The ONE Quality That All The Superstars in HR Have…

by Alan Collins

What’s that one quality?

Simply put, it’s…

Financial Intelligence.


Don’t be.

Let me explain.

Many HR folks complain about how tough it is to be taken seriously and win a seat at the leadership table where the big boys and girls sit.

The superstars in HR don’t.

A lot of HR professionals are further discouraged by popular articles like “Why We Hate HR” (Fast Company) and “Memo to CFOs: Don’t Trust HR”  (CFO Magazine) that rake HR across the coals as a totally worthless function.

The superstars in HR read these articles, throw them in the trash and just laugh out loud.

HR superstars don’t worry about any of this stuff.

Why?  Because they feel that if you’re in HR and you don’t know your numbers and don’t know your business well enough to participate actively at the table, then you don’t deserve a seat there and the disparaging stuff that’s being written and said about HR is warranted and applies to you.  (Hey, that sounds kinda arrogant, but I don’t believe they intend it to be.)

On the other hand, they’ll say…

It’s Easy To Impress Your Business Leaders As An HR Professional…
When You’ve Impressed Them With Your Knowledge Of Their Business First”!

If this sounds familiar, it should be.  It’s item #1 on my list of “50 Things I’ve Learned in HR.” Here’s why this is true.

Superstars in HR demonstrate a high degree of influence and personal persuasion with their business leaders.  And they achieve this by building their financial knowledge steadily so they can be viewed as equal partners with them.

Here’s a quick test to clarify what I mean.

Let’s say, you’re an HR manager in the Gatorade business at Pepsi, and your Gatorade general manager was out sick, could you step in and give his 30 minute monthly financial update to the leadership team?  Could you describe the current challenges facing the business?  Or talk with confidence about how Gatorade is made, where it’s made, how it makes money, and how the product has been positioned to attract consumers in the marketplace?  And could you describe how the P&L impact of the HR programs and initiatives you’re accountable for.

Tough standard?  Yes.

Impossible? Definitely not.

At Pepsi, we called this skill “knowing the business cold” and all of our very best HR people – the ones that were true partners with their business leaders — had this skill in spades.  And you’d be amazed that how much credibility they had, how much they were valued and how much they were and are able to influence the performance their business.

So, if you really want to become an effective HR advocate, leader, and business partner… and want to position yourself for position of greater responsibility, be taken seriously and advance your HR career…it’s simple.  You must improve your financial acumen and knowledge of the numbers.

In the old days, HR professionals could focus only on the people side of the business and get by.  It was HR’s job to ensure that hiring and firing were done properly, that labor laws were followed, that employee benefits were properly managed, and so on.   The better ones could stand out by throwing around a few HR-specific financial metrics, such as the cost of turnover.

But when the financial discussions occurred in business meetings — as they do 80% of the time — that was the cue for HR to shut up, check their smartphone messages under the table or leave the room.  Some HR professionals still don’t think or talk much about the broader financial side of their organizations.

Unfortunately, when this happens, business leadership teams lose out on the HR perspective. But it also hurts HR people themselves. Why? The fact is, business will always be a game of numbers, and the real players are the people who understand what the numbers mean.

So, if you want to be seen as an integral part of the success of your company, if you want your department to be seated at the strategic table, if you want to be a true business partner to the operational unit you are supporting, then you need to be financially savvy.

The best companies have begun expecting HR people to understand the business and to take part in business-related discussions and decisions.  And, the superstars in HR recognize this.  They’ve begun transforming themselves into business folks and number jockeys that can hold their own with just about any business leader on their team, just like the Gatorade HR manager in the above example.

They speak the language, ask questions, and use financial information to add their voice…a strong voice…to business decisions, not just HR decisions.

However, financial intelligence is not innate.  It can be learned.  And here four things that let you know that you have it:

1.  The finance basics don’t frighten you.

HR leaders who are financially intelligent can read an income statement. balance sheet, and a cash flow statement.  They understand how their company makes money.  They know the difference between profit and cash. They understand why the balance sheet balances.   The numbers neither scare nor mystify them.

Once you can read the cash flow statement, you can simply take it the way it comes and inspect it for what it tells you about your company’s cash situation.  Then you can figure out how you affect it as an HR professional and you can help improve he business unit you support with your HR expertise.

For example, HR affects many line items on the P&L including travel, training, and office supplies.  However, the fact that HR’s direct line of sight is to expense items doesn’t mean that HR should ways be focused on expense reduction.  The investment in doing more training might bring more value to the company than just cutting back training expenses.

2.  You can talk the talk.

Finance is the language of business. Whether it is comfortable for you or not, the one thing every organization has in common is numbers and how those numbers are tabulated, analyzed and reported.  In HR you need to talk the language to be taken seriously and to communicate effectively.

As with any new language, you can’t speak fluently at first, but you gain confidence as you go.

For example, in most manufacturing-based organizations financial ratios such as days sales outstanding (DSO) is a key measure of the company’s efficiency in collecting receivables. The faster receivables are collected, the better a company’s cash position.  As an HR professional, knowing this enables you to go to your finance leader and say, “Hey, I notice our DSO has been heading in the wrong direction over the past few months—how can I help turn that around?”

You may think that questions like these aren’t in HR’s purview. But if you really want to elevate your status as an HR professional, you must be taken seriously a businessperson.  And doing that requires that you treat finance as your second language, not a foreign language.

3.  You can tell what’s real and what’s B.S.

HR superstars recognize that finance and accounting are an art as well as a science. They recognize that their finance counterparts must try to quantify what can’t always be quantified.  It’s not always black and white, there is often bias that is built into the numbers.  And just like HR does with people, often finance must do with numbers and so they must rely on rules, estimates, and assumptions.

Financially savvy HR managers can identify where the “artful” aspects of finance have been applied to the numbers, where the “soft spots” (or BS) are in the numbers, and they know how applying the numbers differently might lead to different conclusions.    They are thus prepared, when appropriate, to question, push back and challenge the numbers like any other member of the business team.

For example, consider a plant manager charged with delivering a gross profit of $1 million per month. This month she is $20,000 short. Then she realizes that $25,000 of her COGS (cost of goods sold) is in a line item labeled “contract administration on plant orders.” Does that really belong in COGS?  She lobbies the controller to move those costs to operating expenses and the controller agrees — so the change is made and the plant manager hits her target, and everyone is happy.  An outsider might even look at what’s happening and think that gross margins are improving—all from a change the plant manager made because she was trying to hit a target. Since you provide HR support to this business and take part in regular manufacturing meetings, it is important for you to know exactly what happened and why.   This can influence how you establish your own budget for the HR department.

4.  You walk the talk.

Once you have the foundation and an appreciate for the art of finance, you can use the information to analyze the numbers in greater depth – ratios, return on investment (ROI) analysis, and the like — to justify your own actions and make better decisions.  You can connect the dots between financial results and your HR job.

For example, let’s say you want to add a kiosk at one of your remote manufacturing sites so that your employees can have direct access to their payroll, benefits and compensation information.  Your boss says he’ll listen, but he wants you to justify the purchase.   You can certainly provide “soft” data from your most recent employee survey.  Nothing wrong with that.  That’s what most HR folks would do.

However, the HR superstar will go one step further and also dig up data from finance, including cash flow analysis for the kiosk, working capital requirements, and a depreciation schedule.  All these numbers—surprise!—are based on assumptions and estimates.  They will then examine them to see where they make sense.   If they don’t, with the help of their finance counterpart, they change the assumptions, adjust the estimates, and put together an analysis that is more realistic and that supports their proposal.   They might assume that they can save an hour a day per employee because of the new computer’s features and processing speed.  And, then they calculate the value of an hour per day of his time over a year and presto the recommendation shows that buying the kiosk is a no-brainer.

All of this is powerful stuff.

Want to know how to begin building your financial acumen?

There are lots of ways of doing it.  However, one of the best books I’ve read on the topic is called: Financial Intelligence for HR Professionals: What You Really Need to Know About the Numbers

It’s available at Amazon by CLICKING HERE.

This book is different than most numbers-oriented books aimed at HR.  Those books typically focus on numbers specific to HR, things like hiring, staffing, compensation, retention programs, training, and the like.  This book, by contrast, is about general financial metrics — especially for HR professionals.  These are the numbers that senior managers use to gauge a business’s performance. They are the basis for many of the fundamental decisions a company’s leaders must make day in and day out.

If you don’t have enough time to read this book, take it with you at your desk for lunch or if you fly for business, take it with you on a trip or two. In a couple of hours, you will dramatically enhance your knowledge about finance. Also, the chapters are deliberately short, and you can read one whenever you have a few spare moments.

If you are already an HR superstar, none of this is new to you.  However, if you want to join their ranks begin taking steps today to improve your financial intelligence.

Would love your feedback! CLICK HERE and share your own insights and thoughts.

About the Author: Alan Collins is Founder of Success in HR, and the author of the two HR best sellers, UNWRITTEN HR RULES and BEST KEPT HR SECRETS.  He was formerly Vice President – Human Resources at PepsiCo where he led HR initiatives for their Quaker Oats, Gatorade and Tropicana businesses.

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34 Responses to “The ONE Quality That All The Superstars in HR Have…”

  1. Elliot Feibelman Says:

    The best HR people I worked with in retailing were the ones that understood the business.

    When we were trying to develop a corporate maternity leave policy at Liz Claiborne (over 20 years) ago, it was my SVP of HR who understood how leaving a job open for 3 months might affect the retail division’s performance (we were not only a wholesaler, but a retailer as well). She spent time in the stores and realized what might happen if a Store Manager was out on leave for 90 days. It was her understanding of the business that allowed us to develop a policy that, not only solved the concern, but allowed for other supervisors to grow and become “promotable”. Without experience and knowledge of the business, we might still be debating the issue.

    So, in short, I totally agree that the best HR executives are ones who understand the business and financial ramifications of HR policies and practices.

  2. Crshonda Says:

    Great reminder! Thank you for sharing.

  3. Joseph Clay Says:

    Alan, thank you for providing this insight. One of the more frustrating things about our profession is the low expectation some executives have for HR. Unfortunately, too many HR practitioners reinforce this perception out of their ignorance about financials.

    I once had an SVP of HR for a billion dollar global service/entertainment company, confide in me that she knew absolutely nothing about the company’s financials. She couldn’t even manage her own HR budget.

    Unfortunately, she lacked the knowledge and the curiosity needed to positively impact the bottom line for the business. She tried to compensate by calling herself “Chief People Officer” and focusing solely on relationships and other intangibles. This “soft” focus and many of her decisions, made it difficult for the HR function to be taken seriously as a partner of the business.

  4. Charles van Heerden Says:

    Hi Alan, great points and practical suggestions. As a commercial VP HR, including previous line management experience with P&L responsibility, I will add two points:

    1. HR Superstars understand how they can impact on and IMPROVE the bottom line. You can be financially intelligent, but still not helping to improve profitability. The real challenge is not just in reducing costs. Most managers are good at that. Example: using OD knowledge to ensure that your new sales division have resilient staff – having reduced staff turnover (cost) AND achieving better sales (PROFIT). One of the companies I worked with use dieticians to sell a new product. They were technically good, but couldn’t sell. By putting the right sales staff in these roles all sales targets were achieved within the next year!

    2.Any opportunity to spend real time in the trenches are invaluable. It is only once you have to worry about 500 customers and achieving all your business targets, that you realize that the latest HR program is not the highest priority, even if HR think it is. By understanding how you in HR can show and explain the benefit for the manager, you will realize that telling a manager it is good for the business is not enough! Trying that approach with an external customer will be incredibly shortsighted, but I am always surprised how HR people struggle to explain the real financial benefits. Example: Recently worked with a company that decided due to high petrol costs to change company cars. By using a positive change strategy, field service operators were given 4 cylinder 4WD’s more suited to their needs, rather big 6 cylinder station wagons. Real saving of $20K per vehicle per annum. Benefit and cost savings achieved!

  5. admin Says:

    Eliott, Joseph & Charles – Thanks for taking the time to add your perspectives and stories. Your wisdom on this topic is just awesome and it’s added much depth and perspective on the need for HR folks to deepen their business & financial acumen. Great stuff! Thank again.


  6. Mohammad Talha Says:

    While I agree with the contents of this article, I would also like to emphasize that thre are very few organizations like PEPSI who would provide the opportunity to HR Leaders to sit in the top executive committee. Secondly, no organizations look for financial skills in HR professionals before hiring them. Thirdly HR comments or advice on business issues is construed as interfrenece in business rather than being taken seriously.
    To sum it all, its easier said than done. I am a fan of Jack Welch and we need leaders like him who realize the importance of HR function and give them their due place in business. We need to train our leaders (CEOs) to treat HR at par with Finance; without proper support from the top no HR professional can be successful even though he possess extraordinary skills in Finance or even know business thoroughly.

  7. Victoria Says:


    Loved the article as usual. What about nonprofit businesses? Especially primary education? What tips can you offer?

  8. Kevin Gamble Says:

    Alan —

    As usual, your topic and content are flawlessly presented and on all points in terms of the conclusions drawn. We HR professionals can continue with the “HR speak” and hope we’re adding value, or we can take it to the next level and learn to speak the global language of business – finance.

    Thank you for your timely and insightful article!

  9. admin Says:

    Mohammad – thanks for your comments on the article! To be honest, most of them sounded like excuses. Pepsi (like many organizations) does provide the opportunity to sit on the executive committee. However, there’s a difference between being there…and earning respect and being taken seriously while you’re there…that falls squarely on the individual. Secondly, the fact that financial intelligence may not be required for many HR positions is exactly the reason why those HR pro’s who have them and can apply them to IMPROVE business results are the superstars…they bring more to the party than just those HR folks that are merely good. Thirdly, it’s hard for me to believe that “smart” questions about the business and talking about HR in financial terms would be viewed as interference. I’ve yet to meet a business leader or CEO that wasn’t interested in profit-improvement, cash flow or even cost reduction ideas that HR has, primarily because so many don’t participate in the business this way. Finally, HR superstars don’t wait on saviors like Jack Welch to treat them on par with Finance, they earn that respect (just as Finance has) based on the value they bring to the table. I do agree that all is this is easier said than done. ..but like anything else I believe this can be acquired through training, focus and hard work.

    Victoria – great question! My experience has been primarily in for-profit organizations so I don’t have a great perspectives for you. I would think that even the non-profits have revenue, fund-raising, donation or financial objectives to meet — but I’m clearly out of my element here. I’d like to give your question some further thought and perhaps write about it in a future article. Also, hopefully, someone can comment on it here to shed further light on it for all of us.


  10. Davetta Says:

    Hi Alan,

    Though I am not in the HR field, I am in non-profit and I will be looking forward to any information or thoughts that you have to share. I am glad that Victoria asked the question. Thanks, you are always on top and I think that HR Buzz is a great resource.

  11. Stephanie Lunn Says:

    Absolutely right! A Payroll Manager I worked with last year, stated to me that it was refreshing to work with an HR professional who could understand numbers and spreadsheets! Great for me, but what about the general reputation of the HR industry! Oh dear! To be able to understand the numbers and the business strategy for not just corporate business, where a profit is important to the shareholders, but also in non profit where breaking-even is critical, takes HR into the decision making league. HR people need to move from just delivering the “let’s now discuss the people” part of the board meeting, to participating through-out the board meeting on the business strategy and vision. After all, a company no matter its status, is made up of people! I took lessons from a fantastic finance director who wanted to teach me spreadsheets and the P&L, in order to work with her on overall business direction. She helped me in order that I help her. It won’t turn HR people into finance people, but will give us ability to make great change for the better.
    (also try the book Magic Numbers for HRM, by Hugh Bucknall and Zheng Wei)

  12. Debra Heinzelman Says:


    I definitely agree with your article regarding HR & financial saavy. I’ve been w/my company for 3 years now. For the 1st time, the CFO requested that I project our 2010 benefits costs. We have 9 health plans. Last year, the owner of the company asked me to save him some $. He was looking for me to justify letting go 1 of our clerical people, the quickest way to save some $. Instead, I showed him how he could save $150k. He let the clerical person go, but also implemented some of my suggestions.

    I realize your article is talking about more sophisticated financial saavy, but even my examples demonstrate that senior mgmt in your org. is happy when they can have these conversations with HR and it will definitely garner respect for you as an individual and for HR.

  13. admin Says:

    Stephanie & Debra — thanks for sharing your personal experiences and further enriching this article…you are both absolutely spot on!!


  14. Scott Rude Says:

    This is interesting. A year ago I was talking in a large lecture hall at Iowa State University. As an HR VP who previously graduated from Iowa State I asked the class, who knew I had a business management degree, what they thought were the most important classes I took to prepare me for the role I have today. You guessed it – they threw at me all the management, psychology, communications, and touchy feely classes they knew. Their eyes just stared at me when I told them – Finance / and then went into the reason why and how people get a chance to sit at the table, and not just be the place setting. Good article. Thanks

  15. admin Says:

    Scott – great story – thanks for sharing it. (Also, great question for grabbing their attention and engaging the class in your presentation. I have to remember that one 😉


  16. Pay-It-Forward: An Awesome Strategy for Networking in HR… | Success in HR Says:

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  17. R Hill Says:

    As a former Controller/Financial Analyst & HR Manager for a Big Four Accounting firm , I can tell you that in my role as Director, HR & Administration of a law firm, my financial skills are what permit me to speak the language of the business and connect with professionals on their level.

    I also worked in the financial services industry in an HR leadership role for about eight years prior to joining the law firm. If you think you don’t need finance in that type of environment, think again.

    You will never be taken seriously without a strong background in finance. Do yourself a favor and get the knowledge and experience early in your career if you want to rise to the top in the industry.

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    […] “human” back in Human Resources where it belongs.  Sure, we need to know the business and have financial intelligence.  But we can’t TREAT people like they’re numbers on a spreadsheet or “human capital” […]

  19. Tulasi Says:

    Excellent information. For every HR person to be successful in the present market scenario they really need to be business savvy. I agree with all the points mentioned in the article. Thanks a lot for the posting.



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    […] would you do right now that could move your HR career to the next level?  Would you improve your financial intelligence and knowledge of your business?   Would you improve your skills as an HR leader?   Would you […]

  21. Shannon Says:

    I truly appreciate the guidance and recommendation for developing financial skills to be a better HR Business Partner.

    I think (part of the problem) of HR not being taken seriously is because it’s continuously changing, including the titles, the roles, the duties, etc. What other business function continuously changes like this?

    I agree to be an HR Superstar you should improve your financial skills, but when is the same expectation put to all levels of management to truly understand and be proficient in their knowledge and skill of Human Resources laws, policies, benefits, strategic management?

    As HR Professionals we must admit, we can’t (and shouldn’t) do it all. Likewise, many managers will tell their HR dept, “that’s what we have you for” to handle the potential legal issues they “choose” not to deal with. It’s not “soft skills” when “the numbers” are behind the lawsuit being filed for their lack of training, understanding and compliance, which most HR business partners are ultimately trying to mitigate.

    HR as a department or business partner shouldn’t be viewed as less of a business partner because they’re knowledge is weaker in one area of the business. We could say the same for management.

    Just my two cents. GREAT article and I will be checking out the book.

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  23. hossam Says:

    HR Manager in any industry should have the sense of the business, the back ground of theindustry , experience able to identiy the financial side, the make cost efective

  24. P.E. Paulton Says:

    I completely agree with you Alan. This is particularly true and an essential job skill as an HR professional working in an organization and not reporting into an HR department. Although, it is still tough to find organizations that give HR the time of day, even when we do know the numbers.

  25. Faipttism Says:

    Hello all! I like this forum, i organize many compelling people on this forum.!!!

    Great Community, consideration all!

  26. Rattan Says:


    It is really good and an important asset for HR professionals. It will really help onself to boost up his/her career in HR.

    Thanks a lot…

    Regards Rattan

  27. Khalid Javed Says:

    I agree with Mr. Mohammad Talha’s comments. In most companies HR professionals are not given such degree of importance to sit on the table where finances are being discussed or finalised. One reason; CFOs dislike (some time hate)the other relates to the mind thinking of top management. However a good article. To be come HR Superstars, HR Executives must think seriously over it. Regards (Khalid Javed, Pakistan)

  28. Khalid Javed Says:

    I fully agree with Mr. Mohammad Talha’s comments. In most companies HR professionals are not given such degree of importance to sit on the table where finances are being discussed or finalised. One reason; CFOs dislike (some time hate)the other relates to the mind thinking of top management. However a good article. To be come HR Superstars, HR Executives must think seriously over it. Regards (Khalid Javed, Pakistan)

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  30. Rakesh Says:

    The points made by the authour are true in the nodern business organisations where focus is shifting from traditional outlook of HR to an integrated outlook and a partner in profitability.

    If HR leaders wish to be valuable and relevant and leaders of businesses they need to be financially oriented as suggestted by the authour

  31. Krupali C Says:

    Thanks Alan. As usual great insight.

  32. Jennifer G. Says:

    Thank you for this article. I’m always looking for way to continue to add value to my organization and increase my HR knowledge. I will definitely be picking up this book.

  33. Vishal Dudhate Says:

    Dear Alan,
    In my experience i have seen many HR professionals are unable to quantify the benefits of HR activities. For example – the benefit in numbers to business through an HR initiative like team building exercises. This is what puts off business leaders.

    I earnestly request you to suggest us few books through which we can learn- 1. how to quantify HR functions, HR activities benefits.
    2. How to contribute to the revenue generation of the company – directly or indirectly.
    3. HR also needs to have knowledge of marketing like products and services and how to contribute to them directly or indirectly. Also suggest some books on how to understand where the business is heading, HR strategies for technology transfer etc.
    4. HR professionals also dont understand the external environment in which the company business is operating and how its impacting the company business, people. How to understand the external environment of business and contribute by advising accordingly.
    5. How should HR professionals read and understand data of other functions like marketing, operations, supply chain and advise business leaders accordingly please suggest how to go about on all these above mentioned points.

    Your guidance and suggestions on the above points would highly appreciated.

    Warm Regards,
    Vishal Dudhate

  34. Sanjana Says:

    Dear Alan, My words will be too less to express how much I appreciate your thoughts. I wish I have a boss like you. I remember when I had just started my career in HR, I was ridiculed by my immediate supervisor for using excel and analysis to present data to Ops Head. I was once interviewed by a HR Head (VP) of a Fortune 500 Company who actually told to me at the end of my interview that he did not agree with me that HR can help to increase productivity because it was Ops job. Even more he directly expressed his disagreement when I told to him that as HR Business Partner I had taken lead in Career Aspiration Mapping of employees in the division that was aligned to me. He again said that CAM was the Ops Line Supervisor’s responsibility. I wondered what he wanted HR to do in his organization. After reading your article, I know I will be able to survive and win amidst such HR people at senior level who cannot accept that HR is not a field chosen by Engineers simply to get into Management role. HR is not about talking management gyan. HR is really a serious business. I really wish to have a boss like you. Infact I wish I had someone like you as my boss. I have always faced duality, on one hand Ops Heads were happy with me as they found my contribution valuable for their business and on other hand my HR bosses kept trying to restrict me to a role of HR doing a ramp-walk on the Ops floor.