Business Acumen Flashcards
Balance Sheet
Presents the company’s assets, liabilities, and shareholders’ equity during a specific period in time.
HR Context - HR indirectly effects the Balance Sheet:
- Salaries & benefit costs affect Net Income, influencing Retained Earnings.
- Employee Training & development affect intangible assets and long-term performance.
Employee turnover costs - affect operating expenses and net income.
- Accrued vacation or bonuses are a liability on the balance sheet.
Income Statement
a financial document that shows a company’s revenues and expenses during a specific period.
HR Context:
- Salaries & benefits affect operating expenses
- Efficiency and effectiveness of training & development, talent acquisition, etc. can all show up on the income statement.
Cash Flow Statement
Statement showing the cash inflows and outflows during a specific period of time.
HR Context:
- Operating Activities
- Investing Activities
- Financial Activities
Effective HR management can positively impact cash flows by optimizing workforce efficiency, managing turnover costs, and strategically investing in employee development.
Balanced Scorecard Framework
A valuable tool for measuring HR performance and its alignment with overall organizational goals. Helps organizations align their activities with their vision and strategy.
- Financial - Cost Efficiency (cost per hire), and Return on Investment (ROI)
- Customer Perspective - Employee Satisfaction & Service Quality
- Internal Processes - Time-to-Fill, Employee Retention/Turnover
- Learning & Growth - Participation and progress in skills growth
Key Performance Indicators (KPIs)
Quantifiable measures that evaluate performance. Provide a way to track progress, assess effectiveness, and make informed decisions.
HR Context - Time-to-Hire, Absenteeism Rate, Benefit Utilization Rate, Employee Net Promotor Score, etc, etc.
HR Compliance Risks in new markets
- Labor laws
- Industry regulations
- Legal
- Reputational
HR Strategic Risks in new markets
- New markets
- Talent acquisition
HR Operational Risks in new markets
- Inefficiencies
- Timely pay
- Employee records
Benefits of SWOT Analysis
Internal: Strengths, Weaknesses
External: Opportunities & Threats
Helps employees make informed decisions and develop strategic effective strategies.
DEI
Diversity, Equity & Inclusion
Ethical Implications of A.I.
Security risks, accountability & liability, job displacement
Innovation Labs
Dedicated spaces or teams where employees can collaborate, explore innovative concepts, and test prototypes.
Context - Contributes to idea generation and cross-functional collaboration.
Hackathons
Events where individuals, often from diverse backgrounds and skill sets, come together to collaboratively work on solving problems or developing innovative solutions, typically within a short timeframe
Context - Intense, rapid, diverse product development acceleration.
Scenario Planning
preparing for and responding to potential future events, changes, or challenges that may impact the workforce and the organization as a whole.
HR Context - enables HR to proactively address challenges, seize opportunities, and contribute to the organization’s resilience and long-term success.
Cost-Benefit Analysis (CBA)
- Identify all costs (salaries, software, etc.) Consider opportunity costs, legal implications and other hidden costs.
- Quantify benefits (turning qualitative factors into monetary value)
Net Present Value (NPV)
Financial metric used to evaluate the profitability of an investment or project by comparing the present value of expected cash inflows with the present value of cash outflows over time
I.e. Assess the present value of the expected benefits (reduced absenteeism, improved well-being) against the present value of wellness program costs.
Discount Rate
NPV calculations involve discounting future cash flows to their present value using a specified discount rate.
The discount rate represents the time value of money, reflecting the idea that a dollar received in the future is worth less than a dollar received today.
Payback Periods
the time it takes for the initial investment in a project or initiative to be recovered through the resulting cash inflow
i.e. time it takes for the organization to recover the costs of compensation changes through increased employee satisfaction and retention
