HR & CFO makes a good team

Dhwani Mehta

Role of Human Resources (HR) in assisting Chief Financial Officer (CFO)

Two core functions of any organization Human Resources & Finance always seem to be at loggerheads with each other. While it is said Human Resources is a function of right side of the brain which involves art & creativity and Finance is a function of left side of the brain as it involve analysis, facts & Figures. In reality, we require perfect balance between the two functions to lead the organization on the path of progress. Historically, finance always had upper hand in comparison to HR due to profit motive. Although, financial dominance continues today but due to evolving nature of business dynamics, CEOs & CFOs of the world today cannot deny the criticality of HR function in charting long term growth territory. CFO’s find it difficult to accept and reconcile the demands of Human resources. Increasing cost of employee acquisition / Retention, Training & Development and other overheads put a dent in bottom line of the company which HR defends and finance refuses to accept. In light of such conflict between HR and finance, an important study has been conducted by IBM & Oracle jointly to understand from CEOs / CFOs of the world’s largest companies to understand their views on importance of HR as a critical function. According to the study, a large percentage of CFO’s feel that their HR managers need to upgrade in terms of their skills, relevant knowledge and experience. This surprising study throws questions regarding human resources for a chief financial officer. We believe, following are the observations worth considering while carving out any opinion on the subject matter

1. Increasing employee cost of acquisition / retention Ever increasing salaries and perks for employees has been necessitated by intense competition for talent in the market. In such situation, HR plays a crucial role in deciding along with finance division on what kind of skills & knowledge they require in future employees and cost they are willing to take. This is especially important considering it puts pressure on bottom line of the company. On the other hand good employees are important for new initiatives and higher quality demands from customers and clients. So qualitative inputs must be taken into account along with the numbers

2. knowledge driven economy Where profits are largely driven by skilled labor force, Finance needs to develop an excellent partnership with HR in order to make sure right talent is inducted in the company at optimized cost. Skilled & knowledge driven workers provides better ability to finance manager for future projection of revenues

3. Employee satisfaction It largely decides the performance and financial results of companies. More so today, when employees are aware of other options and information of other companies and their work culture is freely available on various digital media sites. Hence, employee satisfaction must be at the center of various company initiatives, even if it means an additional budget is required.

4. Information Technology Today’s employees are more demanding, they r look for up to date Information technology systems to provide them flexibility to work from any location, they need a portal which will fulfill every need, right from their salary payslips, leave database, corporate memberships. All these demands of employee which are represented by Human resources involve serious costs to finance. They need to evaluate through cost benefit analysis to decide the efficacy.

5. Data Metrics Management No matter how much pressure HR puts on cost front, there is no denying that some of most crucial data for future policy making comes from Human Resources. It is responsibility of HR to devise metrics to measure their contribution as well as per employee contribution to the topline growth of the company.
Hence, it is very clear from above mentioned facts, since cost of human capital has gone up substantially in recent times and a balancing partnership between finance and human resources is an inevitable relationship.


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