How often have we as a function talked about needing to be business savvy?
It’s certainly a conversation we’ve heard frequently as we’ve moved to the Ulrich model i.e., Business Partner, Centres of Excellence and Shared Services. The Chartered Institute of Personnel & Development (CIPD) view is that as People/HR professionals we should understand our organisations purpose, future direction, priorities and performance, as well as understanding external influences and trends. To reflect this the CIPD’s professional map has an entire knowledge area on business acumen, this covers topics such as financial literacy, business planning and supplier management.
At InFocus HR we would fully agree that as a profession, understanding what our organisation is trying to achieve and performance against goals and budgets is critical, as it supports our engagement with stakeholders. As a profession though the question we need to ask is whether we run our function in the way that we expect our organisational managers to operate theirs? A Gartner article from May 2020 referenced an emerging trend for HR Chief Operating Officer roles and they specifically call out a need to focus on the operation of the function itself.
So, how do we apply that business acumen and focus to our own function?
Business acumen can cover a wide range of areas and we should be clear this is not necessarily about creating yet another team within the function. Depending on organisational size this can be built into someone’s role, it could be a dedicated Business Management position or for bigger organisations it could be consolidated into a small team. Typical areas of scope would include:
- Strategy development & planning
- People & functional analytics
- Risk Management
- Supplier Management
- Project Management (including continuous improvement)
Over the next 5 weeks we will publish a series of blogs on each of these specialist areas, going into more detail around what could or should be undertaken to support the functional objectives.
This week, we will start with Finance
Research commissioned in 2015 through Bersin by Deloitte highlighted that 90% of HR leads felt they had a handle on their budgets. However, our experience would suggest that awareness of finance and more basic budgeting can vary significantly across organisations and certainly within People/HR leadership teams. Often the top line People/HR budget is known, however, how that spend breaks down, when it’s due to occur and how the budgets are tracking can often be missing or not understood.
So, what should good finance management look like within the function?
Well, the first thing to say is that this shouldn’t be about creating a shadow finance role within the People/HR function – the finance team are unlikely to respond well to that! In reality the activities undertaken are unlikely to require a full-time role, although there will be peaks and troughs in workload, driven by the budgeting year. The support should be seen as complimentary to how your organisation’s finance function operates and would generally cover the following activities:
- Engaging with People/HR leads to determine budget requirements, whether that’s just financial or for wider resources such as headcount.
- Building the case for securing additional funding to deliver the people strategy or just to reflect increased operational costs. Focusing on the justifications in advance can often ease the sign off process through an organisations budgetary cycle.
- Working with finance and the People/HR leads to phase budgets and track spend throughout the year, identify potential over/underspends (including why?) and agreeing options for managing i.e., pulling forward or delaying spend on new initiatives, thereby managing expectations better.
- Supporting the function with pulling together business cases for new technology or services. Using insight into impact on the functions BAU budget and understanding how Finance might assess a business case can help with successful sign off.
- Providing quality assurance to the People/HR lead in terms of budgeting should free up their valuable time.
- Building the Finance teams awareness and understanding of the People/HR functional plan so that when extra funding is required or when budgets are reduced or cut, they have a better understanding of the potential impact.
- Coaching the People/HR leadership team around financial management and ensuring that budgets are a regular discussion and review point throughout the year
Through these activities the function will become more business savvy, building its financial credibility with Finance and this should hopefully be reflected in any requests for additional budgets having a smoother journey through the organisation.
To find out how InFocus HR can help your function to become more business savvy, whether that’s implementing or reviewing your current business management tools and techniques click here for more information to request an initial obligation free conversation.
 Bersin by Deloitte, High-Impact HR