I’m in HR, not Accounting!
Most HR departments already have a full plate, between recruiting, hiring, and onboarding employees, administering benefits, and upholding policies and procedures for a safe, effective workplace. It’s easy to see why they can be resistant to taking on anything else, especially if it might fall under accounting.
But understanding finance can help HR professionals work smarter, benefitting not only their department but also the business. Here is why.
Why HR and finance benefit from working together
In many organizations, there is an inherent tension between finance and HR departments. Why? There can be conflicts in roles and goals between the two departments, and persistent stereotypes that finance is more concerned with costs and HR with people. In addition, both finance and HR have access to sensitive and confidential information on employees, payroll, compensation, benefits, compliance and much more. The responsibility to keep this information secure can sometimes affect communication and collaboration.
Setting these realities aside, there is a strong business leadership case for tighter coordination, and for HR professionals learning more about finance and accounting. With a better understanding of both, you will gain insight into your organization’s strategy—and ensure that your HR department is indispensable to your organization.
HR and finance already share an overarching goal: achieving high levels of performance and profitability (except of course in nonprofits, where the focus is on efficient use of earned resources and good stewardship of contributed income). Additionally, there are some HR duties that touch finance, including calculating and tracking the costs of recruiting new employees or budgeting for benefits, for instance.
Moreover, foundational financial knowledge is essential to the HR department, especially in a business model in which HR must partner with internal customers for services like recruiting, policy and procedure administration, and more.
Basic HR financial knowledge
HR financial knowledge also extends to a variety of activities within the HR function, including:
- Fiscal and budget oversight. Yes, HR is about people, but it is also about business. HR professionals need to be able to develop and manage budgets for payroll, benefits, hiring, training, and more. Basic working accounting knowledge makes it easier to read budgets and to evaluate items—like staffing, bonuses, and programs—for their cost and benefit to an organization.
- Proposal development. Want to introduce a new program or initiative? You are going to have to do more than prove it will solve a problem—you are also going to have to justify the cost. It is easier to do with basic knowledge of finance and accounting to be able to balance the investment with the proposed savings and expected return.
- Performance measurement. Performance measurement is essential to good business management. When they speak the same language, HR and finance staff can work together to understand and monitor performance measurements for sales, inventory, customer satisfaction and more. In addition, it is easier to develop a response to potentially problematic trends, like staffing shortages or flat sales, with a basic knowledge of accounting and finance principles.
How to develop or expand your financial knowledge for HR
As an HR professional, you’ll always be focused first on the people part of your organization. But understanding the basics of finance and accounting can help you be more collaborative—and help you strengthen your organization through people and strategy.
Attending association education events through organizations like DallasHR and industry conferences like The HRSouthwest Conference can bring you together with subject matter experts and peers who are knowledgeable about finance and accounting.
DallasHR is the third-largest SHRM affiliate chapter in the nation. With more than 2,000 engaged HR professionals, the Chapter has been Advancing the Value of HR since 1939 through innovative education, valuable networking events and providing opportunities to share best practices with others in the field of HR. The HRSouthwest Conference powered by DallasHR, is the official Texas SHRM conference and one of the largest regional HR events in the U.S. Visit us at Dallashr.org, hrsouthwest.com and follow us at #dallashr, #hrswc.