Of all your fellow executives, who do you spend the most productive time with? And the flipside to that – who do you spend the least productive time with?
If a global survey of 800 chief financial officers (CFOs) and senior finance executives is to be believed, the CFO spends the least amount of time collaborating and sharing knowledge with their HR counterpart, the CHRO. While this news is hardly surprising, it’s unfortunate as this particular combination of minds and talents can perhaps have the most significant and positive impact on the future state of the organisation – both operationally and culturally.
The survey, conducted by The Economist Intelligence Unit, sought to uncover the way in which finance departments collaborate with other functions in order to manage costs, plan operations and steer company strategy. It found that senior finance executives currently spend the least amount of time with HR compared with all other functions – 7.7 hours vs. 10 hours a month with management and strategy, for example. Further, respondents were less likely to describe their collaboration with colleagues in HR as “effective” than any other function.
Despite the time-savings being made through automation of HR processes, it seems there’s little to no interest in discussing HR strategy development. Indeed, when CFO and HR team collaboration does occur, the topics focus on direct HR costs such as employee benefits and salary negotiations (57%) and employee training and development strategies (56%).
There are several key areas that deserve more attention.
- Talent acquisition and retention. The Economist study makes it clear that although these are often considered hand-in-hand, there is often only a shallow appreciation of these critical HR functions. Just as critically, both areas are still rooted in cost management – yet, as the study states: “They go further than direct costs by also factoring in opportunity costs. Finance executives must work closely with HR to evaluate the cost of acquiring and training new talent verses the cost of retaining existing employees. More alignment in talent acquisition could ensure its alignment with broader business strategy and reduce employee turnover to save businesses future hiring costs.”
- Risk management. Although this is naturally a priority for the finance function, it could be further enhanced through strategic coordination with HR, especially areas like fraud detection. As “gatekeepers” of corporate culture, HR has a significant impact on what is deemed unacceptable behaviour. “This is directly linked to HR policies on penalties and dismissals for offending employees,” the report states.
- Office space management. An unconventional item, to be sure – but in an age of flexible work and a desire to break down silos, finance/HR collaboration on office space optimisation should not be underestimated. The report comments: “Although interaction with HR was not cited as vital to the management of real estate costs, this might reflect an overlooked opportunity at present.”
In terms of core skills, finance and HR have traditionally been deemed poles apart. On one side sits finance, focused on numeracy and quantitative metrics. On the other side sits HR, with its nuanced understanding of human behaviour. However, with the increasing HR focus on metrics and analytics, this gap is narrowing.
Perhaps 2020 will be the year HR and finance teams stop looking at collaboration as merely an exercise in cost management and instead consider it as a way to achieve business goals.
For further tips on how HR can become a “friend of finance”, read our blog.
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