This blog is a Guest Commentary written by me that appeared in Canadian HR Reporter on November 21, 2011. You can view a copy of the original article here.
Why can’t finance and HR just get along?
Finance and human resources have more in common than they care to admit – here’s how HR can improve its relationship with the CFO
I have been fortunate enough in my career to deal with organizational leaders in finance as well as human resources. For as far back as I can remember, I have noticed the friction that exists between these two groups and it has always fascinated me.
Finance and HR have more in common than they care to admit. The CFO’s role is to manage the financial assets of the company while the CHRO is mandated with managing the company’s human capital.
Both finance and HR are important support functions for any enterprise. However, neither finance nor HR drive revenue — they support it. In organizations where finance and HR work well together, they provide solid support to corporate objectives.
The biggest point of this interdepartmental friction comes from the intersection of their interests — HR deals with people, whose costs are usually the largest expenditure in a company, while finance is mandated with managing costs.
So why can’t finance and HR work well together? The truth is they can — it just takes effort from both sides to make the relationship work.
Here’s a rundown of what HR professionals can do to improve their relationship with finance:
Communicate: A CFO needs to understand what you do, how you do it and how you can help her. HR needs to be proactive to understand the needs of the CFO and work together with her to provide appropriate solutions.
It sounds simple yet how many HR groups really have an open and effective line of communication with finance?
Treat finance like a business unit: A successful CFO needs a strong team to support him to meet objectives. As an HR professional, you understand what is involved in building, developing and sustaining a solid team, so help the CFO in his quest for having the most efficient and effective team. This is one sure way to get on the same side as the CFO.
Give finance what it wants: In the spring, my firm conducted an online survey of 40 CFOs to find out if they were willing to commit internal resources for the development of their finance teams.
More than one-half (56 per cent) said they want support for succession planning, 83 per cent want help with talent management and 94 per cent want a more effective and efficient structure for their finance team. We asked them if they were willing to invest resources in these areas and the majority of them said yes. Who can better solve these challenges than human resources?
Finance training: Ask your CFO to help develop the financial literacy skills of the HR team. Imagine the synergy that can exist internally when your team better understands the financial aspects of the business, how it applies to the corporate objectives and what it means within the context of delivering strategic and tactical HR functions.
These are just some examples. To make the relationship with finance work, HR needs to take steps to build relationships — with the focus on adding value.
Do you have examples of how you were able to bridge the divide between finance and HR and have a positive impact on your organization?
Sudeepto Saha says
I think cross fertilization between Finance and HR related to their respective processes is mostly absent in large companies. As I moved to from giant corporations (Annual revenues above USD 1 bn) to smaller / start ups I appreciated the HR processes more and more.
Samuel Dergel says
Based on your experience, what would you recommend to have finance and HR work closer together?
In my opinion, a detailed and clear workflow (who is doing what) will help identify how Finance and HR work together. When interpersonal relationship between them is not good all the time, we must know where the it is stuck and based on the workflow, who is involved in the problem.
Finance, I think, should play the more important role to propose a solution for specific HR related problem. Cost – benefit analysis will be considered to evaluate the effectiveness of that problem, and no one is more expertise than Finance in an organization. HR in this case will be supportive to determine the problem with HR view only.
Samuel Dergel says
The article that I wrote was written towards an HR audience in a mainstream HR publication. I happen to agree that Finance needs to play an important role as well.
Ultimately, workflows don’t mean anything if there is not a real desire to work together. It is important for the leaders of Finance and HR to set the tone for interdepartmental civility (at minimum) and co-operation (the ideal state).
I know it is easier said than done. Let’s all committ to making the relationship stronger.
HR Consulting Firms India says
Hello! A very well versed written article. Thanks for sharing the gap between finance and hr and also how to tackle this problem. Cheers!