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HR’s smartest move: Align with the CFO

09/13/2011

Issue: Corporate pressures now call for closer ties between HR and top finance.

Benefit: Winning the chief financial officer (CFO) as an ally can help earn funding for HR projects, and your strategy smarts will draw attention.

Action: Take steps to cultivate the relationships and learn the numbers he or she thrives on.

You’d be wise to align yourself more closely with your organization’s chief financial officer.

Why? CFOs are feeling increasing pressure to show how “people assets” are being managed in their organizations. Being friendly with the finance team can help secure funding for your HR projects.

“Historically, there’s been little love lost between finance and HR in most companies,” admits Rick Guzzo, Ph.D., a human capital strategy consultant with Mercer. “However, the changing business landscape makes it necessary for these two areas to come together in new, more collaborative ways.”

Employers spend 36% of their revenues on HR (pay, benefits, training and other expenses), yet only 16% of 180 financial executives polled by Mercer say they really understand the return they’re earning on this huge investment.

The first step? Partner with the finance chief by learning the measures and indicators he or she thrives on, such as:

  • ROI
  • Payback period
  • Risk assessment (or failure rate)
  • Cost per unit of service
  • Competitive advantage

Then, pick an HR program (ideally one that your CFO is skeptical about) and focus on proving that program’s business impact and high return. Conversations like that will draw attention to your strategy smarts, and it’ll build respect between you.

Final tip: Show how your HR programs improve productivity. Lowering the “people dollars” required to produce a unit of output/production is the key to instant recognition, but most HR departments never measure it.