In yesterday’s Advisor, Clare Novak gave tips on understanding the basics of finance; today, how HR relates to this side of your business and some advice on how to turn financial know-how into funding for your comp plan.
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Novak, who is an award-winning international consultant and author of Never Rule Without a Magician, a Sage, and a Fool, shared some tips on decoding finance-speak in a recent BLR® webinar.
Become an Asset
Unfortunately, HR is a liability on a balance sheet, not an asset, says Novak. While HR may refer to employees as “assets,” financially speaking, a wage is a liability. Healthcare, vacation time, benefits, incentives—all are on the “minus” side of the ledger. So the question is, how can HR become an asset and have a positive effect on that bottom line?
Increase Productivity
Everything that you in HR do to increase productivity helps the bottom line, says Novak. There are many ways to do this, including through organizational development efforts, leadership training and development, and any initiatives that boost engagement. Such HR functions will help reduce turnover and also have employees showing up to work with their hearts and minds truly into it. Onboarding the right people increases engagement, and they will CHOOSE to be more productive, says Novak—HR can foster this mindset.
Decrease Costs
HR professionals can also become an asset by decreasing costs. Novak notes that reducing turnover is a great way to do this—hiring is expensive! Any way you can improve processes to decrease cycle times (such as hiring time or time to fill positions), you drive down costs. Reducing lawsuits, grievances, and lost time is also fantastic, says Novak, and if HR can hold the line on healthcare costs (or at least keep the increases minimal), it’s a great way to contribute to the bottom line.
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Tell the Punch Line First
Without a doubt, speaking the language of finance will help you secure funding for programs, including compensation and benefits. So, what’s the most common mistake HR makes when trying to get funding for initiatives?
When asked this question, Novak had some simple, effective advice. What we tend to do while giving reports is walk the listener through the entire research process—we think we need all the details to help the financial gatekeepers understand our conclusion, but in fact, we’ve lost them. Flip it around, says Novak: here’s the conclusion, this is what we need and why we need it, and this is going to be our return. If you need the details, supply them. But in general, tell the punch line—THEN give the story.
From decoding finance-speak to determining merit increases to designing affordable incentive plans for the coming year, compensation and benefits are never easy. “Maintain internal equity and external competitiveness, with benefits and compensation, and control turnover, but still meet management’s demands for lowered costs.” Sound familiar?
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Great advice on leading with the punch line–it’s so easy to lose your audience’s attention otherwise. You still might, in fact, but they’ll still have gotten the takeaway.