How collaboration with HR can drive growth
Partnering for performance
People are a company’s greatest asset. A company’s workforce drives growth and performance; and success is intrinsically linked to the workforce’s skills, talent, knowledge and ability. This value, held in people’s heads, is worth more than any physical asset.
In most companies, people are also the single largest expense.
One study has estimated that total human capital costs average nearly 70% of operating expenses1. But unlike the physical assets that CFOs have long valued, measured and managed, people are difficult to control and predict — they have wills of their own.
While the CFO must ensure that resources are allocated efficiently and appropriately to deliver the company’s strategy, it is HR’s role to nurture this particular asset to realize the potential value for the company.
An organization’s people exist at the junction between the CFO’s and CHRO’s [Chief Human Resources Officer] worlds. But the relationship between these two figures has not always been a comfortable one.
The CFO & HR - find out more
EY professionals explain how collaboration between the CFO and chief HR officer drives faster growth and higher productivity. [See a transcript of this video]
Two worlds converge
As companies around the world seek to grow, the two most likely obstacles they will face will be a scarcity of funding and a shortage of human capital.
To overcome these finance and talent bottlenecks, CEOs will increasingly rely on the Chief Financial Officer and Chief Human Resources Officer. Both these roles have risen within the corporate hierarchy. It has become common for them to report directly to the CEO and to be peers on the management team. This has coincided with a broadening of both CFOs’ and CHROs’ responsibilities to be more strategic and commercial, and less siloed and specialist.
The transformation of the HR and finance operating models, through the establishment of shared service centers and centers of excellence, has accelerated this shift. In many businesses, finance and HR are at different stages of this journey.
Organizations that have successfully completed this transformation have taken the administrative burden away from the retained function, freeing up time for a more-strategic focus.
“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 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
Although many of these trends have been taking place over a decade or more, recent years have seen a dramatic shift in the relationship between the CFO and the CHRO. Among the 550 finance and HR leaders surveyed for this report, 80% say that their relationship has become more collaborative.
Over the past three years, what change has there been in the degree of collaboration between the CFO and the CHRO in your organization (percentage)?
CFOs and CHROs with global responsibilities, and those who are at companies with annual revenues over US$10b, are particularly likely to report an increase in their level of collaboration. This reflects the fact that larger and more global companies are grappling with increasingly complex human capital decisions, requiring the CFO and CHRO to work more closely.
- Partnering for performance Part 1: the CFO and supply chain
- Partnering for performance Part 2: the CFO and HR
- Partnering for performance Part 3: the CFO and CIO perspective
- Partnering for performance: the CFO and CIO – an emerging markets perspective
- Drive organizational success through human capital
12006 SHRM survey of over 700 companies including a significant number of Fortune 500™ companies