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
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
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.
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?
McAdam : 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
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.
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?
more details on what your subscription
your subscription payment
us at +603 6140 6398 or email
us for details
between a print edition or digital edition subscription.
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.
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.