Financial Intelligence for HR Professionals - What You Really Need to Know about the Numbers

Citation

Nolan, S. (2008), "Financial Intelligence for HR Professionals - What You Really Need to Know about the Numbers", Strategic HR Review, Vol. 7 No. 5. https://doi.org/10.1108/shr.2008.37207eae.001

Financial Intelligence for HR Professionals - What You Really Need to Know about the Numbers

Article Type: Recommended reading From: Strategic HR Review, Volume 7, Issue 5

Karen Berman and Joe Knight with John Case,Harvard Business Press,April 2008,ISBN: 978-1-4221-1913-6

Written by the founders of the US-based Business Literacy Institute, Karen Berman and Joe Knight, this book is designed to demystify financial terms and tools for the HR specialist and to show how to use this knowledge to gauge a company’s performance and make better departmental and strategic decisions. It aims to provide managers with four basic skill sets to hone their financial intelligence:

1. 1.

   Understanding the foundation. How to decipher income statements, balance sheets and cash flow statements and to know the difference between profit and cash.

2. 2.

   Understanding the art. How to identify when the artful aspects of finance have been applied to the numbers and what that means to drawing accurate conclusions and being prepared to question and challenge the numbers when appropriate.

3. 3.

   Understanding the analysis. How to make informed decisions based on the information underneath ratios and return on investment.

4. 4.

   Understanding the big picture. How to value the context created by changes in the economy, the competitive environment, regulations, customer needs, new technologies, etc., and what that means for interpreting a company’s financial numbers.

Once this core knowledge is imparted, the authors hope to help HR managers to take the next step so that they can confidently speak the language of business, ask insightful questions about what is underneath the numbers, and use this information to analyze data and make decisions that improve the bottom line and create better value for their company.

The book uses examples, case studies and toolkits to provide HR managers with these skills and knowledge and it has a useful section at the end with new practices and exercises. It is written in an easy-to-understand style, it uses box definitions throughout for key financial terms and it retains a HR context. The toolkits, in particular, relate the theory to HR. For example, part three focuses on the balance sheet and the toolkit for this section looks at employees as assets and explains expenses versus capital expenditure. This makes it a useful guide for HR professionals trying to adapt to today’s requirements for a more business-savvy approach and looking for the knowledge to confidently converse about fiscal matters.

Sara NolanEditor, Strategic HR Review