Sales, Finance, and Human Resources, Only Room for 2 at the Table
Posted on Mon, May 10, 2010
Without an understanding of how your project impacts either sales or finance, you have very little justification for budget. You have to make a case for your salary or contract and it is easier to get either if you can trace directly to sales or to profit. Because without a pet project you're either in or you're out.
There are really only 3 swim lanes in business: sales, finance, and human resources. All jobs fall within only these 3 swim lanes, or functional areas. Unfortunately, only 2 of those 3 functions are considered business drivers: finance and sales. The 3rd, human resources, a support function, a compliance function, and a cost center.
You can't have a business without sales and you can't stay in business with financial acuity.
Just look at some job categories and the reality of where they align:
- marketing < sales
- accounting < finance
- operations < finance
- IT (internal processes) < finance
- IT (market data) < sales
- public relations < sales
- supply chain < finance
Sales gets the dollar and finance maximizes the profit margin of each dollar and until human resources ups their stake in the game human resources is largely relegated to support, compliance, and supply.
All the talent management, learning and development, organization behavior, human resource business partner, recruiter, chief human capital officer, chief diversity office, chief learning office, human resource generalist, and organization development cabal; we are in a war for limited attention, limited resources, and limited involvement until we make the clear case that we (you) do drive sales results or that you (we) do drive financial performance.
It's your job to make a valid case, each and every day, on how talent drives business results; strategic recruiting is a direct link to sales; and that motivation drives financial performance. If you can't make the case you are not business partners. Worse, we don't deserve a seat at the business table and will never be invited to the business discussion.
I don't have a prescription, but I know the only way to be a business partner is to understand finance and understand that when human resources does not contribute to sales it's just a cost center.
Time for human resources to know that their place: either driving sales or compliance and transaction. If it is compliance, that is a perfect map to be outsourced and outsourcing, of course, increases margins and that gets us right back to finance...
So, if you want to talk business then learn to talk sales and talk finance; know the industry drivers for each; and frame all your projects, programs, or efforts in maximizing sales and/or maximizing margin.
Human resource ROI is a sexy topic bring up, but without a sales and finance frame it's only putting lipstick on a pig.
Knowing finance is as easy as asking what formulas are used to evaluate projects:
- Net Present Value?
- Present Value?
- Internal Rate of Return?
Whatever the formula do yourself a favor and learn how to calculate your impact, it is rarely more than addition, multiplication, or division, so there is no advanced math to be intimidated with.
Otherwise don't be surprised if the contract or project is canceled.
About the author: Toby Elwin is part of the MassBayODLG, you can find out more about him at his website or on @telwin
For more information on organization development's impact on business, check out last week's MassBayODLG meeting from Julia Geisman: