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Growing HR's Influence
Laura McAdam brings unique insight by marrying finance with HR and argues that raising HR’s financial acumen is so critical to their success.
By Isabella Chan

JAN 2012 | HR Matters: For HR professionals to truly add value and help their organisations execute business initiatives, they need to be the ones leading change. They need to do it effectively and with persuasive skill. Crucial to this, is their ability to carry forward a dialogue about the things of value and relevance, balancing the interests of the organisation and that of its people. How do you see HR drawing this balance between two seemingly competing needs?
McAdam : HR professionals have the responsibility to advocate for the organisation, and in doing so, must also advocate for the employee. The needs of the company and employee should not compete because one wouldn’t exist without the other and neither can function alone.

If more HR professionals approached issues by creating a business case it would make their arguments more tangible. Take, for example, wellness programmes. There are some companies that were early adopters of wellness programmes and realised a return on their investment that far exceeded their expectations. Other companies couldn’t get wellness programmes off the ground because they couldn’t convince senior management that they were worth the investment.

Presenting a business case for a wellness programme (or any other employee related initiative) is more effective than making an emotional plea to the senior team that it is the right thing to do.

HR should be familiar with what financial items are present on the balance sheet and income statement as well as the seven key financial drivers.

HR Matters: HR will succeed in executing strategic initiatives when they are able to align employees to the organisation’s strategic plan. However, the knowledge that something is relevant and important does not in itself help you to turn a goal into reality. In other words, what does HR need to be doing on a daily basis to get themselves closer to making what’s possible very real?
: There is often misalignment between an organisation’s strategic plan and execution at the employee level. HR professionals have a tremendous opportunity to affect positive change in this area, thus increasing an organisation’s profit, cash flow, and shareholder value.

First of all, HR professionals need to start with themselves and absolutely understand the strategic initiatives of their organisation and what impact the initiatives have on the company and the competition and why they exist in the short- and long-term. Only after HR professionals internalise the strategic initiatives will they be able to affect change.

Second, they should discuss the strategic initiatives with their business partners to determine opportunities for improvement and set an HR strategy with those business partners to ensure the strategic initiatives will be met. For example, if a business competes on service and customers are paying more for a product than the competition because of that service, then on-time delivery of that product is non-negotiable. HR should look for ways to add value to the business partners that are in alignment with the overall strategy. Business partners should establish operational strategies in their respective areas of control and HR should support them. These are the day to day interactions that will move the organisation forward.

HR Matters: You’d agree that a successful HR practitioner is one who has a thorough grasp, not only of the business but of the financial framework of the business. How does HR lend their expertise to create value, to improve profit ratios and increase cash flow? How much financial information do they need to acquaint themselves with, to make that difference?

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Laura McAdam

In 2002, Laura McAdam founded Profitability NOW, a firm specialising in strategy execution for businesses. Profitability NOW works directly with the HR function to help align the people of the organisation with the business initiatives of the organisation. Profitability NOW helps organisations break down barriers to increase cash flow and profit by utilising their most precious resource, their people. Laura McAdam co-created HR ProfitAbility® with Profitability Business Simulations.

This is a hands-on innovative experience that allows HR teams at all levels to self-discover how to better support their organization, by accelerating the development of their business acumen. HR Profitability is approved for 15 strategic hours continuing education for HR professionals by HRCI.

HR Matters Magazine
Issue 17 | January 2012

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