By Alan Large
In the “jungle” of business, HR Professionals and CFOs don’t automatically strike you as natural friends. One may think the other has little impact on them or their progress and initiatives. Unfortunately, a disconnect between the two areas is common, which can be detrimental to a smoothly functioning, cohesive business unit.
Because these departments are far more connected than one would think at first glance.
People. Strategy. Execution. Cash. The key to sustaining and scaling up or growing any business is attracting and keeping the right people, creating a truly differentiated strategy, driving flawless execution and having plenty of cash to weather the storms and capitalize on opportunities that arise unexpectedly. We are taught and reminded of this in the book “Scaling Up” by Verne Harnish. While the concept sounds simple enough, it’s actually a formidable, strategic high wire act of balance and flexibility mixed with focus and resiliency.
Great companies recognize early on that leaders and departments cannot operate at maximum effectiveness in silos. Cooperation and collaboration among leaders and across departmental boundaries is a foundational requirement and key in achieving aggressive company goals, especially year-over-year.
Human Resources has many more layers to their responsibilities than just hiring and firing people. HR professionals play an integral role in helping identify, attract, and retain the right people and in making sure they are in the best seat, working on the most important tasks and duties, and performing to the best of their abilities. After all, human capital is often considered the most valuable of company assets.
HR is often thought of as an administrative expense. However, smart HR professionals quickly learn how to showcase their value by positively contributing to the bottom line.
There are four important ways, from my CFO point of view, where HR Professionals can be directly involved in moving the needle toward higher company revenue and play a part in directing the company toward success.
Participating in Ongoing Multi-Department Communication
We have found this to be a success in our own company. Educating all department leaders and holding them accountable for understanding and appreciating their peers’ roles and goals have made a significant impact on our bottom line. An essential action to achieve this has been leadership meetings. Coming together on a regular basis and being able to share ideas across departments breaks down the perceived barriers and assists everyone involved in widening their company viewpoints.
HR professionals need a seat at the table to educate their peers in the valuable work HR does. It is just as crucial for HR to better understand their unique role in helping create the company strategy and their role in executing HR throughout the organization.
Realizing Money Talks
As a CFO, one of my main priorities is making sure that HR clearly understands how the business makes money, the consequences of over-spending, what our financial goals are, and how HR is instrumental in helping us attain those goals.
In most companies, employee salaries and benefits are a big chunk of the overall budget. HR needs to understand our total human capital spend compared to our revenue and their role in monitoring that expense. HR needs to be accountable for determining and understanding our turnover rate, the costs associated with it, sharing it with other leaders, identifying reasons for it and being a driver of solutions to reduce that rate.
HR has an awesome responsibility to help drive forward what we believe is foundational to our success. Employees are the heart of HR, and the lifeblood of a company. A primary Data Facts philosophy is that Data Facts takes care of our people, our people take care of our clients, and our clients take care of Data Facts. Marrying the organization’s budget with people management is key for HR professionals to directly help move the needle forward.
The more HR knows and understands the logistics of the operations’ and sales team’s goals and initiatives, the better positioned they are to help execute on the company strategy.
In addition to fostering a cohesive relationship with the CFO and accounting team, seeking out and building personal connections with operations teams and top sales producers helps build an atmosphere of collaboration and finger-on-the-pulse type insights.
Making Data-Driven Decisions
By HR having a seat at the table, they gain essential information that they should use to drive their moves. HR leaders must be able to think in numbers and put sharp analytical skills into play so these numbers stay in balance with overall company needs and expenses. Full transparency in key performance metrics, with both leading and trailing indicators, should be at their fingertips. Our company believes it to be paramount that this information is shared with HR. HR uses this information to create positive results in working with other leaders in the organization in hiring, training, retention, benefits, policies and procedures and more.
Transparency in data of these metrics along with sharing other key financial performance data is crucial for a top leadership team, including HR, to be able to understand all the moving parts and pieces of the puzzle of an organization as it manages people, strategy, execution and cash. Knowledge is power, but only if you use it. We expect people to use it.
There are few, if any, companies that only want to be in business for the next few years. We all want to survive, grow, and thrive. HR leaders and CFOs have a substantial role to play in this success, and make a significant impact into the organization’s level of prosperity or failure. Each department should make understanding the other’s point of view and important knowledge they can learn from each other a top priority. A strong, respectful relationship between HR professionals and the CFO help build a stronger company with a solid foundation and an eye toward long-range growth and sustainability.