Staffing.org Research Library Article

7/10/2014

Partnering for Performance

David Earle

Contents
Partnering for Performance is the second in Ernst & Young’s ongoing series focused on how CFOs can develop more powerful business partnerships with other corporate departments, in this case HR. According to their research, two biggest challenges facing international businesses today involve scarcity of capital and shortages of talent. CFOs are in charge of one and CHROs the other. It is logical and desirable that they be close working allies.

But historically they have not been. An organization’s workforce is usually its largest expense. In the past, CFOs were trained to view that asset primarily as a cost, while HR was trained to view it as an investment. But those views are outdated.

According to E&Y, corporate HR and corporate finance are in parallel states of transition. Both have risen in stature and increasingly report directly to the CEO. As peers on the management team, both are realizing that they have problems in common, including the high cost and scarcity of talent, changes in strategies, operating models, and products and services. To solve these problems, they have recognized that they have to break the traditional molds that defined their roles, which means broadening their outlook, becoming more strategic and learning to collaborate.

The E&Y study focuses on the benefits of communication and coordination. The data shows a strong correlation between business performance and the degree of collaboration between its finance and HR leaders. Higher EBITDA (gross earnings) correlates with higher performance across a range of human capital metrics.

In high performing organizations:

  • CFOs and CHROs spend 50% more time collaborating
  • Both are highly involved in workforce planning
  • Both rely heavily on analytics
  • Key HR metrics are rigorously identified and tracked

 

CRO and CHRO collaboration Over the past three years, what change has there been in the degree of collaboration between the CRO and the CHRO in your organization (percentage)

 

 

 
Value
This information is tremendously valuable for HR. It shows that in high performing organizations, HR’s “seat the table” and parity with other top executives are no longer issues. In today’s competitive global environment, how well a company understands, measures and manages its people is closely linked to its financial performance. CHROs and CFOs who partner successfully provide their organizations with significant, measurable competitive advantage.

Our own research continues to be illuminate the differences between the 20th and 21st century practices of HR. One of the key differences is the amount and quality of the conversation with the finance function. In companies that have evolved to the new model, this relationship is dynamic and robust, and makes use of shared service centers, common technology and common metrics.

Contents

  • Two worlds converge
  • 4 key drivers of collaboration
  • What high performers do differently
  • 5 reasons why CFOs should be interested in workforce analytics
  • How can companies make collaboration happen
  • Ten steps for CFOs to build a more collaborative relationship with HR

Quote
"The most important thing for a CFO or CHRO is that they think broadly and have credibility and strategic vision. That requires them to look beyond their functional roles. As CFO, I consider myself to be first and foremost an executive of the corporation, and then, secondly, a leader of the financial organization. I would expect the same kind of outlook from the CHRO.”   Bruce Besanko, CFO, Supervalu, Inc

Source Info