HR MUST accept its links with finance so it can effectively support the current transformation of the HR function and its business, a recent report has found
HR MUST accept its links with finance so it can effectively support the current transformation of the HR function and its business, according to a recent report.
As a result, HR professionals must therefore have a good understanding of their organisation’s financial and operating environment.
“By understanding the organisation’s finance vision, HR strategies focused on recruiting the right talent and geared towards improving finance capabilities can be developed,” said Catriona Brash, executive partner, Accenture Human Performance, Australia.
Speaking at the launch of Accenture’s TheAustralian CFO Agendareport, Brash said Australian CFOs must clearly define their organisation’s performance metrics and what drives business value.
“This highlights the need for CFOs and HR to work together to develop workforce capabilities that drive the organisation to meet and exceed its performance metrics. HR has a role in transforming the business,” said Brash.
There is often a “failure to communicate” between HR and finance, she said. As a result of the traditional conflict between HR functions and CFOs, finance will be challenged to understand, monitor and influence the underlying intangible levers of business value, which is increasingly driven by intangible versus tangible assets.
“As the value of the workforce as a source of competitive advantage becomes further embraced, finance should work collaboratively with HR to gain a better understanding of the impact of changing workforce demographics such as an ageing workforce and the demands for Generation Y on business value,” she said.
“Holistic strategies to address this emerging business performance challenge must be developed.”
Despite the fact there is a scarcity of talent within the finance profession itself, the report also found that very few CFOs had developed a formal vision of what their future finance function would look like, in order to help finance deal with their own capability challenges.
The study showed that almost 90 per cent of finance professionals reported that improvements to service quality were among the benefits received from shared services, co-sourcing or outsourcing, whilst the second highest scoring benefit, at 80 per cent, was lowering costs and maximising efficiencies.
Alternative sourcing models such as outsourcing and shared services are important for HR professionals, according to Brash, as they have workforce implications that will require careful HR planning and support.
“CFOs will look to HR professionals to help map out future talent requirements, based upon financial visions and operating models, vital to maintaining business continuity and stakeholder value.”
While recent Australian HR research by Accenture has found that non-HR executives are often concerned that HR departments are failing to add value in line with strategic or organisational objectives, as CFOs look towards transforming finance function capabilities, she said HR departments will play an increasingly strategic role within the finance department.
“There is clearly more business value to be created by HR and finance working together to create value across the organisation in line with strategic objectives,” she said.
The report also found the role of the CFO has become ever more critical to businesses today, as CFOs must provide the analysis and data behind the corporate strategy, track and manage performance and risk, set finance strategy, and run an effective and efficient finance function to support the business.
The study also highlighted the fact that Australian CFOs need to “get back to basics on performance management”. While 44 per cent of CFOs were continuing their investment in performance reporting, only 28 per cent were investing in a new program.
A large number of Australia’s senior finance executives from the public and private sector and their direct reports participated in the research, which found there is a 70 per cent positive correlation between the proficiency of an organisation’s finance function and its overall financial performance.
