Financial Skills for HR Experts

Introduction:

Planning and budgeting processes typically begin within the Human Resources Management (HRM) department in most organizations. While sales and marketing teams strategize on product and service offerings, pricing, and demand forecasting, the HR department assesses its staffing requirements for both short-term and long-term needs.

HR professionals play a critical role in managing an organization's cost budgeting. They are responsible not only for controlling departmental budgets but also for meeting overall budget targets. Financial acumen is increasingly essential for HR professionals, as they are frequently required to conduct financial analysis and focus on economic considerations.

In today's interconnected business environment, where systems like ERP are widely used, all business departments must process financial data effectively. This conference on financial management skills for HR professionals is designed to equip HR practitioners with essential accounting and finance skills, as well as the ability to apply these skills effectively within the context of organizational financial management.

The workshop focuses on enhancing HR professionals' financial management skills and highlighting the role of HR in budget management processes. It facilitates informed decision-making, helps in the preparation of HR-specific budgets, and supports the effective implementation of these budgets.

Objectives:

At the conclusion of this course on Financial Skills for HR Experts, participants will be able to:

• Pinpoint the criticality of cash flow and discounted cash flow in making sound business decisions.
• Comprehend and apply financial accounting concepts to evaluate financial reports using ratio analysis and understand its challenges.
• Understand the contribution of HR functions to the organization's budgeting process and apply concepts such as activity-based budgeting (ABB).
• Use break-even analysis and variance analysis for efficient managerial control and budgetary oversight.
• Assess HR operational parameters for performance management and annual budget preparation.
• Integrate finance and accounting elements with strategic planning and decision-making processes in HR.

Training Methodology:

• Case studies
• Group discussions
• Simulations
• Problem-based learning
• Presentations
• Hands-on financial exercises
• Group projects
• Individual assignments
• Assessments and feedback

Course Outline:

Unit 1: The Purpose of the Company’s Financial Statements and Objectives

• Performance management of the company
• Wealth maximization: Value creation versus economic objectives
• Profit and loss statement
• Statement of financial position
• Statement of changes in financial position

Unit 2: Analyzing and Developing a Financial Statement

• Assessing operational efficiency and performance
• Quantitative assessments of position and performance
• Risk evaluation and mitigation strategies
• Explanation and application of financial ratios

Unit 3: Discounted Cash Flow (DCF)

• Timing of cash flows and their effects
• Methods for calculating future and present value
• The DCF debate and its usefulness in decision-making

Unit 4: Costing

• Direct, indirect, and variance analysis
• Overhead application and activity-based costing (ABC)
• Inventory valuation and expense recognition
• Contribution margin analysis

Unit 5: Decision-Making

• Costing concepts for relevant decision-making information
• Analyzing shutdown versus status-quo decisions
• Strategic analysis for make-or-buy decisions
• Decision-making under conditions of scarcity
• Decision tree methods for complex decision-making scenarios

Unit 6: Budgeting

• Importance of budgeting in organizations
• Budget creation process
• Focus on Activity-Based Budgeting (ABB)
• Managing risks and uncertainties in budgeting
• Psychological and motivational aspects of budgeting
• Identifying common budgeting challenges
• Using non-financial performance measures alongside financial objectives

Unit 7: Cost/Volume/Profit (CVP) Analysis

• Interplay between cost, volume, and profit
• Break-even analysis as a financial planning tool
• Impact of cost restructuring on financial performance
• Limitations of break-even analysis

Unit 8: HR and The Budget Process

• Relationship between HR structure and budgeting
• HR's role in responding to labor market demands
• Estimating direct and indirect labor costs in budgeting
• Accounting for employee compensation and benefits
• Employee record management and payroll administration
• Costs associated with redundancies and occupational health and safety
• HR’s involvement in performance appraisal and retention planning