The Important Role of HR in Finance
The global economic crisis has emphasized finance related aspects, such as the important role of HR in finance, and the need for a harmonious relationship between these two departments.
The global financial and economic crisis has made managers and companies in general even more aware of the importance of sound financial strategies and decisions. With many corporations, including even the very largest ones, struggling to survive and avoid bankruptcy, the economic climate seems quite harsh. As such, many groups are forced to re-evaluate the myriad aspects of their performance, including, for example, the role of HR in finance.
HR or human resources is undeniably an integral part of any organization. After all, where would a company be without its motivated, well-performing, loyal employees? Most successful companies have realized this fact and have taken to investing more and more into maintaining and improving their so-called human capital. Returns on these investments may not be as direct or immediate as on other investments, but in many cases, they are quite significant. The results of good, effective training programs and incentive schemes should not be underestimated. They are usually only neglected because of their indirect nature that makes them harder to quantify.
Now, HR has two kinds of relationship with finance. One is the fact that the activities of the human resources department would also need to be allocated the proper amount of resources. This allocation and need would have to be factored into the considerations of budget and financial strategy.
For example, in these current economic times, it would actually be a good idea to invest more heavily in training and other employee improvement programs. This might seem to run counter to the intuitive idea of having to cut costs as much as possible, but in fact, to survive the crisis, any organization needs to go back to its people. By ensuring that employees are as well prepared as ever to handle changing circumstances, organizations would increase their chances of regaining their performance once the crisis has passed. Investing in employees makes even more sense during uncertain economic times because other kinds of investments have suddenly been thrown into doubt. Financial markets, such as the stock market or even the foreign exchange, will inevitably take some time before once again stabilizing.
On the other hand, human resources would also have its own role in shaping the kind of people and employees that are in the finance department of the company. Thus, they should take utmost care to select only the best and most worthy employees to take on the critical tasks of navigating the turbulent economic waters. To this end, they should be aware of the need to evaluate possible employees based on their experience and historical performance. They should know the contextual financial conditions underlying this performance to avoid any biases or distortions.
The role of HR in finance cannot be understated. For a company to be successful, there should be a harmonious, synergistic relationship between the two departments. Finance officers should be aware of the need to give human resources its due share of the budget, while HR should be able to populate the finance department with worthy candidates.
