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The CFO’s Complete Guide to Assessing the Health of the HR Function

The CFO’s Complete Guide to Assessing the Health of the HR Function

Chief Financial Officers (CFOs) are now becoming more and more engaged in the HR function, and ensuring that each and every aspect of HR is reviewed carefully and regularly is an important step forward for any organization.

Data from a Robert Half survey shows that HR is the top area where CFOs have expanded their reach over the last three years (39%), largely because CFO involvement in HR allows them to address staffing challenges from a financial perspective.

As CFOs continue to put more time into HR, it’s first crucial to understand the major areas in which CFOs should begin their assessments regarding whether an organization has a sound HR operating structure in place. In this post we will overview the main areas of focus a CFO should assess to ensure a healthy HR function.

HR Areas of Focus for CFO Assessment

Company Culture

Company Culture Audit
Company culture is one of the most important aspects of maintaining a competitive modern workplace. In a study conducted by RippleMatch, company culture was the leading reason that a candidate decided to accept a job or not, with almost three quarters of respondents (who were 700-plus recent graduates) reporting that this consideration was the most important. When it comes to auditing your organization’s cultural health, measuring employee satisfaction is key.

Employee Satisfaction
In HR’s current “war for talent,” with the unemployment rate the lowest it’s been in decades, it’s more important than ever to create a solid recruitment strategy that’s complemented by employee satisfaction as a serious driving force. CFOs looking to assess the current health of the HR department need to put time into assessing employee satisfaction, whether by:
• Implementing regular employee satisfaction surveys
• Inviting employees to join company discussions or meetings
• Gauging interest in benefits like company events, outings, professional development opportunities, and work-life balance benefits
• Ensuring a sound manager-employee review system is in place that happens at least once or twice per year

Addressing Critical Culture Issue Areas
Another aspect of a company culture audit is identifying the most critical issue areas. To really have a complete, successful HR program, any company culture problems must be proactively addressed. Critical issues often include that the company has no clear values that employees can recognize and thus cling to; that leadership isn’t accessible or transparent; or that there are no long-term goals in place.

If these three common issues can be recognized and addressed by CFOs, company culture will be on the path to being revamped and competitive.

Compensation and Rewards

Of course, another important aspect of HR is compensation and benefits. And part of staying relevant is ensuring that you’re offering competitive salaries and benefits packages to employees.

Benchmarking Salaries
Especially with top-level talent and executives, it can be challenging to know if an employee will be tempted by a better offer within a competing organization. One way to ensure you remain competitive and retain this top talent is to benchmark, which means assessing your own compensation structure and comparing it to other companies within your industry. Then, salaries can be updated if necessary (or, benefits can be improved to balance out any salary discrepancies).

Bonuses and Incentives
It’s common knowledge that employee satisfaction increases when employee contributions are overtly recognized and celebrated. This is why bonuses or performance-based incentives can be impactful in HR retention strategies. CFOs should try implementing an incentive that’s based on an employee’s performance, giving them something to work towards and thus improving motivation. Year-end bonuses can also help employees feel recognized and satisfied with their jobs. While a simple “thank you” may work at times to encourage and inspire, HR and CFOs should work together to create an incentive program that the organization can afford and which motivates employees.

Benefits Package
Similar to compensation benchmarking, CFOs should do their research to ensure that the company’s benefits package is competitive and updated regularly. This means knowing what modern top talent is looking for. According to Harvard Business Review survey data, the most desirable employee benefits are:
• Health, dental, and vision insurance
• Flexible hours
• Vacation time/paid time off
• Work-from home options
• Unlimited vacation
• Student loan assistance
• Tuition assistance
• Paid parental leave

One of a business’ largest expenses is the annual dollar amount spent on employee benefits. CFOs should make sure that benefits dollars and being invested wisely into crafting a thoughtful, impactful benefits package.

Technology and Data

Another big consideration for HR departments and CFOs alike is data. With the rise of automation and machine learning, businesses can now streamline processes and analyze large amounts of data to make future plans and projections. And these changes apply to HR efforts, such recruitment and retention, which now depend on sophisticated data and a method in place to analyze it, such as a useable online dashboard.

According to a report from KPMG, 92% of strategic HR functions now see automation as having a significant impact on the HR function, and 66% of organizations are putting a greater focus on the automation conversation within their company.

However, actual strategies are still lacking in HR, KPMG data also shows. While around two thirds of HR executives recently reported to believe that HR is undergoing a big digital transformation, only 40% of these leaders said they have a plan in place at either the enterprise or HR level. So, putting these considerations at the top of the priority list could give your business a significant competitive edge.

Assessing the Existing Technology Stack
First, CFOs should start by assessing their HR department’s current technology utilization. Is there a method in place to not only gather data, but to analyze it and incorporate it into a long-term strategy? What databases and dashboards are being used, and are they successful? And of course, cost is an important factor in implementing new technologies, so CFOs are encouraged to always consider technology ROI in terms of process improvement.

How to Find the Right HR tech for Your Business
Every organization has different needs and trends, so it’s important for you to help your HR department figure out which technologies will best meet your business’ needs. Some important considerations to keep in mind include:
• How automation will impact the need for long-term HR staff
• Training for HR staff to be able to properly use technology to handle and analyze data
• Implementation processes and timelines for new technology

Key Data Metrics to Track Over Time
So what metrics should your HR department care about most? Here are some of the top data metrics for HR to track and use for future planning:
• Cost-benefit analysis: tracking the benefits of a program weighed against the cost (such as a benefits package)
• Revenue per employee/productivity: tracking the total amount of company revenue divided by the number of employees so that efficiency and productivity can be measured via human capital
• Recruitment: tracking how long it takes to fill a position, and how much it costs
• Turnover: tracking how long employees stay at the company and which departments see the highest turnover, in addition to the cost of turnover
• Retention: tracking the company’s actual ability to retain key talent

Hiring and Retention

Next, CFOs should analyze hiring and retention strategies, one of the most important parts of the HR function.

Recruitment Tactics
How is the HR department currently approaching recruitment? This includes considerations like where job advertisements are being posted, whether recruiters are engaged with platforms like LinkedIn or other social media outlets, and whether competitors’ job posts are being assessed and incorporated into the company’s own job ad approach.

Depending on your industry, recruiters should be involved in researching and reaching out to top talent who they find would be great candidates. This could be through networking events or via online platforms.

Hiring Processes
It’s also important to consider the efficiency and effectiveness of hiring procedures, such as:
• How resumes or cover letters are received (email, online application, etc.)
• How long it takes HR to respond
• How the interview process works (i.e., phone interview followed by two in-person interviews)
• How job offers are relayed (email, formal letter)

Onboarding and Training
A good onboarding strategy can make or break recruitment efforts and retention strategies. It’s important to set up a welcoming, informative program that educates new hires and aims to integrate them into company culture by involving multiple departments and individuals. These early connections are important for any new hire to feel like they made the right decision in accepting a job.

Just as important is training and development that new hires will need, so each department should have its own system in place in addition to the overall HR employee training program. These are important considerations: 69% of employees have a higher chance of sticking with a company for three years if they have a great onboarding experience.

Identifying and Addressing Turnover Issues
One of the biggest threats for modern businesses is high turnover. The Center for American Progress says that on average, the cost of turnover is 22% of an employee’s annual salary.

The first step in addressing turnover problems is figuring out when employees leave—if it’s near the start of their tenure at the company, greater focus is needed for onboarding and training, perhaps. If it’s later in the employee’s tenure, the reasons could be related to company culture, benefits, compensation, management, or room for growth within the company. All of these considerations deserve a detailed plan from your HR function.

Compliance Review

CFOs play a major role in HR compliance, since penalties or legal issues could be involved if required policies and procedures aren’t followed. Here are the top areas for CFOs to review regarding compliance.

Employee Handbook
Every HR department should create an employee handbook that lists all policies and procedures. This levels the playing field so that employees don’t think one worker is getting special treatment. The handbook should be updated as the industry changes or as new laws and regulations are put into effect, and it should include things like benefits, leave policies, dress code, flexible working opportunities, tuition reimbursement, and more.

Employee Files
CFOs should take a look at how employee files are currently handled. There are many records that need to be kept confidential, so it’s crucial to ensure that there is a security system in place for these sensitive records.

Benefits Compliance Review
There are important acts and laws for every HR professional and CFO to understand and ensure compliance with. Some of the most important include:
Family and Medical Leave Act (FMLA): related to required time off for new parents, health issues, or family issues
Fair Labor Standards Act: overtime regulations, minimum wage, etc.
• Disability coverage regulations for employees
COBRA: required continued insurance offering after an employee leaves the company

An important aspect of the HR function is ensuring all of these important regulations and policies are followed and applicable requirements are met.

Strategic Alignment Evaluation

Because HR is such a crucial part of company operations, it’s important that the department is aligned with other areas across the organization. HR is often the first point of contact for job candidates, so HR professionals have a unique obligation to reflect company values as well as the positives of working at your business.

Aligning Finance, HR, and Company Goals
Part of the CFO’s involvement in HR is to ensure that practices are aligned with finance and overall company goals. Some of the HR metrics to track that were described earlier will apply here, since they’ll be important in determining cost-benefit ratio, the cost of recruitment/new hires, and other HR finance considerations.

Company goals and values should also align with HR for the reasons previously mentioned: HR is often the face of the company during recruitment and hiring, so it’s crucial that these professionals reflect the organization’s mission, vision, and goals. Leadership from each of these areas within the company should meet regularly and discuss any issues so that key team members are aligned across the board.

Long-Term Workforce Planning
Many of the considerations already discussed are necessary for efficient workforce planning. This means integrating a company’s goals and mission while ensuring that the organization has the human capital it needs to succeed. HR professionals, in conjunction with the CFO, need to evaluate both current and future needs in personnel and departmental structure, and figure out how to make these efforts cost-effective.

Another consideration here is the professional development and training that will keep personnel effective within the given industry. As mentioned, in regards to technology, systems and processes are constantly changing, and companies have to ensure that they keep up by educating employees, ensuring they can operate with the most cost-effective and efficient tools in place.

Key Takeaways

In today’s workforce, CFOs are tasked with ensuring that HR not only functions as it should on the appropriate legal and financial level, but also that it is making successful efforts to integrate technology and implement high-impact recruiting and retention strategies.

When assessing the current state of an HR department, CFOs should remember to look at the following key areas:

  1. Company Culture
  2. Compensation, Benefits, and Incentives
  3. Technology and Data Strategy
  4. Hiring, Onboarding, and Retention
  5. Compliance
  6. Strategic Alignment and Workforce Planning

Only after reviewing these key aspects of HR can CFOs better make decisions about personnel, policies and procedures, cost considerations, and departmental structure that will drive the business forward.

This post is brought to you by Paycor.
Are you a CFO in Charge of HR? What You Need to Know

Are you a CFO in Charge of HR? What You Need to Know

As a CFO, your job isn’t easy even at the best of times. You’re responsible for managing the company’s financial health, capital investments, and return on those investments. And as if that wasn’t enough, many modern CFOs have now been given ownership over their company’s HR.

This change can be particularly difficult because as a CFO, you’re probably a numbers person – now you’re supposed to be people person too? You may well be wondering how you’re going to juggle it all.

The good news is that, with the right approach, managing HR as a CFO can be extremely rewarding and empowering. You get to guide the financial and people side of your business, coordinating the two to maximize your company’s growth. That’s a pretty good position to find yourself in, as long as you know how to handle it.

Launchways recently hosted a webinar that covers some of the most common issues CFOs face while managing HR. In today’s blog post, we’ll cover some of the main points that were discussed on the webinar. In this post we’ll cover:

  • Aligning business strategy with HR strategy
  • Owning and leveraging company culture
  • Examining HR processes
  • Identifying key HR metrics to track and evaluate

Align Business Strategy & HR Strategy

The two main uses of a company’s capital are technology and people. As a CFO who is also responsible for managing HR, you get to guide the success of your investments in human capital. Instead of seeing your hybrid role as an irritating added responsibility, you can see it as an opportunity for greater control over your company’s growth and financial health. You get to use your financial expertise and familiarity with the company’s business strategy to maximize the return on investment in your company’s people.

The best way to do this is to align the HR strategy with the business strategy so that all parts of the company are working in sync towards the company’s goals. That doesn’t just mean approaching HR from a finance perspective, though. For the best results, you must aim to see things from an HR perspective.

It’s important to bring in the right people and to make sure that they stick around for the long-haul. At the same time, cross-department alignment is critical. Every department needs to be aligned with each other and with the company’s goals so that the company can work as efficiently and productively as possible.

Many companies dismiss the impact that HR can have on their growth and continued success. They underestimate the cost of turnover and so under-invest in their people. But the fact of the matter is that talent acquisition, development, and retention are critical to a company’s long-term success. And as a CFO in charge of HR, you have control over these processes.

Build and Maintain Your Company Culture

Company culture is one of the main drivers of employee acquisition, productivity, and retention. A culture based on the company’s mission/vision and in-line with business strategy motivates exceptional employee performance. Employees who are driven by the company mission are not just contributing to a company’s profits in exchange for a salary, they are part of a greater community working towards higher goals.

That matters because providing meaningful work is one of the main challenges that companies face in today’s market. The truth of the matter is that a good salary and benefits package isn’t enough to keep employees around anymore, and as a result, turnover rates continue to increase year over year. By creating an intentional culture that is genuinely integrated into company operations, you can solve many of your HR challenges and reduce talent-related expenses.

When it comes to company culture, you need to establish a strong foundation that will set you up for future success. Mistakes early-on will lead to bigger problems down the road, so it really is worth taking the time to get your company culture right. That’s especially true for growing companies since maintaining a focused and effective culture and strategy gets harder as companies scale. Not taking the time to get things right while you’re still small can come back to bite you as you grow.

You want your team to be aligned with your vision, driven by your values, and focused on your core objectives. The first step to accomplishing that is deciding what your values are and how you can express them in your company culture. After that, you should establish an excellent team of key management-level employees who will direct how that culture will become part of the lived reality for their departments or teams. Then make sure that all of your managers are dedicated to the company’s mission/vision and driven by your culture, objectives, and career progression.

Examine HR Processes

Now it’s time to get down to the nitty-gritty of how your company operates. In order to effectively guide your company’s HR, you need to understand how the processes in place work and start to mold those processes to support the company’s business strategy.

The first step is to conduct an audit of your HR situation. Take a look at what the current HR processes are and who owns what responsibilities. Examine workflows and interview key employees to get a sense of the current state of affairs. Then, think about what works and what can be changed to establish an effective and sustainable workflow.

The next step is to look at your own responsibilities as the company’s “HR generalist”. Generally speaking, these are:

  • Human capital decisions: who to hire, promote, or fire.
  • Day-to-day people operations: ensuring individuals, teams, and departments are operating smoothly and working together towards the company’s goals.
  • Compliance: making sure that your company is following labor rules & laws regarding fair labor standards, anti-discrimination, sexual harassment and more.
  • Payroll: managing employee salaries, adding new employee files and editing existing files, complying with tax laws.

When examining these responsibilities, it’s a good idea to think about what you can handle yourself, what you can delegate, and what you can outsource to third-party providers. You want to establish a sustainable HR approach that leaves you with enough time and energy to manage your more traditional CFO responsibilities. Think of your managers as allies in establishing and maintaining effective HR processes in addition to the company’s HR professionals.

Once you’ve established your HR processes, it’s time to figure out how to track and evaluate HR performance.

Key HR Metrics to Evaluate

Identifying key HR metrics can be a huge asset when evaluating your current HR situation and future HR performance. That way you can make your human capital decisions backed by concrete data and clear trends. You should look for metrics that you can use to measure performance on the individual, team, department, and company level.

Starting with the broad-strokes metrics, you can establish departmental KPI’s and objectives to track performance between departments. These metrics should help you answer the question of which departments are performing better than others, and why. You also can and should track turnover rates on the company, department, and manager level to measure employee engagement and avoid the costs associated with turnover.

Ultimately, the most important metrics for planning and evaluating your HR initiatives and processes occur on the individual level. After all, HR is about building, maintaining, and leveraging the company’s people power – which is made up of individual contributions. That means that some of the most useful metrics to look at include employee engagement, employee happiness, and cultural health. These may seem difficult to measure, but you can collect invaluable data by gathering employee feedback.

Learn More About Managing HR as a CFO

In this article, we’ve covered several of the basics of effectively managing your HR responsibilities as a CFO, including:

  • How and why you should align business strategy and HR strategy
  • Building and maintaining an effective and sustainable company culture
  • Evaluating and establishing HR processes
  • Identifying key metrics that will allow you to plan and measure the success of your HR initiatives

There’s a lot more to learn about becoming an effective HR leader as a CFO, though. That’s why we put together a webinar that covers many of the key aspects of managing HR as a CFO. Learn what webinar panelists Dan Gloede, President and CFO of Codeverse, Jim Taylor, Founder and CEO of Launchways, and George Nissan, Director of Finance at BenchPrep have to say about what they’ve learned about guiding HR as a CFO.

DOWNLOAD THE COMPLETE WEBINAR AND WATCH INSTANTLY HERE.

Emotional Intelligence: An Increasingly Vital Skill for the Modern CFO

Many CFOs have built their careers on technical skills and financial smarts, but performance today is no longer solely measured on those abilities. For the modern CFO, a new set of soft skills built around emotional intelligence have become increasingly important in recent years for their ability to help business leaders build relationships, resolve conflicts, and motivate high-performing teams.

From understanding and managing emotions to aligning talent with business needs, the CFO as coach, collaborator and motivator is a growing trend. In this post, we’ll look at how emotional intelligence has become a critical skill set for today’s CFO and examine the five core components of emotional intelligence and the role they play in helping to bolster leadership performance.  These key components include:

  • Self-awareness 
  • Self-regulation 
  • Internal motivation 
  • Empathy  
  • Social skills

Changing the CFO skill set equation

The skill of emotional intelligence refers to the ability to identify, use, understand and manage the emotions of themselves and others in a positive way. For some individuals, the ability to understand and assess emotions may come effortlessly, but for others, not so much.

Since CFOs need to be able to induce change through others, this ability to inspire and influence has become a valuable skill in today’s collaboration-centered workplace.  CFOs need to be able to respond to divergent points of view and differences in the way people think. By extension, they need to harness their emotional intelligence to get through difficult situations.

With fewer layers of management in today’s organizations, leadership styles lean toward less authoritative. Moreover, the shift towards more knowledge-focused, team-based roles means that workers tend to have more independence and self-governance, even with lower levels of an organization. As a result, CFOs are finding themselves connecting and collaborating with people they would not likely have interacted with in the past.

Previously, the finance function required a number of core skills, including technical expertise, analytical thinking, comprehension, and assertiveness. While these attributes may not have changed, today’s CFO also needs to exhibit a wide range of soft skills, including an ability to collaborate effectively, build relationships and perceive, evaluate and manage emotions.

Clearly emotional intelligence is important to everyday social interactions, but how does it relate to CFO performance? When you make tough decisions based on hard data that can have an impact on non-finance departments, you could come across as tough or inflexible. Not a good reputation for a leader. That’s where emotional intelligence comes into play.

Growing need drives resurgence

Emotional intelligence first gained widespread attention back in mid 90s with the release of a book by Daniel Goleman simply titled, “Emotional Intelligence”. The subject has since been the focus of numerous studies, many of which point to it being a better predictor of leadership success than a person’s general cognitive ability. The reasoning? An executive skilled at understanding what makes people tick can better motivate teams and drive more effective interactions. 

Several factors are contributing to a renewed interest and growing need for leaders with strong emotional intelligence skills:

  • Market disruption.  New and emerging technologies are creating substantial market disruption and business transformation across industry sectors, resulting in corporate restructuring, flatter hierarchies and greater cultural diversity. 
  • New workplace demands. The digital age and broader enterprise connectivity is intensifying workplace pressures, creating the need for leaders with greater self-awareness, better emotional understanding and superb social skills. 
  • The need to innovate.  Rapid technology acceleration and the speed of new service deployments requires better collaboration, agile teams and a culture that allows for continuous feedback, honest communication and individual empowerment,  which are core emotional intelligence-based attributes.
  • Service-oriented economy. As we move to a more service-based economy and a more customer-centric focus, relationship building, superior communication skills and better self-management abilities become more important than ever. 
  • Globalization. The ability to empathize and relate to different attitudes, perspectives and cultures is essential in today’s global environment.  When managed properly, this diversity can lead to higher performance and better outcomes.

A recent report from World Economic Forum ranked emotional intelligence as the sixth most important skill needed in 2020 in order to manage the coming fourth industrial revolution.  Emotional Intelligence wasn’t even on the list for 2015. This may explain why many organizations have begun offering employees more opportunities to improve their emotional intelligence.

Gaining a performance advantage

According to the model developed by Goleman, emotional intelligence consists of five core components. 

  1. Self-awareness. Self-awareness is knowing your own feelings and understanding your strengths and weaknesses in relation to how they affect behavior. Leaders who are in tune with their own emotions are better able to control their own impulses and tend to enjoy better relationships. To improve self-awareness, take time to better know and evaluate yourself. Then understand how you relate to others.
  2. Self-regulation. CFOs need the emotional flexibility to collaborate effectively without letting egos interfere. Self-regulation is the ability to control outbursts, disruptive impulses, and moods. It also encourages a “think before acting” attitude. Instead of being held hostage by your emotions, learn to use them strategically as a performance improvement tool.
  3. Internal motivation. Internal motivation is the passion to work for internal reasons such as personal joy, curiosity or mental satisfaction. CFOs need to be continuously monitoring their performance, making sure they’re hitting their targets and dealing with issues when they arise. Internal motivation provides the clarity of focus and the drive needed to initiate change and take action while opening the door to positive feedback and learning. 
  4. Empathy. Most of us are not taught how to deal with our emotions or the emotions of others. Empathy requires reading feelings and understanding the needs of others. Learning to control your own emotions will enable you to help others manage theirs. By becoming more aware and understanding how others feel in various situations, you’ll be better equipped to inspire, motivate, and connect with others across the organization.
  5. Social skills. Having good social skills and sound situational awareness can be a powerful tool for leading a team. While a clash of opinions is sometimes inevitable in a cross-functional team, the ability to negotiate the needs and viewpoints of others and find common ground is vital for a CFO. Creating the harmony and agreement needed to move initiatives forward hinges largely on the ability to managing relationships. 

Key takeaways

It turns out cognitive intelligence and technical skills are an incomplete predictor of performance. The ability to influence, collaborate, and communicate effectively across departments, cultures and generations is a key component of effective leadership. 

The reality is there is a strong link between the emotional intelligence of its leaders and the financial performance of an organization. Today’s CFO needs to be both a strategic and tactical thinker. Not surprisingly, hiring managers are increasingly placing higher value on emotional intelligence and are incorporating these characteristics in their leadership search criteria.   

While technical and financial expertise is important, CFOs can take their performance to the next level by combining financial know-how with emotional intelligence. Like any form of self-improvement, building and strengthening your emotional intelligence will stretch your comfort zone and challenge some long-held notions about effective leadership styles. The good news is the effort you make to improve your emotional intelligence will pay dividends far beyond the initial investment.  

How to Ask the Right Human Capital Questions as a CFO

How to Ask the Right Human Capital Questions as a CFO

In today’s highly competitive, global economy, skilled talent is often one of the distinguishing traits that separates leading companies from the rest of the pack. Organizations that excel at managing their talent enjoy important operational and performance advantages. The right talent can help drive innovation, spur business growth and improve customer retention and value.

In recent years finance departments have become a valuable resource for human capital planning and management, helping to optimize workforce performance and partnering with human resources to achieve business goals. In this post, we’ll highlight several key questions a modern CFO should be asking to help ensure the business is maximizing its return on HR investments. The questions center around four core disciplines:

  • Strategic collaboration and planning 
  • Performance measurement
  • Talent optimization
  • Use of data and intelligence

First, we’ll look at the changing role of the CFO and the ramifications for HR leaders who collaborate with or support finance leaders.

The CFO as an HR advocate

One of the major areas of opportunity in many organizations today is the potential value that can be gained by leveraging the relationship between the CFO and HR function. Through their intimate involvement with corporate strategy and cost management, CFOs have developed a deep knowledge of business priorities and an understanding of each department’s needs and individual impact.

Areas where HR excels — such as recruitment, onboarding, and retention —are instrumental to the health and vitality of any business. But there’s also a growing opportunity for CFOs to add substantial value from the financial side of the business.

On the surface, talent management may not seem like an obvious component of the CFO’s role and responsibilities. In recent years, however, CFOs have increasingly become involved in driving business strategy and are becoming better equipped to take a more active role in working closely with HR to execute plans and achieve business goals.

This change has important implications for the HR function, which must work in partnership and negotiate with finance departments. While these two roles are often at odds with one another as they pursue their functional agendas, when the collaboration works, the alliance becomes a powerful engine of transformation and growth. 

The CFO can provide key insights and perspectives that an HR team needs to acquire talent and drive productivity. But it requires asking the right questions from the start, and knowing the precise metrics that are relevant to an organization. Key questions to consider include:

1. How can finance and HR collaborate better?

HR understands the company’s current and potential human capital strengths as well as anyone. Closer collaboration with the finance department can help HR better leverage this insight on behalf of the company’s larger goals, and also, if needed, support changes in strategy or initiatives to help tackle the newest market challenges. 

One important step a CFO can take is to integrate processes and work to improve information sharing across the two departments. CFOs need to share key metrics with HR so the best hiring choices can be determined based on the most vital needs of the company. The CFO typically has deep knowledge and insights into key business priorities that can prove instrumental in helping to shape the company’s people strategy and raise the right questions. Do our actions align with business strategy? Are we building a sustainable talent roadmap? Can we maximize retention and reduce the cost of turnover? Are we engaging all key stakeholders?

Whenever possible, seek to share performance data, long- and short-term financial goals, and vital metrics related to important business priorities. Likewise, HR can provide input about employee performance and other metrics. This information exchange can help lead the way toward identifying precise needs and employee skills needed to help the business more effectively compete in the market.

Bottom line: the more HR is engaged and integrated into the company’s strategic and financial planning initiatives, the better it is able to contribute to talent acquisition, productivity and workforce sustainability improvements. 

Key actions to better collaboration:

  • Seek out common ground on business issues
  • Create a leadership culture that encourages collaboration
  • Invest the time needed to make the relationship work
  • Focus on initiatives that impact the entire organization (beyond specific functional areas)
  • Ensure that HR is involved in upstream planning and decision making

2. How do we define and measure HR success?

To meet quantitative goals and keep the company competitive, HR needs to have its own clearly defined metrics that measure its success. This is where the CFO can add value. 

CFOs typically have deep knowledge in analytics and metrics, which are essential to measuring performance. CFOs can assist HR leaders in defining metrics related to employee retention, engagement, training costs and more, and illustrate how those correlate to business performance.

HR performance metrics are often shaped by what is easiest to measure rather than by what is most important. Finance should work closely with HR teams to identify and monitor the key performance indicators that will support the organization’s core business objectives and strategy. Adopt a more comprehensive, longer-term system of performance indicators that include leading employee, as well as lagging finance-oriented, metrics. This might include more tactical measurements, such as employee productivity and engagement, and retention.

Make measurement a continuous, predictive process. Establishing a performance baseline is the first step in the process. In addition to sharing relevant financial data, the CFO should calculate the cost-benefit performance that weighs heavily into to overall value creation of the business. With a consistent dialogue with HR leaders and a clearer understanding of performance goals and targets, the CFO becomes an important strategist, able to influence and more effectively support the HR function.

CFOs also play an important role in determining how performance is to be rewarded based on the analysis of those metrics. This is important for both engaging workers and helping to ensure the process connects to core business strategy.

3. Are we extracting maximum return on our HR talent?

If HR isn’t tapping into the full potential of talent in your company, you’re leaving money on the table. By not capitalizing of your employees’ potential, detachment and reduced motivation quickly follow. This can lead to lower productivity and high turnover.

The CFO can advocate for employee development within the executive team to ensure that HR gets the needed resources for employee development programs and advancement paths. Because there is often no immediate return on investment, the CFO can often lend support to the initiative to get executive buy-in.

Rather than reporting on previous performance, CFOs need to consider new potential growth areas. Accomplishing that requires a solid understanding of your company’s growth patterns and the resources to research and adopt new ones if needed. Begin to see operating budgets as enablers of growth rather than control levers; start inquiring into which resources could advance the company’s competitive situation, rather than focusing on reducing or minimizing those resources.

Organizations that do an extraordinary job managing their talent are better able to distinguish themselves in the broader marketplace. By more closely exploring the relationships between costs and human capital, the unlikely alliance between HR and finance becomes a powerful engine for growth strategies, talent advancement and productivity. 

4. How can we better leverage the value of big of data?

The use of big data and analytics offers a powerful collaboration tool. By applying a more analytical, data-driven approach to human capital management, management teams are able to gain greater insight into the drivers of a business’ performance.

Analytics also allow companies to model diverse scenarios, using a mix of internal and external data, to predict possible results from a range of investment options. This helps companies identify the optimum workforce management approach for the defined business strategy.

Analytics are a useful tool to not only measure retention, but to predict it as well. Through forward-looking analysis of how changes to the business will effect new talent requirements, and evaluating the market availability of those skills, companies are better able to plan ahead. They can determine the feasibility of crucial investment decisions, and any possible workforce roadblocks that need to be removed.  

Workforce analytics is coming of age. Greater maturity of HR data, and the ability to apply this information to areas such as strategic workforce planning, and operational and workforce performance modeling, provides a powerful platform for understanding how people investments will affect certain key performance indicators. CFOs are ideally positioned to add value here by identifying new ways to apply analytics to workforce improvement and engagement efforts.

Key takeaways

Today, the role of CFO encompasses more than financial reporting and financing. It has expanded to include strategic, operational, and people management responsibilities. This change has ramifications for HR leaders and professionals who collaborate with or support finance leaders. 

The good news is CFOs now have a much stronger sense of the importance of human resources and the contributions it makes toward business growth. They are becoming better equipped to accept the responsibility of successfully identifying skills sets across departments. By asking the right questions, the CFO can provide the key insights needed to identify and acquire talent across different departments while helping to make their workforces more responsive to their current and future needs.

With many companies now embarking on digital and financial transformation initiatives, CFOs are at the center of exciting new technology-driven programs that are unifying operational and financial processes. By taking a proactive role in organizational transformation, CFOs are ideally positioned to help integrate and enhance human capital assets to drive higher productivity and support business growth.