The importance of human resources hasn't always been at the top of every chief financial officer's priority list. In the past, HR and finance departments were often perceived as being at odds with one another. In fact, the assumption – that finance sees HR as incurring unnecessary expenses, while HR sees finance as obsessed with counting every penny – can prevent these two essential departments from fully collaborating with each other.
The good news is, CEOs and CFOs alike now have a much stronger sense of the importance of human resources and the contributions it makes toward business growth. These days, it's more commonly understood that HR's primary objectives, including recruitment, orientation, and retaining a skilled workforce, are invaluable assets to any company. As the Harvard Business Review notes, many business leaders agree that human capital management "must be accorded the same priority that managing financial capital came to have in the 1980s," when the preeminence of CFOs began taking place.
Here are action steps the CFO who understands the importance of HR throughout the organization can take to help ensure HR is utilized to its fullest extent:
Include HR in strategic planning activities. The more HR is engaged in the company's strategic vision, the more it can offer in terms of assistance with talent sourcing, succession planning, and employee productivity and retention. CFOs can enlist HR administrators when developing a long-range business plan, and gain insight into the best use of human capital within a clearly defined budgetary context. A shared strategic vision can guide the way toward more efficiently achieving a business' stated goals.
Emphasize areas of common purpose. While it's true that broadly speaking, the finance department is concerned with the cost implications of any new program or initiative, it may not be fully conscious of how these programs or initiatives will affect employee morale and productivity. These, of course, are HR priorities; by more closely exploring the relationships between costs and human capital, these two departments can benefit the entire organization.
Share key metrics. Information-sharing remains among the most impactful actions a CFO can take. Wherever possible, look to share performance measurement data, short- and long-term financial goals, and key metrics associated with other top business priorities. In turn, HR can offer input about workforce performance and other metrics. This exchange of high-level information can help point the way toward identifying specific needs and employee skill sets required to keep the business competing in the marketplace.
Act as an HR advocate with the executive team. In many companies, HR has a place on the executive team. Even so, when the CFO acts as an advocate, others on the team may get a better understanding of what HR can contribute to strategic growth. For example, if there's high-level resistance within the executive team toward subsidizing extended employee development and training (due to perceived costs), the CFO can make a strong case for learning programs as a key resource for the business' employee retention objectives. Without training and growth, how can a company expect to retain its best employees? The CFO's advocacy on this point – highlighting the fact that training expenses incurred today can offset expenses related to employee turnover tomorrow — can carry great weight with others on the executive team, including the CEO.
HR is recognized as the best resource for understanding the current and potential strengths of a company's human capital. The backing of the CFO, can help HR more effectively leverage this knowledge on behalf of the organization's broader goals but also, when needed, support changes in vision or initiative that make new demands on the workforce. By working together, CFOs and HR administrators can make a powerful team.