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.
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
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
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.
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
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:
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.
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.
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.
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
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.
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
According to the model developed by Goleman,
emotional intelligence consists of five core components.
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.
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.
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.
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.
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.
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.
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.
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:
collaboration and planning
Use of data and
First, we’ll look at the changing role of the
CFO and the ramifications for HR leaders who collaborate with or support
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?
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
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.
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.
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
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.
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.
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