Financial Literacy for the HR Professional

’The more you learn the more you earn’ or ‘knowledge is power’, are both adages which apply to business professional development. In business it is critical to keep moving ahead with your career objectives obtained through education. One key competency that is lacking in many human resources employees’ repertoire is financial literacy.

Financial literacy can be defined in a multitude of ways but it includes awareness and understanding of key business functions such as accounting, finance, budgeting and tax. Few companies would expect their HR Department to also be accountants but some fundamental education in accounting, otherwise known as the ‘language of business’ can add value to the department and increase the credibility of the individuals possessing such knowledge.

With increased globalization of many companies, both large and small, there is an increasing rift between the provincial or localized view of business and the international perspective. Many international companies are outsourcing their HR Departments instead of developing those employees who currently work in their U.S. corporate offices.

Another key reason to obtain more financial literacy through education is credibility at mid and high level management meetings wherein the HR function is often overlooked as too narrowly focused. There is often a perception that HR professionals lack knowledge of the big picture or an understanding of the interrelated aspects of the business. The HR Department can be dismissed when negotiations begin, when budgets must be discussed or the Financial Statements assessed.

The answer as expected is to become more informed and literate among your business peers. Learn what is on a Balance Sheet or an Income Statement. Even better, understand a more complex Financial Statement such as a Cash Flow Statement. In business, cash is king and the cash flow of an organization, as recently seen with the AIG governmental bailout, can mean disaster to any sized company.

Dr. Regan Garey, CPA has taught full time for the past nine years after earning her certification in accounting (CPA). She has extensive business experience as an accountant and small business owner. She has a BA in economics, BS in accounting, an MBA and a Doctorate in business administration with a concentration in accounting. Her specialty is training individuals who have little or no business background and she simplifies a very complicated area of business. Regan is an active member of the community and is on the Board of Directors of the Food Bank of Delaware. She is a member of SHRM, Financial Executives International, Wilmington Women in Business and the Institute of Internal Auditors. She has also done extensive research and writing in leadership areas such as emotional intelligence and ethics. She is a lifetime learner and she understands that success in business stems from employees’ ability to embrace change and to keep learning.