HR and Finance

I have been following HR trends and theories for the past 15 years or so. Working at a leading software company, I’ve spent considerable time crafting product messaging and linking technologies to these themes. Selling and consulting about HR technology is an interesting place to observe the ebb and flow of HR trends, waves and fads. In the past few years, shared services, HR as a business partner, becoming strategic, jettisoning administration, outsourcing, Talent Management,  HR transformation and other buzz words have resonated throughout the HR space, not just in the US; but world-wide.

The Ulrich business partner model is now at the core of many HR department plans. It is rare today that I meet an HR organization that isn’t doing some form of shared service restructuring, or “transformation project”. The mantra of “strategic” HR is on the lips of most HR management.

“We need to add value to the business and drive the organization of the future.”

  • “The HR head should be the trusted advisor of the CEO”
  • “We must become more analytical, and measure ROI and link HR activities to profitability or growth matrixes.”
  • “Performance management must link to organization success and individual success”
  • “How can we win the war for talent?”
  • “We must benchmark”
  • What should we be called?

Consulting firms point to diagrams of pyramids inverting admin into strategy. BPO providers articulate how outsourcing can reduce the administrative burden and free up the space and resources to “Be strategic”. Technology promises to reduce administrative drudgery and slash transaction costs. We are busy in HR, aren’t we, changing our world for the better?

HR- under huge pressure to validate and prove it adds value. HR: underinvested and undervalued, but fighting back. HR, on the move – transforming. HR, wrestling with a changing agenda, reinventing itself and becoming “business focused”, “integrated” and linked to the “bottom-line”. Some HR departments have gone as far as to re-brand HR as “Human Capital Management”. Software products have been quick to follow.

Somehow, HR often manages to see itself as unique, having different challenges from the rest of the organization, requiring unique solutions and processes. People outside HR often look on in bewilderment, wondering what it is that keeps HR so busy.

I recently received a major jolt. I’ve have started to collaborate with a new team looking at Chief Financial Officer challenges and issues. Key current top topics are:

  • Getting more out of financial shared services
  • Beyond compliance
  • Transforming from administrative to value added financial services
  • Enterprise performance management
  • Accounting for intangible assets (IP, Brand and People)
  • Becoming the trusted advisor of the line and the executive team.
  • Building for the future.

I recently saw the Wharton executive program, “The CFO: Becoming a strategic partner” featured prominently on their website. Books and journal articles abound promising to “transform it (the finance function) from a numbers-cruncher into a strategic partner to the business.”

The most recent issue of the CFO magazine was devoted to Human Capital. With articles such as “What’s wrong with finance training” and “The new Human-Capital Metrics.”

In the German “Controller” magazine a recent article explained how HILTI had integrated HR type metrics into accounting reporting.

I have been asked to give a talk on “People issues for finance”- to provide guidelines for finance functions developing learning programs to cope with the switch to shared services and business partnering. It is worrying that they are asking me, and not their own HR teams.

It is seldom that I see HR and Finance willingly talking to each other. Even at business school the HR folks and the Finance Folks would hang out at different ends of the library or even the bar.  The accountants would play hooky in the organization management classes, and the HR folks would avoid “quants” and accounts like the plague. Relationships or liaisons with bean-counters were frowned upon. Their jokes weren’t even funny.

Odd then: The top challenges facing the Head of HR are almost exactly the same as those facing the Head of Finance. Perhaps it is time that Finance and HR sat down together and shared some ideas. HR folks might be able to teach the finance folks a bit about the people issues in performance management, and who knows, just maybe they could help you figure out how to build a convincing ROI case for your talent management strategy. 

You might even come up with some joint strategies. Measuring the value of “Human Capital” is interesting to the accountants too. Sarbanes-Oxley isn’t just a finance thing. You may agree it seems dumb to build two shared service centers to handle first level support. You may realize that accountants are people too. If you think back to business school, there was that one person in accounts who was patient and explained depreciation without seeming depreciating, and who was able to write a sensible paragraph on organizational culture. Organizations need more of those people, and less of a silo mentality.  He or She is probably a CFO now.

HR and Finance are not castes. Its time for some inter-marriage.


5 thoughts on “HR and Finance”

  1. Pingback: itsreal
  2. very interesting…a few things wich even i used to ponder upon..plannin to do my PhD in a topic linking FINANCE and HR…help needed!! 🙂

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