While the relationship between CFOs and HR managers is often tumultuous at best, much of this friction can be avoided if HR managers understand the needs of a CFO and the ideology behind their thinking and actions
The relationship between CFOs and HR managers can be rife with struggle, but if HR knows how to understand the finance department, life will be easier for everyone.
There are four processes that must be undertaken in order to assimilate the views and productivity of both CFOs and HR managers, according to Sarah Cornally, MD of consulting firm Leading People.
The first principle is understanding the world view of a CFO, who focus on the hard data, facts, figures and risk analysis essential to an organisation.
“CFOs deal with the black or white,” she says. “They take these numbers to people, and have to deal with all excuses and negative behaviour which they are often ill equipped to handle. This is made doubly worse because they know the value of numbers and are conscious of how people can distort them to avoid facing reality.”
CFO’s world view in dealing with people is very simplistic and they use whatever works with them to try and influence others, according to Cornally, not realising how different approaches will work with different people.
“To communicate more effectively with CFOs, we must understand their position and why they often experience the worst in people,” she says.
The second principle is based on building a strategic relationship with the CFO.
As CFOs report to the CEO and the board against the strategic priorities of the organisation, Cornally says they can be a valuable asset in helping HR understand business imperatives and how initiatives can be aligned strategically.
“HR practitioners are people and resources orientated, and must utilise these skills to be an asset to CFOs. If HR uses risk concepts in its rationale, it will create a common language with CFOs,” she says.
In doing this the CFO can experience the value of HR and it will make HR’s job easier and enhance their effectiveness in the business. It will also enable the CFO to see what HR actually does for an organisation, and appreciate their function and effect more.
For CFOs to work together strategically with HR managers, CFOs need to understand what HR is doing and how it directly aligns with strategic priorities and produces an economic benefit to the organisation, says Cornally.
The third principle relies on HR producing business case presentations for CFOs. Here HR managers must endeavour to show CFOs the financial leverage of HR activity and how they can save or produce more dollars for them. By relating HR activities back to economics, the CFO will better understand and appreciate their role.
“What does an unresolved conflict between two executives cost in terms of their performance?” Cornally asks. “What is the cost of confusion? What is the cost of ineffectiveness? What is the cost of poor morale?”
When HR is good at identifying the cultural and behavioural links to financial performance, they identify the value for CFOs who have a bias for looking at the economic value of activities.
The fourth and last principle rests on communication. Similar to producing case studies, Cornally says HR practitioners must use analogies or metaphors that relate to the knowledge base of a CFO.
As such, using accounting and economics metaphors that will make sense to them, such as drawing on stories in business magazines that they read, will work.
“This means HR managers need to learn about these matters and understand how important they are in a business,” says Cornally. “By explaining things to them in this way, you will be able to help them see both a correlation and a economic value of all activities undertaken.”
Cornally advises HR professionals not to underestimate how much CFO’s care about people and their performance, as they simply employ a different approach to achieve that.
“It is by facing people with the facts, with reality so they can make better informed choices. CFOs often don’t realise not all people are wired like they are and make the common mistake HR also make of assuming we all think the same and therefore what works for me will work for them,” she says.
“We have to walk in the moccasins of the person we wish to influence and what works for them and then give it to them so they understand us.”