Finance and accounting often do not hold HR to the same standards as other departments because it is believed that HR is different and people initiatives cannot be measured or managed like other business initiatives. However, having different standards for HR is a disservice to both HR and the company, resulting in lower expectations and less return from HR expenditures.  HR professionals are quite capable of playing by the same rules as their colleagues in other departments and can deliver tremendous business value, but finance and accounting professionals need to have a realistic sense of what may be expected from HR.

I believe that HR, including L&D, should be held to the same business standards as other departments. This means that finance and accounting should expect the same from HR as any other department – not more, not less – just the same. At a minimum, finance and HR should have five expectations for HR.

First, since HR is a support function, it should align some of its initiatives to the organization’s top business goals. This means that HR, through its many departments like L&D, talent acquisition and total rewards, should have programs or initiatives that directly support business goals like increasing sales, reducing defects, improving patient quality, etc. Of course, HR will also have programs in support of HR goals like increasing employee engagement, improving leadership and reducing regrettable turnover. While these programs are very important and will indirectly contribute to achieving all the business goals, the expectation should be for HR to directly contribute to the business goals as well, which it can easily do.

The second expectation is that HR will prepare a business case for major programs or initiatives, just like other departments are required to do. The business case will bring together the planned benefits and costs of the initiative, making explicit all the key assumptions and risks. The business case should include the HR ROI (return on investment) which is simply the net benefit divided by the total cost, which is commonly used in L&D. This will help finance and accounting make better decisions about funding and will allow comparisons among different HR requests, although it will not allow a direct comparison to the financial ROIs from other areas since the formulas are different for HR and financial return on investment.

The third expectation is that HR will create a business plan for the coming fiscal year, just like other departments do. The plan may be written or PowerPoint depending on the organization’s culture and should include at least an executive summary, a review of last year’s accomplishments, the business case for the coming year for at least the major initiatives, and the budget, staffing, and other resources required to deliver the plan. The plan will include specific, measurable goals for all key initiatives. The process of creating a plan is just as important as the finished product. A good business planning process will ensure the right questions have been raised and the right people have been involved to yield the organization’s best thinking about what can be accomplished in the coming year.

The fourth expectation is that HR will execute its approved business plan with discipline. Now that specific, measurable goals (targets, plans, KPIs – whatever you prefer to call them) have been set in the business plan, HR needs a process to ensure these planned results are delivered. Disciplined execution requires monthly reports comparing year-to-date (YTD) results to plan and ideally a forecast for how the year is likely to end compared to plan as well. The reports should include all the key measures identified in the business plan and should be used in a monthly meeting of senior leaders dedicated to actively managing results to come as close to plan as possible by the end of the year. Disciplined execution requires that two questions be answered every month: 1) Are we on plan year to date? and 2) Are we going to end the year on plan? Answers to these two questions will drive management efforts for the rest of the year.

The fifth expectation is that HR will be accountable for results. The approved business plan contained the specific, measurable goals for the year. Now HR needs to execute with discipline and be willing to be held accountable for achieving its plans, just the same as any other department.

These are the five most important expectations that finance and accounting should have for HR. Each is a realistic expectation that is being met by some HR departments today. Some in and outside HR have argued that HR is different and cannot meet these expectations. They claim that since HR works with people, specific and measurable goals cannot be set and HR initiatives cannot be managed the same way as in other departments. Consequently, they don’t believe in creating business cases or business plans or reports comparing progress to plan. As an HR insider, I believe they are wrong. HR can meet these expectations. HR is no more difficult to manage than sales, manufacturing, quality or other departments, and in some ways it may be easier since we often have more control over the outcome.

Meeting these expectations will strengthen HR’s seat at the table and vastly improve our credibility in the eyes of our colleagues. Let’s show them we can play by the same rules and realize our full potential to contribute to our organization’s success.

To learn more, check out this course on What Finance and Accounting Should Expect from HR.