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Bridging the CHRO/CFO Divide: 5 Steps to A More Powerful Partnership

As part of our series on how and why HR and Finance should collaborate more closely, we focus on steps to create a powerful partnership.

Bridge Stretching Out Into Fog or MistCEB’s survey of more than 100 midsized company executives revealed clear intent for the finance and HR functions to work more closely, identify emerging HR trends, and take advantage of opportunities to help teach and learn from each other.

From a distance, the CHRO (chief human resources officer) and CFO (chief financial officer) have a lot in common.

First and foremost, they control the two most important resource streams in most organizations, money and people, as well as how those resources interact.

Both functions are non-revenue generating—serving at the “corporate center” on a mix of compliance and strategic value activities—and determine the performance management of the organization.

And, as CEB’s report on the corporate functions of midsized companies shows, both have important roles to play in developing and implementing the growth strategies of their firms in what will be an important five years for the long-term health of many companies in a growing and changing global economy.

When It’s Good It’s Very Very Good, But When It’s Bad It’s Horrid

When CFOs and CHROs are tightly aligned and working well together, they wield great power and strategic influence.

But when either function fails to make the strategic impact it should, or when they fail to collaborate effectively, both often end up retreating to their functional comfort zones and talking in what might as well be Greek on one side and Magyar on the other.

For example, within an HR team “performance management” refers to the process that ensures the firm is developing and getting the most from its employees but, to a finance team, it means making the most of a firm’s financial capital. To a CHRO “good performance management” might mean creating certain jobs and, to a CFO that isn’t working closely with HR, “good performance management” might mean resisting any attempt to create those same positions.

When these two functions are not aligned corporate performance suffers, and this can often lead to finger pointing and a frayed corporate culture.

Five Areas Where CHROs and CFOs Agree

Our survey, which included current HR trends, showed there are five areas where CHROs and CFOs agree completely on how they should work together; we also identified four areas where CHROs and CFOs each thought their business partner has more to learn if he or she hopes to strengthen the partnership.

  1. Engage and ally early in strategic planning to encourage corporate focus on a set of limited, realistic, and clearly defined strategic goals.

  2. Integrate operational and workforce planning to create a connected, transparent process for resource allocation.

  3. Teach the value of HR- and finance-functional metrics, and then collaborate to align those metrics against company objectives.

  4. Focus compensation and benefits decisions on driving behaviors aligned with strategic priorities.

  5. Implement an ongoing review process that enables HR and Finance to coordinate on critical people decisions.

Four Areas Where They Don’t

In addition to the five areas of agreement, the survey also uncovered four areas that CFOs and CHROs view differently and believe their partner should strengthen their expertise if they’re is to be better collaboration.

  1. CHROs want CFOs to understand that development has strategic value beyond a direct return on investment.

  2. CHROs want CFOs to understand that labor laws can limit HR action.

  3. CFOs believe the HR team needs to strengthen its knowledge of quantitative metrics.

  4. CFOs want assurance that CHROs closely monitor and report details on head count and expenses.

The following six posts in this series will look at each of these areas in more detail.
 

Read part 2 of the series, Bridging the CHRO/CFO Divide: Engage in Strategic Planning Early

Read part 3 of the series, Bridging the CHRO/CFO Divide: Integrate Operational and Workforce Planning

Read part 4 of the series, Bridging the CHRO/CFO Divide: Help the Business Use the Right Metrics

Read part 5 of the series, Bridging the CHRO/CFO Divide: Align Compensation and Benefits with Corporate Strategy

Read part 6 of the series, Bridging the CHRO/CFO Divide: Coordinate Your Approach to the Line

Read part 7 of the series, Bridging the CHRO/CFO Divide: Four Areas Where CFOs and CHROs Disagree

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