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This chapter is from the book

You Don't Need to Be a Quant to Make Good Business Decisions

In most cases HR managers need only a modest level of quantitative skills. There is certainly no need to be the kind of individual the Wall Street firms refer to as a quant. Analyzing business decisions generally requires no more than a tolerance for basic arithmetic and a comfort with the creation and use of spreadsheets. Actually, in many cases more important than the ability to crunch the numbers is the ability to think analytically and creatively about the business challenges a firm faces. Some HR managers are limited in their ability to do this simply because they do not understand all the jargon used in their company’s financial statements or in the models their firm uses to evaluate business alternatives. Without that understanding it’s impossible to know, for example, whether a proposal made by a colleague is brilliant or nonsense.

Fortunately, gaining an understanding of basic financial jargon and concepts is not difficult to do. You don’t need a degree in finance to use financial tools to make better decisions. The goal of this book is to help HR professionals deepen their understanding of business economics and finance. Hopefully an increased understanding of these issues can enable them to make better decisions about resource allocations within the HR function. The bigger potential benefit, however, is that an increased understanding of these issues can enable them to more effectively tailor an HR strategy to the firm’s business strategy. If this can be done they can significantly improve their firm’s competitiveness and add value to the firm’s shareholders. At the same time they can enhance their own prospects for career advancement. Too many HR professionals underestimate the role HR can and should play in strategic decisions. They should not be deterred simply because these decisions involve financial models or analyses.

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