Sounds like a silly question. Finance and HR functions are necessary organizational support functions. Companies require both Labor and Capital for success. Yet turf wars and egos impact many companies and the individuals that work in them. (Read: What do CFOs want from HR?). How a CFO manages their relationship with Human Resources is very important to their success (Read: Road Map to Successful CFO Relationships).
Interestingly, my recent blog on Human Capital Reporting Standards shows a new intersection where Finance and Human Resources can work together, building on each other’s strengths.
If this subject interests you, a recent article in CFO.com by John Boudreau called “Does Finance Play Second Fiddle to HR?” is worth reading. In his article, Boudreau states that his research shows that HR feels that their work is more strategic than Finance feels.
To Boudreau’s credit, he does realize that the results of his research does not make sense compared to what
would be expected, and provides answers as to the reasons for the difference in how HR and Finance feel about being strategic.
Who’s work is really more strategic? If you want to know the answer, ask the CEO and ask the Board. Until objective research can be done using the approach I mentioned, let`s look one subjective criteria.
Who becomes CEO? If HR was really more strategic than Finance, Vice Presidents of Human Resources (or as we see this title being used more – CHROs) would be promoted to CEO of organizations. While tracking CFO Moves, I see CFOs that get promoted to CEO, either on a permanent or interim basis. I haven`t seen many VP HRs becoming CEO.
Who do you think is more Strategic – Finance or HR? Why?
Thanks to Cindy Kraft for pointing out the following SmartBrief Poll on the topic: http://b.cfo-coach.com/JPGQ5P
Samuel,
I wonder if the question is somewhat of a red herring. For one, how do we define “more”? Hours spent on strategic issues? Strategic impact of actions? Long-term importance? Each of these interpretations could lead to a different conclusion.
In a well-led and well-performing organization, my guess is that ALL areas of the firm are strategic and doing their fair share of “pulling the strategic oars”.
David,
We all need to pull our weight on the oars to move the boat.
The question is – Who is leading? Because if the rowers are not rowing together, in the same direction, and in sync, the boat won’t get very far.
How do we define “more”? Great question. The conclusion is not as important as finance leaders being keenly aware that they are not just the scorekeepers of an organization, they have valuable information that can be provided for improved operational and strategic decision making that will lead to ultimate success.
So David, that is why a solid company needs someone like you as a leader.
Thanks again for your continued input and feedback,
Samuel