What is financial management?
Financial Management is a vital activity in any organization.
It is the process of planning, organizing, controlling and
monitoring financial resources with a view to achieve
organizational goals and objectives.
The planning, directing, monitoring, organizing and
controlling of the monetary resources of an organization.
What is Human Resource Strategy?
Human resource strategy is designed to develop the skills,
attitudes and behaviors among staff that will help the
organization meet its goals.
Human Resource Strategy (HR Strategy) is a designation for a
long-term plan created to achieve objectives in the field of
human resource and human capital management and
development in the organization.
As we draw closer to the end of the financial year in March, many organizations begin to
review their strategic plans and draft their business plans. One aspect of this will be to
ensure that your HR strategy supports your business plan. What does this mean in
What are your organization's long term goals?
The Chartered Institute of Personnel and Development (CIPD) describes strategic HR
management as an approach to the management of human resources that provides a
strategic framework to support long term organization goals. The starting point is
therefore to be clear about what the long term goals are for your organization. Is it to
grow? To increase surplus? To improve on existing services? To change direction? Attract
different types of funding?
What staff resources do you already have?
Whatever your longer term goals, it is inevitable that your staff will be instrumental in
achieving these. It is also true that your staff might be involved in shaping these goals.
This has two dimensions. Firstly, front line staff are often closer to your service users or
members than senior managers and their knowledge may be as valuable as any amount
of expensive market research. The second dimension involves using the talents and
capabilities of your staff team to shape your strategic plans.
Can your current staff structure deliver your goals?
Once you are clear about the business goals, this will lead you to a second set of
questions around your current staff. If you accept that your staff will be instrumental
in achieving your strategic goals then you will need to ask whether you have the right
staff in place to do that. More specifically whether they have the skills, knowledge and
experience you need; whether they are in the right location and working the hours that
you need; whether you have enough of particular types of skills or a surplus in a
particular area. In other words, whether you have the right staffing structure to deliver
Does your organizational culture support your aims?
What is the culture? And does it support your strategic aims? For example, do you have
a culture where you’re more reactive than proactive? Think about the type of
organization you want to be and need to be for your strategic aims and this can be the
starting point for your HR strategy.
Define your HR strategy
All these questions should point towards the aims of your HR strategy. Once you are
clear about these you will want to move onto the next phase which is to identify the
individual HR actions which might need to be taken. These will typically fall under
traditional headings such as recruitment, pay and reward, performance management,
staff engagement, workforce planning, staff development etc. What is really important
at this stage is that there is clarity over how the actions you choose will contribute not
only to the HR strategy but to the organization's strategic and business plans and that
their impact can be measured.
Why Finance and HR Should Have a Close Working
The HR and finance departments work towards one ultimate goal of achieving a
higher level of performance and profitability. In the current business context, HR
managers often perform some duties that were traditionally thought to be financial
The Impact of Tension On Business Performance
A strong relationship between the two departments has a positive impact on the
overall performance of an organization. Given the overlap in responsibilities, open
communication across departments is important to ensure that the overall goals and
objectives are achieved.
The Changing Business Context
The current business context is highly competitive and dynamic. Organizations can
no longer hold on to ineffective traditions and outdated perspectives. Managerial
teams must shift from internal problems to the high competition in the global
business environment, which is a threat to many companies’ survival.
The Need for a Strong Relationship between HR and
It is clear that the two departments are not fully aligned with one another. Over
the years, however, there has been a realization that Finance and HR, irrespective
of their agendas, are working towards a common goal: business growth and
The finance department can plan on managing the finances of the business
effectively, but it cannot do so if the human resource department does not recruit
the right financial officers and staff to manage the businesses accounts.
From the onset, recruiting staff seems like the core competency of the human
resource department in a business. Typically, however, HR will need to consult the
finance department before being able to agree the salary and financial benefits to
be awarded to an employee, since the financial department will have the true
picture of the business’s financial state.