McMaster UniversityHRM 817

a.  How do you see management accounting fitting into your role as an HR professional?

b. Do you think financial accounting or management accounting will apply more? Or do you see both being relevant in equal measure?

Answer:

a. How management accounting fits into your role as an HR professional

Human resources is in charge of the human resources that push and pull an organization toward its goals and objectives. HR policies and programs are viewed as success factors by senior management because they direct employee performance, which has an impact on profitability. Those interested in a future in HR should take business courses, particularly accounting, to become well-rounded business people, according to the Society for Human Resource Management.

In today's competitive global economy, successful HR professionals must be financially savvy. They, like their counterparts in sales and marketing, must be able to communicate in management's language: accounting.

1. Budgeting

Human resource managers set up and manage departmental budgets. Accounting training prepares them to think of budgeted items like training, recruitment, staffing, incentives, and performance evaluation in terms of cost and monetary benefit to the company. HR budget requests provide top management with the information they need to decide how to allocate available cash once they are accompanied by and based on payback evaluations.

Accounting knowledge also aids an HR manager's understanding of business cash flow throughout the budgeting process. For quarterly financial reporting, employee vacation costs, for example, can be charged monthly rather than when they are actually expended.

2.  Proposals

When an HR manager wants to implement a new policy, service, or program, he must first obtain his supervisor's consent. It is insufficient to assume that a new activity would solve a problem; the cost must also be justified. In order to sell his idea, the HR manager must anticipate the questions that senior management would ask. If he has studied accounting, he will be able to illustrate the viability of his strategy in monetary terms.

For example, if he wants to revamp the orientation process to reduce new-hire turnover, his proposal should compare the present cost of hiring, training, and lost productivity to the expected savings and efficiency from the new program. This strategy positions new-hire orientation as a profit-generating business driver, rather than just an HR nicety.

3. Return on investments

Management wants to know that spending money will result in a profit for the company. An HR manager will learn how to execute a break-even analysis and compute return on investment in an accounting class to illustrate the cost-effectiveness of HR initiatives.

 The HR manager should be able to make recommendations that demonstrate to management how investing in human resources may boost productivity and profits.HR professionals will be difficult to persuade management of the virtues of their plans if they lack this competence, especially when it comes to software and systems projects.

4. Perfomance measure 

Accounting enables an HR manager to get more comfortable crunching statistics and analyzing performance metrics in areas such as inventories, customer satisfaction, sales, and quality control. More crucially, an HR manager with an accounting background can look beyond his department for dangerous trends that could be tied to HR.

 An rise in shrinkage in a retail business, for example, may signal that staffing numbers should be adjusted, loss-prevention personnel hired, training programs developed, and employee incentives implemented.By using accounting concepts to portray the solution as a cost-cutting exercise that minimizes theft, the HR manager can demonstrate the necessity for action.

5. Trend tracking

HR and accounting experts keep an eye on trends inside and outside your firm and understand the factors driving them, from staff growth to predicted healthcare increases. They understand how to strategically use these analytics and insights to your organization and can assist you in making more accurate forecasts between expected and actual outcomes.

6. Workers compensation audits

Audits can be time-consuming for firms, but with HR and accounting working together, they may go lot more smoothly. Accounting can help you arrange and analyze the payroll documents you'll need to give, while HR can make sure claims are handled quickly and equitably, and employees are categorised correctly so you can receive the greatest premium rate.

7. Insuarance applications

Obtaining health insurance and other types of insurance sometimes necessitates collaboration between HR and accounting. Both have access to sensitive employee information and can work together on the financial and personnel information needed. HR knows what kind of plans best suit your employees' needs, while accounting can assist you keep premium costs under control.

8. Recruiting and retaining talent

Because bad hiring and excessive job turnover can cost your company time, energy, and money, it's critical for accounting and HR departments to collaborate to assess the cost of recruiting and replacing employees vs retaining them. Accounting and HR can help you find and retain top performers as well as establish better teams and morale throughout your organization by partnering on salary evaluations, programs, and rewards for employee engagement.

b.. Do you think financial accounting or management accounting will apply more? Or do you see both being relevant in equal measure?

How finance and HR have a close working relationship

Many businesses struggle to establish a positive working connection between their finance and human resources departments. Conflicts over these departments' duties and aims are typical in many organizations. The conflict between the two departments stems from their conventional objectives and viewpoints.

The misconception that the finance department is only concerned with money or costs, while the HR department is only concerned with people, has a detrimental effect on the relationship between both departments. Human capital is the most essential asset, according to the HR department, which is based on an antiquated notion. Finance, on the other hand, is interested in profits and regards HR as a cost center.

Different points of view create unneeded friction in a company. For the following reasons, both departments must establish a close working relationship:

1. Overlapping responsiblities

The HR and finance departments collaborate to achieve a common goal of improved performance and profitability. In today's business world, HR managers frequently handle tasks that were previously regarded to be financial in nature. 

Chief financial officers are in the same boat. HR managers, for example, must weigh the costs and benefits of hiring new personnel. They must also think about the influence of their HR practices on the company's profitability.Data analysis and financial estimates are required for such considerations.

Finance officers and managers must look beyond personnel as costs to see how businesses might boost profitability by leveraging human resources. Finance managers, for example, calculate the impact of wage increases, bonuses, and other incentive programs on the company's profitability.

2.The impact on the tension on  business performance

A good impact on an organization's overall performance comes from a solid partnership between the two areas. Given the overlap in responsibilities, it's critical to maintain open lines of communication between departments to ensure that the overall goals and objectives are met. Businesses must guarantee that information, particularly performance data, flows freely across departments.

The strategies of each department can then be aligned to optimize future performance. Tension obstructs the free flow of information, stifling business growth and advancement. Each department must acknowledge the contribution of other departments to the overall success of the organization. The HR staff must understand the value of making solid financial decisions. The finance department must realize that all businesses, even financial firms like ETX Capital, rely on staff to carry out their growth and profitability plans.

3. The changing of business context

The modern corporate world is highly competitive and fast-paced. Organizations may no longer cling to out-of-date beliefs and ineffective practices. Managerial teams must shift their focus away from internal difficulties and toward the severe rivalry that exists in today's global business climate, which threatens the existence of many companies. Roles and responsibilities of human resource managers and finance officers are also changing. Professionals must be open to change in order to remain competitive and relevant.

Conclusion

For many years, there's been a rift between the HR and finance divisions. The two departments are also at odds due to differences in key aims and responsibilities. However, in order to attain the overall goals of corporate growth and profitability, both financial management an HR must work together. Because of the overlap in their tasks and the changing environment, a good partnership between the two departments is necessary.

Which applies more

Although both forms of accounting have intersections with the human resourse management, Management accounting applies more in human resourse than financial accounting . This is because  managerial accounting has many intersections with human resourse  compared to financial accounting.

References

Amirul, SharifahMilda, and Rasid Mail. "Strategic Flexible Working Arrangement: The Realignment between Human Resource and Management Accounting." (2020).

Ha, S., Nguyen, H., Nguyen, N., & Do, D. (2020). The outside determinants influencing quality of accounting human resources for sustainability through the lens accounting service firms in Hanoi, Vietnam. Management Science Letters, 10(3), 543-550.