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Bridging the CHRO/CFO Divide: Engage in Strategic Planning Early

Part 2 of our series on how and why Finance and HR should collaborate more closely

Bridge Stretching Out Into Fog or MistAs discussed last week when we launched this series, CEB’s survey of more than 100 midsized company executives reveals clear intent for the finance and HR functions to work more closely and take advantage of opportunities to help teach and learn from each other.

The same survey showed us five areas where CFOs and chief human resources officers (CHROs) agree on how they should work together, and four areas that CHROs and CFOs view differently and believe their partner should strengthen their expertise. The next five posts will look at each of these areas of agreement in more detail.

The first area where both parties say they work well together is in strategic planning. They both find it immensely valuable to collaborate as early as possible in their firm’s strategic planning process, and encourage senior executives in the line and other functions to focus on a set of limited, realistic, and clearly defined strategic goals.

Those interested in how finance teams can get better at strategic alignment should fill out this form, and those interested in how HR can be more collaborative should fill out this form.

Collaboration on Strategic Planning: CEB’s View

Successful collaboration begins with strategic alignment. To do that effectively requires CFOs and CHROs to rise above any functional viewpoint and recognize (whether there’s a formal strategic planning process in the firm or not) and agree on how the company intends to drive value. Then both functions have to be “at the table” as they co-own the management of the largest resource streams for the organization.

The two functional heads must share a unified vision for corporate performance. Without clear goals, both sides often plan independently, adjustments are unclear, and both CFOs and CHROs retreat to running their functions instead of aligning their functions to drive business value (see chart 1).

Potential Value of Strategy Versus Realized Value

Chart 1: Potential value of strategy versus realized value  Indexed  Source: McKinsey & Company; CEB analysis

Executive’s View

In my experience, if Finance and HR aren’t highly involved in strategy formulation, the organization will make too many uninformed bets and miss opportunities to drive value in new and innovative ways.

CFO, Electronics Industry

Up Next

How CFOs and CHROs want to collaborate on the integration of operational and workforce planning to create a connected, transparent process for resource allocation.

 

Read part 1 of the series, Bridging the CHRO/CFO Divide: 5 Steps to A More Powerful Partnership

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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