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Bridging the CHRO/CFO Divide: Help the Business Use the Right Metrics

As part of our series on how and why Finance and HR should collaborate more closely, we focus on success requiring more than just Finance and HR metrics.

CEB Human Resources knowledge of key emerging HR trendsCEB’s survey of more than 100 midsized company executives clearly showed that executives in finance and HR – including CFOs and chief human resources officers (CHROs) – want to work more closely and take advantage of opportunities to help teach and learn from each other.

The same survey highlighted five areas where CFOs and CHROs agree on how they should work together, and four areas that CHROs and CFOs view differently and believe the other should strengthen their expertise.

A previous post looked at the integration of operational and workforce planning, which is the second of the areas where both parties say they work well together. Third in the series is the need for Finance and HR to work together to help the business use the right metrics.

Combining the Right Enterprise Metrics: CEB Human Resources View

Companies that over rely on financial metrics may achieve their short-term goals but rarely manage to build the capabilities needed to achieve any long-term goals.

Finance should work with HR to engage line managers in developing operational and human capital metrics that explain the health – or otherwise – of the organization, and not just how likely the business is to hit financial goals. Success in this engagement requires both Finance and HR to understand financial, human capital, and operational metrics, pressure-test them against the business, and adjust them as needed.

Many companies use a balanced scorecard approach that Finance, HR, and the business review and update for relevance each quarter.

And the gains can be great. Making progress on the right human capital measures is the one lever that continues to drive substantial productivity improvement. Top quartile companies realize productivity gains over bottom quartile companies by 2,600% (see chart 1).

 CEB Human Resources knowledge of key emerging HR trends

Chart 1: Trends in Key Productivity Measures  Source: Compustat; CEB analysis

Executives’ View

We should have joint buy-in on key people metrics linked to financial goals and strategic objectives so that we can measure success and act quickly when we go off plan.

CHRO, Electronics

Up Next

CFOs and CHROs should use their position to ensure compensation and benefits decisions encourage behaviors aligned with strategic priorities.

 

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

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 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

More On…

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