Part 1
According to Berman, Knight, and Case (2008), “businesses perform better when the financial intelligence quotient is higher.” To begin with, thanks to financial intelligence, executives can be able to make strategic decisions that would further enhance the competitiveness of a business thus effectively enabling the entity to remain relevant in the long-term. Next, financial intelligence leads to the creation of an environment of transparency, effectively helping avert practices that could hamper the long-term success of a business or put it at loggerheads with the law. Thus financial intelligence helps stamp out a toxic environment of lack of transparency which as the authors point out can only last under a short period of time, like was the case with Sunbeam and Enron. Lastly, financial intelligence leads to the betterment of the relationship between business entities and key stakeholders such as stockholders (i.e. via enhanced ROI), suppliers (i.e. via better management of order processes), and customers (i.e. via better pricing and promotion decisions).
Part 2
In the words of Berman, Knight, and Case (2008), “if people in HR understand the financial parameters they’re working under, they can make” more effective and sound decisions even in...
With sound understanding of financials, HR managers can make better departmental budgeting decisions with special regard for recruitment and employee benefits, staffing and training needs, etc. This they can do through better understanding of how the said decisions could impact operational costs and hence profitability in the income statement.
Part 3
One of the approaches I could make use of to enhance financial intelligence in my HR department is training. In this case, a wide range of learning activities could be adopted. These, according to Berman, Knight, and Case (2008) could include case studies and discussions. Next, I could also involve my team in a review of some key performance metrics on a periodic basis. Some of those suggested by Berman, Knight, and Case (2008) include performance to budget and revenue per employee. Lastly, I could lobby for the introduction of visual aids that employees can constantly interact with. Such aids for instance, as Berman, Knight, and Case (2008) recommend, include basic parameters of performance, i.e. how the entity makes money, departmental expenses, etc. In essence, one of the challenges that could be faced in this endeavor is insufficient resource allocation. Also, it is not guaranteed that employees would fully…
