In this episode of the "HR Mixtape," host Shari Simpson welcomes Paul Butler, Client Partner at Newleaf Training and Development. They delve into the critical importance of financial acumen for HR professionals, emphasizing how understanding financial metrics can enhance decision-making and drive business success. Paul shares insights from his extensive experience, highlighting the need for HR to partner with finance to maximize organizational performance.
Key Takeaways:
- Financial literacy is essential for HR professionals to align human resources with business results.
- Building relationships with finance colleagues can create a safe space for HR to ask questions and improve their financial understanding.
- Implementing zero-based budgeting encourages a more strategic approach to financial planning and resource allocation.
Tune in to learn how HR can leverage financial insights to foster a more effective workplace!
Guest(s): Paul Butler, Client Partner, Newleaf Training and Development
Book: Business Financial Intelligence: A mindset and skillset few people have and all organizations need.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:02):
You're listening to the HR Mixtape Your podcast with
the perfect mix of practical advice, thought-provoking interviews, and
stories that just hit different so that work doesn't have to feel,
well, like work. Now, your host,
Joining me today is Paul Butler, client partner at Newleaf Training
and Development. Paul founded Newleaf in 2006 after
(00:24):
serving in senior finance roles with Marriott and Hilton, including director
of finance for Hilton Honors. Newleaf has supported 300 plus clients
across 30 states and eight countries, focusing on
Paul, I'm so glad that we are able to have you on the podcast today.
(00:48):
So we had an opportunity to meet through a mutual HR
person, and your role and background and
passion is something that I think our HR peers need.
And so I wanted to bring you on to talk about business financial
acumen for the HR professional, which doesn't sound like a very
sexy topic, but I think it is one of the more important topics that
(01:11):
HR professionals really need to figure out how to dig into. We'll start with
the very, very basics as we start with questions here. Why does having
this type of financial literacy really matter for HR
I think two things I've noticed over the years as both an employee at
a fairly senior level and doing what we've done for the last, what, 19 years
now, is that it's a good reminder for
(01:34):
human resource professionals that ultimately we're using human
resources to produce business results. And
I'm a great believer that all organizations are for-profit
organizations. Obviously a non-profit doesn't pay tax because
of its social purpose. And even educational institutions
and government or quasi-government entities need to make sure their
(01:57):
income is big in their expenses. And I think human resources can
partner superbly well with their financial friends to
As you think about the conversations you've had with HR
professionals, what are some of the basic financial metrics
or financial terms that you've helped HR leaders to
(02:21):
Yeah, so essentially there are three types of
organizations. Manufacturers tend to use return on
assets because they're obviously very asset rich. Retailers tend
to also use return on assets because they're usually very inventory heavy.
And then service-based organizations, because they sell time, they
tend to focus on return on equity. So depending on where the HR
(02:44):
professional works, you have to understand what's most important.
So that's a key productivity measure. The numerator is return. which
is net income, that's the proverbial bottom line of the income statement. And
the denominator, of course, is just the total of the assets that are on the
balance sheet. So understanding that right off the bat is vitally important. If
someone's working for a corporate entity, whether
(03:07):
they're private or public, earnings per share, and earnings, the
numerator, is exactly the same as net income. We just changed the
word to confuse people. And the denominator is shares outstanding.
Of course, the other two big ones that come to mind would be operating income,
also known as operating profit, operating margin, all means the
same as long as the O words at the front, and then net income,
(03:28):
net profit, net margin, all means the same as long as the N words at
the front. Obviously, if you're working for a retailer or a manufacturer, they'll
have one level higher than that, which would be gross profit, gross
margin, gross income, because you've got cost of goods sold, because you've
got I think my final quick comment
to that would be that if you think about it, as a HR professional,
(03:49):
you're all about the numerator. You're all about the
numerator because you can't really impact necessarily the denominator. I
think HR professionals, again, with their financial friends, can do so
much to really maximize that bottom line, which
for our HR friends who were like, yeah, I
(04:10):
feel like you were just speaking a different language to me. I have no
clue what you're saying. Where do they begin? How do they start to
dive in and learn some of these terms and have a better understanding of
things like profit and loss and your financial statements
The two things, I mean, if I could, just a shameless plug for a
(04:31):
book that I wrote a couple of years ago called Business Financial
Intelligence, and the subtitle is a mindset and a skill set
that few people have and all organizations need. I
did that intentionally. It's a very short, easy read. It's just 98 pages,
and you can listen to it on audio within about two hours. The
second thing I'd encourage, as I mentioned a couple of times, is for a HR professional
(04:53):
to make a friend within finance. I think often what tends to
happen, especially if someone gets more senior in their career, they
kind of get embarrassed to be able to ask things, and so they'll nod their
heads in meetings, and deep down they're thinking,
gosh, I have no clue what they said there. We have to fight against human... So
I've definitely found that to be a case. The third thing I think is also a
(05:15):
mindset because the amount of times I've heard HR
professionals say, hey, I'm no good with numbers. Well,
gosh, if you did junior high math, you're good with numbers because that's really
all you need to know in finance. And it's just once we understand the language, like
any function has jargon, once you understand the language and we can
I think about going down that road to have a better understanding
(05:39):
and coming to the table and having those conversations with
your financial counterparts. I love that you mentioned find a
friend in finance. I don't know that that's like a natural thing
that you would do as you walk into an organization. You know, you typically look
at your, your C-suite and you know, your influential quote unquote
leaders in the organization. But I don't know that you have on the top of
(06:00):
your list. Let me go find that finance person to become BFFs. So
that's great, I love that, I think that's such an important tip because
hopefully you can create a safe space to have some of those
conversations and say, I did listen to the earnings call, I
didn't understand this part of it, can you walk me through that? I have done that
many times in my career, said hey, I got about 98% of
(06:21):
what you just shared, but that 2% I'm still struggling with, can you
walk me through that? And I think there's definitely a
culture shift when it comes to Asking questions
like that, I think when I was earlier in my career, I was encouraged by
my mentors to not show up that way. It's exactly the
opposite now. The more questions you ask, the more curious you are. You
(06:42):
really show that you want to understand the business to be able
to make those recommendations. You know, as you increase your
acumen, you're going to use some of these tools to help make
decisions around compensation and bonus structures and some
of those kinds of things. What are some of the mistakes that you're seeing HR
teams make in that space as they start to think more about
(07:05):
Yeah, yeah, good stuff, good stuff. First of all, the first thing that comes to mind
is the phrase, you know, what you reward tends to get repeated. And
I've often noticed within bonus packages, what human resource
professionals will do, often influenced by other senior
leaders, is they'll focus on say what I call like one
wheel of the car. And what I mean by that is
(07:27):
if you focus just on profit, people
will do everything they can to hit the profit number. Or
if you focus just on, say, the people side, people
will focus just on the people side. So I'm sure all
of our listeners have heard of the balanced scorecard. Hilton
Hotels Corporation, I used to work for, one of the first publicly
(07:48):
traded global companies to use the balanced scorecard of
people, quality, customer. and
profit. And I think that's a great picture of thinking about four
wheels on the car. So again,
in essence, I've found that some HR professionals, they'll focus on
certain rewards, which is only kind of one part of the vehicle, as
(08:10):
And that's common if you think of the managers that you've coached throughout
the year who are dealing with an employee who's like, well, I've met every,
you know, line item on my performance review. But maybe
they are like have terrible personality or they're like difficult to work
with. Right. You're like, OK, well, it's not the only thing you're being
measured on. So that's how that we're familiar
(08:31):
with, as they start to use that concept of making sure that they're
touching all four wheel as they go through their programs, how
can they start to use that language to define ROI
on some of the things that they sit in or in charge of, like training and development programs,
Yeah. So I think when it comes to things like training and
development programs, it's been the perennial problem, hasn't
(08:54):
it, of people talking about How do I measure return on
investment for training programs? One of
the things that we've done over the years with our clients is encouraging them to think
about a different type of ROE, and that would be return on
expectation, so return on expectation. So
for HR business partners to say to the people that
(09:17):
are wanting to sponsor the training, well, what are the desired results
you want to get from this training, both in terms of
quantitative measures and qualitative measures? Trying
to establish a kind of a line in the sand, like where are we at now on,
say, customer service? Where are we at now on attrition? Where are
we at now on the pulse survey when it comes to, say, employee engagement.
(09:39):
And the other thing I tend to find is, is that most HR
professionals, if they do have these types of conversations, they just
focus on the numerator, which is good. In
other words, the profit piece, forgetting the denominator, because
what's the denominator of return on investment? It's investment.
In other words, could we outsource something rather than insource
(10:02):
something? If we're using a vendor for X, could we use them for X and
Y and get a cost Could it
be negotiate things like payment terms, 50% deposits up
front? There's a whole bunch of things that HR professionals can do
to reduce the denominator in addition to obviously
(10:22):
Yeah, and it shows that you're thinking differently
about engaging things like vendors. It's like when
you're thinking about budgeting, forecasting, workforce planning, those
kinds of things, and you're defining out what your workforce
needs to look like, You know, one of the things that I got taught
early on in my career, and this was before I had had any
(10:43):
schooling, was to think about when you're bringing your employees
on board and the impact that that has onto the
budget and finances. So if you're budgeting for a full-time FTE
for the whole year, that's different than I have a full-time
FTE, but I'm bringing them on mid-year, right? So
that has that compounding effect on things like your
(11:06):
ancillary benefits, your medical, dental, vision, all those other financial items
that you have to talk about. As you've helped HR understand that,
what are some other things that they need to be considering when they
I think to be quite blunt, I've actually found
that most budgeting strategies within most organizations
(11:27):
are, for want of a more academic word, lazy. and
inefficient, because most budgeting strategies essentially boil
down to last year plus a bit and whatever we can get away with it. I'm
a great believer in zero-based budgeting. When I
was an employee, either with PWC, Hilton, or Marriott, and
then the work we now do with clients is encouraging to do zero-based
(11:49):
budgeting. That's, of course, where you start with a blank piece of paper, and
you're essentially asking the question, Do we need to do things
the way that we've always done them? Because of course, human nature is we just keep doing
the same thing over and over again. One of the phrases that we use in
the work we do is intrapreneurial spirit, not entrepreneurial,
intrapreneurial, where you try to encourage employees to think and
(12:11):
act like owners. So it's very powerful to encourage people
to think about, well, hang on, if it was your business, What
would you stop, start, and continue? I won't
name the client, but I was with an organization yesterday with about 38 of
their kind of mid-level managers, and it was incredibly powerful
what they came up with. And I'll be printing a little report today
(12:33):
for the senior leaders on what they actually think we should stop, start, and continue. The
So many times it is when you have that kind of a
conversation, we've used that concept that start, stop, can continue
in some of our product retrospectives to
really push us to think through, do we have to do
(12:54):
it this way? Does that make sense? Do we continue with this path? Do
we make changes? What kind of feedback are we hearing from our clients? Those
kinds of things. I will tell you, I have been on both sides of those
budgeting experiences. Zero-based budgeting is definitely more
work, but it's more work, I think, in a good way. I actually would agree
with you. I think being able to come to the table and say, listen, I've
(13:14):
done my due diligence. This is the information that I'm bringing. This is the
supporting documentation as to why we still need to do this and the impact that
it's having. That is a really robust conversation that
you can have when you're going through that process instead of the, yeah,
here's the line item, give me 3% because that's what, you know, cost of
living is this month. It is definitely a better way to approach things.
(13:36):
As you've worked with leaders on this, how
do you start to measure some of the financial impact that things
like turnover or employee engagement have? I mean I know
we have there are basic numbers that we know, right? The
ability to, the cost to ramp somebody up, those
kinds of things. Is there other metrics that you've been talking about
(13:57):
with HR professionals when it comes to those two buckets, turnover,
If I could kind of counter that a little bit, I've
actually found that some organizations, they focus on attrition,
you know, the balance between people joining an organization and
people leaving an organization, they think that people joining the
(14:18):
organization is a bad thing compared to, say, losing people at the organization.
I think you and I would agree, Shari, there are some people in organizations where
the best thing they could do is actually move on. It's the
proverbial hashtag deadwood. I know hashtags
are a bit 2014, but I still think I'm hashtag cool. I
do think there are many organizations where because of, again, like we said, what
(14:40):
you focus on tends to get rewarded. If you focus on employee
retention and you're rewarding people very,
very well, then they're going to stick and they'll just do what's on the job description.
I think new blood can sometimes be a good thing. I
also think as well, in my opinion, that many people overcomplicate things.
And I'm a great believer in the net promoter score, the zero through
(15:04):
10 piece when it comes to things like employee engagement. Very
powerful to just ask that simple question on the zero to 10 basis, how
engaged are you with the organization? It's a heartbeat of the Gallup piece
as well, around nines and tens and sevens and eights and
zero through sixes for the detractors. It's a tough measure. are
a very clarifying measure. So I always recommend the simplicity over the
(15:27):
Oh, that's such a good point. And if you're looking for a hashtag quote
to use, that's a great one. You know, and if you're not tracking
your turnover in this bucket, I'm glad that you brought it
up. You know, the way we track it is we track regrettable turnover
and non-regrettable turnover, because you're absolutely right. There are
people in the organization that we go, you know what, that's okay that
(15:50):
they left. We actually don't regret that they decided to move on. And
that could be for frustrating reasons or it could be for positive reasons.
Hey, you know what, this person was hitting retirement, right? We don't regret that
that person's moved on and we actually aren't going to backfill them because the
role had changed, those kinds of things. So if you're not tracking regrettable and
non-regrettable, definitely something to add to your tracking metrics. Absolutely.
(16:11):
Have you seen a shift at all in CFOs and how they're
perceiving HR when HR comes to the table and starts
Gosh, absolutely. Obviously I've got a good few years under my
belt now as both an employee and then doing what we've done. If
I take my mind back to, you know, about 20 years being an employee, I've
(16:32):
noticed there are two types of HR professionals essentially that
executives directly or indirectly talk about. It's either those
with good business acumen. or
those that need it. And what I've found is because change is
the only constant, of course, within organizations, whether we call
it right-sizing, downsizing, re-engineering, business process
(16:53):
re-engineering, change management, et cetera, I've
noticed that when an organization goes through change,
there are two types of HR professional. There's either those that really major
on the people piece. It's almost like they become very unionistic. Trying
to defend everything about the people. It's important. The
other side of the coin, of course, is thinking about what's best for the business
(17:15):
to navigate through this change. And I think the answer, of
course, is it needs to be a balance. When I think about the best
HR professionals I've partnered with as a senior financial
person, it's where they understand the change is necessary. We
just need to do the right thing by the people through this change. I
always think as well, the fruit that falls from the tree on that is organizations
(17:37):
always have these very admirable values up on the wall. You
can really tell when they believe those when you're going through a big change. And
I think HR and finance can hold hands and partner really
Well, and the values piece is a good thing to bring
up when it comes to finance, because if
(17:58):
you believe in your values and they actually are driving your organization, you
are making financial decisions against those values. And
I think it highlights a lot of times whether you actually do believe
the values or don't believe the values based on what decisions you're gonna
make. And I love that you mentioned the synergy
between HR and the business when it comes to
(18:21):
handling things, right? You nailed it on the head. There are HR professionals
who super focus on the employee piece and
making this a fun place to work. And I don't mean
fun like in activities, but a great place to work. compared
to understanding the profit piece and in what
the business is actually doing. And you're right, that magic HR
(18:43):
person that is so valuable is the person that can come to the table and
say, okay, I have a clear understanding of what we're trying to accomplish with
our business. here are the things that we need to do from a people perspective to
accomplish this, and here are the changes we're gonna make. And if the
business says, hey, you know, we don't wanna do that, at least you can come to the
table and have the same conversation and say, okay, I hear you,
I hear you, I'm gonna support that decision, obviously, when we leave this
(19:06):
room, here's the people impact it's gonna have. It might impact culture,
it might impact attrition, it might impact, you know, whatever
it's gonna impact, but being able to have that conversation is so powerful.
I mean, they're literally worth their weight in gold. Again, I won't name the organization, but
when I was an employee over in Europe, we went through a major organizational shift.
We went from four regions down to two. And when I think about
(19:29):
the HR people that were in the four regions, we
held on to two of them. And the two that we held on to were
the most business savvy. They realized that the change may
impact them, but they were literally worth their weight in gold. They made
sure that we did the right thing by the people. that we honored the
values of the organizations, but they helped us navigate through the change
rather than resisting us, not resisting me, but resisting
(19:52):
the change that was necessary and coming at it almost from a unionistic perspective,
Yeah, I love that. Paula, as we wrap up our conversation, how
does somebody get in touch with you, your organization? I'm
gonna put your link to your book and your organization in the show
notes for anybody who wants to jump on and grab that, but maybe you
could share just a few minutes before we close up here, how they get in touch with
(20:16):
Yes, certainly. So best way to get hold of me would be either on
LinkedIn, and I do go by Paul Austin Butler, because there's
quite a few Paul Butlers on LinkedIn, so Paul Austin Butler,
and that's my middle name, obviously. Or you can get me on our website, newleaftd,
like traininganddevelopment.com, so newleaftd.com. And
if you do want to reach out to me on email, it's just paul.butler @
(20:43):
Thank you so much, Paul, for jumping on the podcast and sharing
You're listening to the HR Mixtape Your podcast with
the perfect mix of practical advice, thought-provoking interviews, and
stories that just hit different so that work doesn't have to feel,
well, like work. Now, your host,
Joining me today is Paul Butler, client partner at Newleaf Training
and Development. Paul founded Newleaf in 2006 after
(00:24):
serving in senior finance roles with Marriott and Hilton, including director
of finance for Hilton Honors. Newleaf has supported 300 plus clients
across 30 states and eight countries, focusing on
Paul, I'm so glad that we are able to have you on the podcast today.
(00:48):
So we had an opportunity to meet through a mutual HR
person, and your role and background and
passion is something that I think our HR peers need.
And so I wanted to bring you on to talk about business financial
acumen for the HR professional, which doesn't sound like a very
sexy topic, but I think it is one of the more important topics that
(01:11):
HR professionals really need to figure out how to dig into. We'll start with
the very, very basics as we start with questions here. Why does having
this type of financial literacy really matter for HR
I think two things I've noticed over the years as both an employee at
a fairly senior level and doing what we've done for the last, what, 19 years
now, is that it's a good reminder for
(01:34):
human resource professionals that ultimately we're using human
resources to produce business results. And
I'm a great believer that all organizations are for-profit
organizations. Obviously a non-profit doesn't pay tax because
of its social purpose. And even educational institutions
and government or quasi-government entities need to make sure their
(01:57):
income is big in their expenses. And I think human resources can
partner superbly well with their financial friends to
As you think about the conversations you've had with HR
professionals, what are some of the basic financial metrics
or financial terms that you've helped HR leaders to
(02:21):
Yeah, so essentially there are three types of
organizations. Manufacturers tend to use return on
assets because they're obviously very asset rich. Retailers tend
to also use return on assets because they're usually very inventory heavy.
And then service-based organizations, because they sell time, they
tend to focus on return on equity. So depending on where the HR
(02:44):
professional works, you have to understand what's most important.
So that's a key productivity measure. The numerator is return. which
is net income, that's the proverbial bottom line of the income statement. And
the denominator, of course, is just the total of the assets that are on the
balance sheet. So understanding that right off the bat is vitally important. If
someone's working for a corporate entity, whether
(03:07):
they're private or public, earnings per share, and earnings, the
numerator, is exactly the same as net income. We just changed the
word to confuse people. And the denominator is shares outstanding.
Of course, the other two big ones that come to mind would be operating income,
also known as operating profit, operating margin, all means the
same as long as the O words at the front, and then net income,
(03:28):
net profit, net margin, all means the same as long as the N words at
the front. Obviously, if you're working for a retailer or a manufacturer, they'll
have one level higher than that, which would be gross profit, gross
margin, gross income, because you've got cost of goods sold, because you've
got I think my final quick comment
to that would be that if you think about it, as a HR professional,
(03:49):
you're all about the numerator. You're all about the
numerator because you can't really impact necessarily the denominator. I
think HR professionals, again, with their financial friends, can do so
much to really maximize that bottom line, which
for our HR friends who were like, yeah, I
(04:10):
feel like you were just speaking a different language to me. I have no
clue what you're saying. Where do they begin? How do they start to
dive in and learn some of these terms and have a better understanding of
things like profit and loss and your financial statements
The two things, I mean, if I could, just a shameless plug for a
(04:31):
book that I wrote a couple of years ago called Business Financial
Intelligence, and the subtitle is a mindset and a skill set
that few people have and all organizations need. I
did that intentionally. It's a very short, easy read. It's just 98 pages,
and you can listen to it on audio within about two hours. The
second thing I'd encourage, as I mentioned a couple of times, is for a HR professional
(04:53):
to make a friend within finance. I think often what tends to
happen, especially if someone gets more senior in their career, they
kind of get embarrassed to be able to ask things, and so they'll nod their
heads in meetings, and deep down they're thinking,
gosh, I have no clue what they said there. We have to fight against human... So
I've definitely found that to be a case. The third thing I think is also a
(05:15):
mindset because the amount of times I've heard HR
professionals say, hey, I'm no good with numbers. Well,
gosh, if you did junior high math, you're good with numbers because that's really
all you need to know in finance. And it's just once we understand the language, like
any function has jargon, once you understand the language and we can
I think about going down that road to have a better understanding
(05:39):
and coming to the table and having those conversations with
your financial counterparts. I love that you mentioned find a
friend in finance. I don't know that that's like a natural thing
that you would do as you walk into an organization. You know, you typically look
at your, your C-suite and you know, your influential quote unquote
leaders in the organization. But I don't know that you have on the top of
(06:00):
your list. Let me go find that finance person to become BFFs. So
that's great, I love that, I think that's such an important tip because
hopefully you can create a safe space to have some of those
conversations and say, I did listen to the earnings call, I
didn't understand this part of it, can you walk me through that? I have done that
many times in my career, said hey, I got about 98% of
(06:21):
what you just shared, but that 2% I'm still struggling with, can you
walk me through that? And I think there's definitely a
culture shift when it comes to Asking questions
like that, I think when I was earlier in my career, I was encouraged by
my mentors to not show up that way. It's exactly the
opposite now. The more questions you ask, the more curious you are. You
(06:42):
really show that you want to understand the business to be able
to make those recommendations. You know, as you increase your
acumen, you're going to use some of these tools to help make
decisions around compensation and bonus structures and some
of those kinds of things. What are some of the mistakes that you're seeing HR
teams make in that space as they start to think more about
(07:05):
Yeah, yeah, good stuff, good stuff. First of all, the first thing that comes to mind
is the phrase, you know, what you reward tends to get repeated. And
I've often noticed within bonus packages, what human resource
professionals will do, often influenced by other senior
leaders, is they'll focus on say what I call like one
wheel of the car. And what I mean by that is
(07:27):
if you focus just on profit, people
will do everything they can to hit the profit number. Or
if you focus just on, say, the people side, people
will focus just on the people side. So I'm sure all
of our listeners have heard of the balanced scorecard. Hilton
Hotels Corporation, I used to work for, one of the first publicly
(07:48):
traded global companies to use the balanced scorecard of
people, quality, customer. and
profit. And I think that's a great picture of thinking about four
wheels on the car. So again,
in essence, I've found that some HR professionals, they'll focus on
certain rewards, which is only kind of one part of the vehicle, as
(08:10):
And that's common if you think of the managers that you've coached throughout
the year who are dealing with an employee who's like, well, I've met every,
you know, line item on my performance review. But maybe
they are like have terrible personality or they're like difficult to work
with. Right. You're like, OK, well, it's not the only thing you're being
measured on. So that's how that we're familiar
(08:31):
with, as they start to use that concept of making sure that they're
touching all four wheel as they go through their programs, how
can they start to use that language to define ROI
on some of the things that they sit in or in charge of, like training and development programs,
Yeah. So I think when it comes to things like training and
development programs, it's been the perennial problem, hasn't
(08:54):
it, of people talking about How do I measure return on
investment for training programs? One of
the things that we've done over the years with our clients is encouraging them to think
about a different type of ROE, and that would be return on
expectation, so return on expectation. So
for HR business partners to say to the people that
(09:17):
are wanting to sponsor the training, well, what are the desired results
you want to get from this training, both in terms of
quantitative measures and qualitative measures? Trying
to establish a kind of a line in the sand, like where are we at now on,
say, customer service? Where are we at now on attrition? Where are
we at now on the pulse survey when it comes to, say, employee engagement.
(09:39):
And the other thing I tend to find is, is that most HR
professionals, if they do have these types of conversations, they just
focus on the numerator, which is good. In
other words, the profit piece, forgetting the denominator, because
what's the denominator of return on investment? It's investment.
In other words, could we outsource something rather than insource
(10:02):
something? If we're using a vendor for X, could we use them for X and
Y and get a cost Could it
be negotiate things like payment terms, 50% deposits up
front? There's a whole bunch of things that HR professionals can do
to reduce the denominator in addition to obviously
(10:22):
Yeah, and it shows that you're thinking differently
about engaging things like vendors. It's like when
you're thinking about budgeting, forecasting, workforce planning, those
kinds of things, and you're defining out what your workforce
needs to look like, You know, one of the things that I got taught
early on in my career, and this was before I had had any
(10:43):
schooling, was to think about when you're bringing your employees
on board and the impact that that has onto the
budget and finances. So if you're budgeting for a full-time FTE
for the whole year, that's different than I have a full-time
FTE, but I'm bringing them on mid-year, right? So
that has that compounding effect on things like your
(11:06):
ancillary benefits, your medical, dental, vision, all those other financial items
that you have to talk about. As you've helped HR understand that,
what are some other things that they need to be considering when they
I think to be quite blunt, I've actually found
that most budgeting strategies within most organizations
(11:27):
are, for want of a more academic word, lazy. and
inefficient, because most budgeting strategies essentially boil
down to last year plus a bit and whatever we can get away with it. I'm
a great believer in zero-based budgeting. When I
was an employee, either with PWC, Hilton, or Marriott, and
then the work we now do with clients is encouraging to do zero-based
(11:49):
budgeting. That's, of course, where you start with a blank piece of paper, and
you're essentially asking the question, Do we need to do things
the way that we've always done them? Because of course, human nature is we just keep doing
the same thing over and over again. One of the phrases that we use in
the work we do is intrapreneurial spirit, not entrepreneurial,
intrapreneurial, where you try to encourage employees to think and
(12:11):
act like owners. So it's very powerful to encourage people
to think about, well, hang on, if it was your business, What
would you stop, start, and continue? I won't
name the client, but I was with an organization yesterday with about 38 of
their kind of mid-level managers, and it was incredibly powerful
what they came up with. And I'll be printing a little report today
(12:33):
for the senior leaders on what they actually think we should stop, start, and continue. The
So many times it is when you have that kind of a
conversation, we've used that concept that start, stop, can continue
in some of our product retrospectives to
really push us to think through, do we have to do
(12:54):
it this way? Does that make sense? Do we continue with this path? Do
we make changes? What kind of feedback are we hearing from our clients? Those
kinds of things. I will tell you, I have been on both sides of those
budgeting experiences. Zero-based budgeting is definitely more
work, but it's more work, I think, in a good way. I actually would agree
with you. I think being able to come to the table and say, listen, I've
(13:14):
done my due diligence. This is the information that I'm bringing. This is the
supporting documentation as to why we still need to do this and the impact that
it's having. That is a really robust conversation that
you can have when you're going through that process instead of the, yeah,
here's the line item, give me 3% because that's what, you know, cost of
living is this month. It is definitely a better way to approach things.
(13:36):
As you've worked with leaders on this, how
do you start to measure some of the financial impact that things
like turnover or employee engagement have? I mean I know
we have there are basic numbers that we know, right? The
ability to, the cost to ramp somebody up, those
kinds of things. Is there other metrics that you've been talking about
(13:57):
with HR professionals when it comes to those two buckets, turnover,
If I could kind of counter that a little bit, I've
actually found that some organizations, they focus on attrition,
you know, the balance between people joining an organization and
people leaving an organization, they think that people joining the
(14:18):
organization is a bad thing compared to, say, losing people at the organization.
I think you and I would agree, Shari, there are some people in organizations where
the best thing they could do is actually move on. It's the
proverbial hashtag deadwood. I know hashtags
are a bit 2014, but I still think I'm hashtag cool. I
do think there are many organizations where because of, again, like we said, what
(14:40):
you focus on tends to get rewarded. If you focus on employee
retention and you're rewarding people very,
very well, then they're going to stick and they'll just do what's on the job description.
I think new blood can sometimes be a good thing. I
also think as well, in my opinion, that many people overcomplicate things.
And I'm a great believer in the net promoter score, the zero through
(15:04):
10 piece when it comes to things like employee engagement. Very
powerful to just ask that simple question on the zero to 10 basis, how
engaged are you with the organization? It's a heartbeat of the Gallup piece
as well, around nines and tens and sevens and eights and
zero through sixes for the detractors. It's a tough measure. are
a very clarifying measure. So I always recommend the simplicity over the
(15:27):
Oh, that's such a good point. And if you're looking for a hashtag quote
to use, that's a great one. You know, and if you're not tracking
your turnover in this bucket, I'm glad that you brought it
up. You know, the way we track it is we track regrettable turnover
and non-regrettable turnover, because you're absolutely right. There are
people in the organization that we go, you know what, that's okay that
(15:50):
they left. We actually don't regret that they decided to move on. And
that could be for frustrating reasons or it could be for positive reasons.
Hey, you know what, this person was hitting retirement, right? We don't regret that
that person's moved on and we actually aren't going to backfill them because the
role had changed, those kinds of things. So if you're not tracking regrettable and
non-regrettable, definitely something to add to your tracking metrics. Absolutely.
(16:11):
Have you seen a shift at all in CFOs and how they're
perceiving HR when HR comes to the table and starts
Gosh, absolutely. Obviously I've got a good few years under my
belt now as both an employee and then doing what we've done. If
I take my mind back to, you know, about 20 years being an employee, I've
(16:32):
noticed there are two types of HR professionals essentially that
executives directly or indirectly talk about. It's either those
with good business acumen. or
those that need it. And what I've found is because change is
the only constant, of course, within organizations, whether we call
it right-sizing, downsizing, re-engineering, business process
(16:53):
re-engineering, change management, et cetera, I've
noticed that when an organization goes through change,
there are two types of HR professional. There's either those that really major
on the people piece. It's almost like they become very unionistic. Trying
to defend everything about the people. It's important. The
other side of the coin, of course, is thinking about what's best for the business
(17:15):
to navigate through this change. And I think the answer, of
course, is it needs to be a balance. When I think about the best
HR professionals I've partnered with as a senior financial
person, it's where they understand the change is necessary. We
just need to do the right thing by the people through this change. I
always think as well, the fruit that falls from the tree on that is organizations
(17:37):
always have these very admirable values up on the wall. You
can really tell when they believe those when you're going through a big change. And
I think HR and finance can hold hands and partner really
Well, and the values piece is a good thing to bring
up when it comes to finance, because if
(17:58):
you believe in your values and they actually are driving your organization, you
are making financial decisions against those values. And
I think it highlights a lot of times whether you actually do believe
the values or don't believe the values based on what decisions you're gonna
make. And I love that you mentioned the synergy
between HR and the business when it comes to
(18:21):
handling things, right? You nailed it on the head. There are HR professionals
who super focus on the employee piece and
making this a fun place to work. And I don't mean
fun like in activities, but a great place to work. compared
to understanding the profit piece and in what
the business is actually doing. And you're right, that magic HR
(18:43):
person that is so valuable is the person that can come to the table and
say, okay, I have a clear understanding of what we're trying to accomplish with
our business. here are the things that we need to do from a people perspective to
accomplish this, and here are the changes we're gonna make. And if the
business says, hey, you know, we don't wanna do that, at least you can come to the
table and have the same conversation and say, okay, I hear you,
I hear you, I'm gonna support that decision, obviously, when we leave this
(19:06):
room, here's the people impact it's gonna have. It might impact culture,
it might impact attrition, it might impact, you know, whatever
it's gonna impact, but being able to have that conversation is so powerful.
I mean, they're literally worth their weight in gold. Again, I won't name the organization, but
when I was an employee over in Europe, we went through a major organizational shift.
We went from four regions down to two. And when I think about
(19:29):
the HR people that were in the four regions, we
held on to two of them. And the two that we held on to were
the most business savvy. They realized that the change may
impact them, but they were literally worth their weight in gold. They made
sure that we did the right thing by the people. that we honored the
values of the organizations, but they helped us navigate through the change
rather than resisting us, not resisting me, but resisting
(19:52):
the change that was necessary and coming at it almost from a unionistic perspective,
Yeah, I love that. Paula, as we wrap up our conversation, how
does somebody get in touch with you, your organization? I'm
gonna put your link to your book and your organization in the show
notes for anybody who wants to jump on and grab that, but maybe you
could share just a few minutes before we close up here, how they get in touch with
(20:16):
Yes, certainly. So best way to get hold of me would be either on
LinkedIn, and I do go by Paul Austin Butler, because there's
quite a few Paul Butlers on LinkedIn, so Paul Austin Butler,
and that's my middle name, obviously. Or you can get me on our website, newleaftd,
like traininganddevelopment.com, so newleaftd.com. And
if you do want to reach out to me on email, it's just paul.butler @
(20:43):
Thank you so much, Paul, for jumping on the podcast and sharing
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