As an HR and learning leader, you’re constantly looking for solutions to improve company culture, help employees perform better and be more aligned, comply with regulations, and so forth. You do your research, listen to employee needs and corporate mandates, and design solutions that you hope will be game-changers.
But how often are you faced with this scenario: You’re excited about a new training initiative or employee development strategy you’ve developed, and you’re ready to begin. You know the initiative would be successful and beneficial for employees, but when the CFO walks into your budget approval meeting and starts asking questions, it seems like you’re speaking different languages. While you’re trying to use the language of HR to communicate the benefits of your initiative for employee development, the gatekeeper of the money – the CFO – wants to know how that initiative is going to bring value to the company – in the form of dollars.
It’s clear that you’ve got a communication problem. It’s like trying to speak Spanish to someone who only speaks Italian. You feel that if the CFO understood your HR world a little better, they’d understand why the initiative is important, but you also have no clue what they’re talking about when they ask you about how the initiative fits in with the organisation’s cost-cutting strategies.
Does this scenario sound remotely familiar? If it does, you’re not alone.
The good news is that your CFO doesn’t expect you to have a finance degree, just like you don’t expect them to have an HR degree. But they do expect you to be able to connect the financial dots. Luckily, there’s a simple model that can help break down communication barriers so you and your finance team can understand each other better. Bear in mind that this model won’t set you up to go toe-to-toe with your CFO; that’s not the point. But it will help you understand their perspective and communicate your own more successfully.
Understanding the Five Business Drivers
Every organisation is powered by five business drivers: cash, profit, assets, growth and people. Each driver is unique and based on a specific set of key metrics, and you can’t affect one without influencing the performance of another. That’s why your CFO is so set on seeing a return on your investment of cash to develop your company’s people.
These drivers are closely related to the three core financial statements that every public company uses to report its current strength and judge future performance. The relationships between cash and the statement of cash flows, profit and the income statement, and assets and the balance sheet form the foundation of the five business drivers. Growth is reflected in all three financial statements and is an important objective for shareholders. The fifth driver, people, is simple: Without good employees who provide value to paying customers, the other four drivers come to a dead stop.
So, how do you apply this framework to communicate the benefits of your initiative to the CFO? First, consider the goals of your initiative; what does success look like, and how will you measure it? Next, consider how success will relate back to the five drivers. Will it help employees sell better, save better, be more aware of how they’re using company resources or be more excited about coming to work every day? Now, how does that information relate to the bottom line? Does more productivity relate to cost savings more sales or more happy customers? Ultimately, what your CFO is looking for is a solid business case for your initiative: one that will bring a recognisable ROI and make both you and your finance team look like the talented people you are.
Developing your business acumen by learning to analyse the benefits of your training initiatives through the lens of these five business drivers will help you not only communicate better with your CFO but also align your training objectives with those of your executive team. Understanding how your initiatives influence each driver (and vice versa) will also improve your own influence, because you’ll know where to focus your training efforts to be more productive and innovative. With a little bit of business acumen, and an understanding of the five drivers that power your business, you’ll be part of the force that’s helping your company grow – and grow in the right direction.
Kevin Cope is the co-founder and CEO of Acumen Learning. Lighthouse partner with Acumen Learning to deliver the Building Business Acumen program in Australia and New Zealand. If you are interested in developing the business acumen of the people in your organisation, with a quantifiable ROI, then please contact us on 02 9091 0305 or 03 8563 9425.