HR & CFO makes a good team

Dhwani Mehta

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

Two core functions of any organisation Human Resources & Finance always seem to be at loggerheads with each other. It is said Human Resources is a function of the right side of the brain which involves art & creativity and Finance is a function of the left side of the brain as it involves analysis, facts & Figures. In reality, we require a perfect balance between the two functions to lead the organisation on the path of progress. Historically, finance always had the upper hand in comparison to HR due to profit motive. Although financial dominance continues today due to the evolving nature of business dynamics, CEOs & CFOs of the world today cannot deny the criticality of the HR function in charting long-term growth territory. CFO’s find it difficult to accept and reconcile the demands of Human resources. The increasing cost of employee acquisition / Retention, Training & Development, and other overheads put a dent in the 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 CEOs / CFOs of the world’s largest companies to understand their views on the 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 the 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 have been necessitated by intense competition for talent in the market. In such a situation, HR plays a crucial role in deciding along with the finance division on what kind of skills & knowledge they require in future employees and the cost they are willing to take. This is especially important considering it puts pressure on the 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 a 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 an optimized cost. Skilled & knowledgeable driven workers provide better ability to finance managers 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 look for up-to-date Information technology systems to provide them the flexibility to work from any location, they need a portal that will fulfill every need, right from their salary payslips, leave database, and corporate memberships. All these demands of employees 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 the cost front, there is no denying that some of the most crucial data for future policymaking comes from Human Resources. It is the responsibility of HR to devise metrics to measure their contribution as well as employee contribution to the topline growth of the company.
Hence, it is very clear from above-mentioned facts, that 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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