Topic 13 – How HR contributes towards business & financial objectives

@lizphil – Don’t worry that it is not a ‘financial topic’ – neither is Topic 6 (Motivation). The basic answer to your question is yes, if they have the data that would be excellent.

What you will need to detail in your report is how the HR function fits into the corporate framework in terms of its strategy – how by recruiting and employing the right people and retaining them, training them, motivating and incentivising them, the company is able to meet its business financial and strategic objectives. In your analysis section you will have to be able to evaluate the HR function’s effectiveness re the objectives, so you need to think how you can achieve this with the data available Some of the analysis can be qualitative but it would be useful if you could bring in some numbers here.

As a simple example of how a company objective impacts on HR would be if the organisation wants to increase its market share it may need more good sales people to push their products (which if is a manufacturing concern would mean producing more so some more staff in procurement and the shop floor too), or if a service industry, more personnel who can deliver the service, (which may involve specialist training for the new recruits). Conversely if the company is downsizing or introducing more automated technology the HR function will be involved in the restructuring. Sometimes it may also be a case of management bringing in new initiatives and require HR to either provide / be involved or inter-face with trainers or monitor the initiatives (just a few ideas to get you thinking about how HR fits into the bigger picture just in case you are struggling on that front).

With the data you are collecting does it relate to some KPIs like stafff turnover and absenteeism? You may be also be able assemble some costs relating to some of the main HR activities (recruitment costs – may take in advertising, agency commissions, and a portion of the HR dept staff overheads for example). It depends to a certain extent what data you can lay your hands on and how detailed the costing information is and also how helpful the HR dept manager is. Depending on what the company objectives are you may be able to demonstrate some form of relationship too in financial terms (HR costs to turnover, profit per employee and the trends for these over a period of time) If you have a good HR director they may possibly give you an idea of the KPIs for his/her function and what financial / costing information they use (budgets and variance reports perhaps?). Although you may not use all of this it is just a good idea to get to know what is potentially available.

However with this topic the one thing you have to steer clear of is just researching and setting out what you found as this does not demonstrate the requisite analytical skills. You are required to show that you have taken some data and used it to help you assess and evaluate the effectiveness of the HR function. You will need to include a few models too and as always I mention chucking in a SWOT or PESTLE for good measure as well (probably the latter would suit HR better). Also put in a departmental organisational chart – I am a bit fanatical about charts and diagrams as they are much better than words at showing how something is.

Hope that gives you a few ideas 🙂

@lizphil Don’t worry because in Topic 6 (and some of the other topics) there is no call for financial information. I just mentioned profits as I didn’t know what your organisation type was. If it is a Qango then there must be some set objectives and some sort of KPIs so these will form the basis of your evaluation.

You need some clear objectives that you can work from regarding the role of HR in helping with the prescribed overarching objectives for the organisation as a whole. If your Qango is focused on specialist people providing a service this will make your job a lot easier (as obviously without them the organisation would fail in its main objective) and a prime sub-objective would be recruiting the right people and then retaining them.

You still have quite a bit of time to collect your thoughts so work round some of the points I’ve made and think how you will be able to use the data you get to show whether HR is doing a good job in terms of contributing to the common cause and giving value for money (for the taxpayer or donors presumably?) 🙂

@alfred Yes that is a real blow 🙁

You have to be able to evaluate how effective the HR function is in helping the organisation achieve its business objectives so really without any inside help I don’t know how you are going to know what some of these objectives are, let alone get data for the evaluation. In principle HR objectives are usually hiring (possibly training) and retaining the best personnel in the most efficient manner with a few sub-objectives as well that dovetail into the organisation’s strategies and objectives . However unless the company has a very detailed mission statement (so many of them are so vague “we aim to be the best….etc etc” – yes, yes that’s fine, but how exactly???) and there is some detail of its HR objectives in the annual report you will struggle on that front. The evaluation section is hard when you have the data and I think you would need either primary data or very good and reliable secondary data (preferably both) so again without these, it looks as if your RAP on this topic for this company is doomed.

So if you can’t acquire the information to satisfy the above that leaves you with the option of :

(a) choosing another organisation but still going ahead with Topic 13
(b) choosing a different topic
(c) trying to persuade the manager /organisation to change their mind.

The data is not circulated by OBU for any other purpose than for marking and is held on a confidential basis (you can even with OBU’s permission ask them if you can keep the name of the organisation anonymous but they would still want some confirmation of its authenticity that the organisation exists and the data is not being fabricated by the student). All work is retained electronically and that is a condition students have to agree to as part of the terms & conditions of submission but it is not in an electronic library accessible by students at all or staff outside the ACCA /OBU department.

Always do the contents page last – you don’t know what exactly is going to end up in your work and you would have to revise it anyway at the end before submission 🙂

@alfred Probably for the best as if you leave it too late it will stress you even more. The 2 topics that immediately spring to mind are either ‘Topic 8 The business and financial performance of an organisation over a three year period’, or ‘Topic 17 The quality of the corporate governance within an organisation and the impact on an organisation’s key stakeholders’. Personally I would recommend going for the latter but it must be your choice.

I answered a question a few days ago for a student who was trying to decide between this topic and ‘Topic 20 An organisation’s corporate social responsibility policies, including business ethics, and their impact on business practice and key stakeholders’. I suggest you search the forums to see what I wrote as it will give you an idea of what it may involve although I only outlined Topic 17 very, very briefly. The key is to choose a company and a comparator company which have a high media CG profile, It doesn’t matter if they have a dreadful reputation with CG as that is something you can expand upon in your analysis as part of your evaluation. You do not have to limit yourself to a company in your own country as long as you have good internet access opportunities.

Topic 8 is the stock topic chosen by about 70% of students. So you could use the search facility to find forums on this. However a Topic 17 done well can get a high grade whereas Topic 8 RAPs somehow tend mainly to get only Bs and Cs if they pass as few students manage to do an evaluation worthy of an A. Of course if you are happy with a C this is immaterial! 🙂

Which ever you decide on, please use the search facility to see if we already have a forum on Topic 17 or find an appropriate one for Topic 8 (there are several already) if you have further questions and post any queries there (even if the forum is old as new postings go to the front so it will be seen – I am trying to organise our site so queries are grouped by topic rather than just a general heading so want students to help us with this). 😀

@atab I would suggest that you choose a couple:

e.g. either the SWOT or PESTLE (the markers seem to love these!) – but I wouldn’t do both for T13 – personally I would go for the latter and try to apply it specifically to HR +

either the Balanced Scorecard or McKinsey or Resource Analysis (which ever you feed more comfortable with given your data and information)

It may be appropriate to do some HR specific ratios if the data is available (normally sales or profit per employee can be calculated easily but it may be more problematic getting the figures for HR costs for example and staff turnover etc). You may also be able to look at share price as being indicative of the company’s success in achieving its business objectives. (Keep your focus on T13 so don’t try to do a mini full version of T8 ratio analysis)

Consider any other staff training initiatives if appropriate e.g. Kaizen

Don’t forget though that your role in T13 is to evaluate the contribution made by HR so you need to be able to assess it objectively not just state it that it is contributing effectively with no consequent proof

For anyone considering doing this topic I found this interesting article via Google Scholar. It is quite advanced in terms of the statistical analysis (and a bit heavy going in places !) but it may give you some ideas of what sorts of areas you need to consider if you want to do this topic. You will not be expected to do do such a detailed statistical analysis however some data regarding staff turnover and the average length of employment would be relevant if you can get the data. This would give you the opportunity to do some graphs and also you would be able to look at things like profit per employee over a period of time as a crude measure of whether the workforce productivity is increasing/decreasing

https://www.jstor.org/stable/256741