In today’s rapidly changing business environment, organizations are constantly seeking ways to stay ahead of the curve. This has become more critical since the Great Resignation and the Covid-19 Pandemic.
When it comes to running a successful business, the two departments that play a critical role are – Finance and Human Resources. As the HR/CFO partnership is responsible for the most crucial business elements – Money and People.
A survey showed that 92% of CFOs believe that HR plays a critical role in driving business success. And on the flip side, 87% of HR professionals believe that the CFO plays a crucial role in creating a positive work environment!
Defining the Synergy
The joint venture of CFO-CHRO is dependent on and independent of each other. Their functions may be different, but their end result is dependent on the other.
According to a recent study, organizations that have a strong HR/CFO partnership are 4.5 times more likely to outperform their competitors.
The most important function of both departments is to create value for the common cause. The CFO and HR must find financial and growth harmony between both the parties (the organization and its employees)
For maximizing value creation, you must ask:
- What value is being created?
- Who is creating value?
- How it can be improved?
This will ensure the combined efforts of the CFO and HR will be fruitful.
Deloitte conducted a survey in 2019 which shows, nearly 70% of CFOs and CHROs saw growth in their statistics. Furthermore, the survey found that companies with a strong HR-CFO partnerships had:
- 56% higher employee engagement
- 47% higher employee productivity
- 38% higher employee retention
That’s right—the dynamic duo of finance and human resources can deliver serious wins for companies, and here’s how:
- Aligning business and HR strategies
- Investing in L&D training
- Implementing performance management systems
- Leveraging AI and technology
Valuing the Strategic Proposal
Given the roadmap to finding harmony, let’s discuss the benefits of the partnership:
- Better Decision Making: By working together, CFOs and CHROs can make informed decisions that take into account both financial considerations and the impact on the company’s people. For example, when deciding on employee benefits, the CFO can provide the financial perspective while, the CHRO can provide insight into what benefits will be most attractive to employees.
- Improved Employee Retention: A CHRO, backed by the financial support of the CFO, can implement programs and initiatives that help retaining top talent, reducing turnover and its associated costs.
Harvard Business Review found that companies with strong HR-CFO partnerships had a 33% higher return on assets compared to companies without such partnerships. Additionally, these companies had 14% higher employee engagement levels and 12% lower turnover rates.
One well-known company that has benefited from a strong HR-finance partnership is the retail giant Wallmart, which has a strong focus on employee development and engagement. Walmart invests a whopping $300 million per year in employee training and development programs and has a turnover rate of 17%.
This focus on employee development and engagement has helped Walmart retaining top talent which has helped it maintain its position as one of the largest and most successful retailers in the world.
- Increased Productivity: When employees feel valued and supported, they are more engaged and productive. By joining forces, CFOs and HRs can create a workplace culture that supports and motivates employees, leading to increased productivity and profitability.
Well, from a CFO’s perspective, HR plays a much bigger role in boosting your business growth. It engages and understands the personal and common cause of every employee in an organisation. And knowing your colleague better causes no harm. In fact, I personally prefer to have a common lunch at Contetra, to discuss work in a totally informal and unstructured way.
- Better Risk Management: The CFO and HR can work together to identify and manage potential risks, such as lawsuits, employee conflicts, and compliance issues. By proactively addressing these risks, they can help protect the company from potential financial and reputational damage.
- Focusing on HR Metrics: The secret weapon of this dream team is the use of financial metrics to measure the impact of HR initiatives on the bottom line. Although not everything an HR does, can be quantified in tangible terms, but the CFO-HR partnership can provide good insights about employee metrics.
The beverage giant has a long-standing commitment to sustainability, and the CFO and CHRO have been key players in this effort. Through their collaboration, Coca-Cola was able to implement a series of initiatives aimed at reducing its carbon footprint, including employee training programs and the use of alternative energy sources. The results have been impressive – not only has the company improved its reputation as a socially responsible business, but it has also boosted its financial performance.
Let your CFO be your strategic partner in achieving your company’s goals.
Under Contetra’s FinanceFirst initiative, we help you get the competitive advantage you need – whether it is finding the right candidates for your finance function or curating learning and development initiatives to upskill your finance team.
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