How important is it for HR to understand finance?

How important is it for HR to understand finance?

How important is it for HR to understand finance?

The traditional role of an HR practitioner is dead. Gone are the days of manual processes, of curating team ‘away days’ and filing personnel claims. Instead, HR is now at the centre of organizational strategy with their feet firmly under the boardroom table.

As such, it’s time HR learned to speak the language of business – namely, figures. HRD Canada spoke to John Love, Executive Vice President at TML Group – and speaker at our upcoming elearning course – who revealed how you can learn the language of finance

“For, far too many HR professionals, the idea of looking over financial statements leaves them feeling awkward and uncomfortable,” explained Love.

“However, an HR professional’s job is to maximize the effectiveness of people in order to deliver results and to do that, you need to be fully integrated with the business you support and that demands financial insight. Unfortunately, working with numbers has not been HR’s strong suit. 

And while CEOs agree that Senior HR executives are valued contributors and trusted advisors on an equal footing with executives from other business areas, they also believe that most HR executives fall short of really understanding the business challenges, according to a report released by the Human Resources Professionals Association (HRPA) and Knightsbridge Human Capital.

“So, if HR professionals want to move up into senior management roles and make a difference as a partner in the business, an understanding of finance and accounting is essential,” continued Love. “Understanding financial metrics helps you understand the drivers of revenue and costs for your company. In fact, one could say that the senior HR professional needs to be a business person first and an HR leader second.

“Only then can you be an effective business partner. The good news is, that it is not as difficult as it may seem.”

To hear how to improve your financial skills and understand business metrics, sign up for our elearning course - Finance for HR (and non-financial) managers.