HR Professional - October/November 2008 - (Page 42)

H R 101 BY K ARINE BENZACAR MONEY SENSE: LITTLE FINANCIAL EXPERIENCE? START HERE S uccess in the business world, regardless of your job, requires an understanding of finance. Companies hire people for their primary skills, like marketing or technology, but the ultimate objective is to be profitable. Understanding the key factors that help the organization achieve its objectives is paramount to advancing the visibility of your department, your business unit and your career. $ Acquaint yourself with financial terms You can’t understand ﬁnance if you don’t understand the terminology. Many terms are used interchangeably; for example, a proﬁt and loss statement is the same thing as an income statement and liability is another word for debt. nancial position of an organization. Reports exist for all levels of an organization. You must know how to read these to understand where money is being spent or generated and to accurately assess if your unit has been successful in its objectives. If you know what to look for, you will be in a better position to achieve those objectives. If your company is public, the ﬁnancials are published every quarter, but if you work for a private company, you may not have access to them. $ Learn about cost allocations In many companies, individual departments are often charged a portion of general operating costs for the company. These costs, called overhead, can include anything from utility bills and property taxes to the president’s salary. Property taxes, for example, might be prorated to individual departments based on the amount of square footage a department occupies. Many business professionals are evaluated on the proﬁtability of their products but don’t necessarily understand all the charges assigned to their areas and the reasons behind them. By understanding the assumptions underlying the charges you can question the amounts being charged to your area if they are inaccurate. Be forewarned: if you are successful in lowering the amounts charged to your department, another department will have to absorb these costs. HR P R OF E S S I ON A L $ Don’t ignore financial reports Financial statements are the report card for an organization’s performance. They highlight how proﬁtable the company is, where it is making its revenues or incurring costs and illustrate the ﬁ- Illustration: Charlene Chua 42 O c t o b e r / N o v e m b e r 2 0 0 8

Table of Contents Feed for the Digital Edition of HR Professional - October/November 2008

HR Professional - October/November 2008 Contents Editor's Letter Contributors Leadership Matters Upfront Legal Compensation Human Capital Talent Management Murphy’s Law Wise Counsel On Message HR 101 Interview with Joseph McCool Off the Shelf The Last Word

HR Professional - October/November 2008

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