?

Within each of the Departments the main tasks were discussed and assessed if (and how frequently) HR was interacting with these departments.

2) What does a Budget Cycle look like?

Companies, such as General Electric for example, usually have 3 budget cycles:

  • Session I – the ‘Growth Playbook’ (3 years): what will the strategic outlook be? This cycle focusses on the industry & macro environment and is the basis for the Operating Plan and Session II (see below).
  • Session II (1.5 years): The second cycle draws an outline for the next fiscal year, with a focus on business imperatives & strategy.
  • Operating Plan (1 year) : Finally, time to create the final Budget and deal with Session II’s details.

Each cycle is made up of 4 steps:

  1. A functional bottom’s up analysis
  2. FP&A (Finance Planning & Analytics) top down analysis
  3. Reconciliation and revision of the results
  4. Finalizing the budget and driving ownership

The three business cycles will eventually result in the company’s KPI’s, either focussing on the entire company or a specific department, such as HR.

Finance also takes a look at the company’s actuals during the three budgeting cycles. Why are we not making our number? What are the drivers, what were the initial assumptions, is there a problem with Price/Volume?

The Budget is not a Finance or Operations only exercise, but involves the whole company

3) How can HR pitch a successful Business Case?

Finally, our participants were ready to pitch their cases before the board of directors. Luc handed them the ideal template to structure their pitch, important to keep in mind when trying to earn a place in the budget:

  1. What is your plan?
  2. Why will the company benefit?
  3. How is it linked to company goals?
  4. Key financials of the plan
  5. Uncontrollable variables: Macro/Industry Trends
  6. Controllable variables
  7. Ownership
  8. Who will make up the project’s Team/Sponsors
  9. What is your action plan?
  10. Finally, approval: will your plan get a yes or a no?

In the end, 80% of the business cases pitched in front of our board of directors (read: participants in the room) were approved.

Now it’s time for the real stuff, good luck!

 

HRbuilders -Established in 2008 with HQ in Belgium - is active in HR Interim Management/ HR Consultancy assignments in Belgium and Europe. Our niche as a matchmaker is 1. HR (only) 2. Temporary (only) and 3. Freelancers (only). No headhunting, no other HR services, we focus on what we are great at! We offer our clients peace of mind where-ever they might need a temporary HR support. In average our assignments are 1 year or longer.

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