Think Tank

CFOs and CHROs: Mutual Expectations and Accountability

In conversation with Hariharan Madhavan, Group CFO, CK Birla Group, and Sameer Zutshi, CFO Hewlett Packard India

Traditionally, HR has been concerned with people management while Finance delves into numbers and spreadsheets. Over the years, both have come to recognise and appreciate each other’s imperatives and constraints. Equally, there remain areas of dissatisfaction or disagreement. As the overarching repository of business performance and outcomes, what does the CFO expect from their CHRO? Conversely, as the owner of the organisation’s most important resource, what support does the CHRO seek from Finance? At a recent India CHRO Forum session in Delhi, we sought to probe these issues by facilitating a discussion between the two ‘communities’. Hariharan Madhavan, CFO of the CK Birla Group, and Sameer Zutshi, CFO of Hewlett Packard interacted with CHROs discussing ways for the two functions to work better together.

Changes to operating model, strategy and products and services are prompting CFOs and CHROs to work more closely

Two worlds converge

The quest for growth faces two major obstacles in today’s volatile environment: a scarcity of funding and a shortage of human capital. To overcome these, the CEO seeks the counsel of both the CHRO and the CFO. Having risen in the corporate hierarchy, the two roles – which typically report into the CEO – have broadened in terms of responsibility and expectations, and have become more strategic and less siloed. Changing business models, evolving organisational strategy and the need for continuous innovation are also prompting CFOs and CHROs to work more closely.

Successful collaboration requires a healthy work culture

Partnering for performance

Each of the two functions must understand the firm’s overall objectives, and align its activities to achieve the greatest efficiency at the lowest cost. HR keeps the firm’s engines running smoothly by mapping employee performance or finding ways to reduce attrition. It is now also expected to formulate strategies that directly propel business growth. The ideal is when Finance and HR work collaboratively but this demands a certain type of organisational culture, backed by strong camaraderie. Driving it requires considerable effort from both the CFO and the CHRO in their individual capacities, with strong support from the CEO.

HR leaders must align more closely with the business

Developing a deeper understanding of business and people

Striking a balance between the firm’s strategic objectives and people’s expectations is critical. CFOs feel that HR sometimes take a backseat in dealing with business problems. To overcome this deficiency, HR leaders must find ways to ‘acclimatise’ themselves with the company’s financials – which is the ultimate yardstick of organisational growth. The aim should be to dabble in every aspect of the business and to then identify unexplored growth avenues. Additionally, given its close association with people, the function must devise a metric for impact assessment – that is, the potential return on every penny invested in a given function.

Finance leaders should develop skills closely related to HR

On their part, Finance leaders cannot depend for success only on the strength of their numerical skills but must also develop the ability to relate to other functions, including HR. To that end, CFOs need to hone their softer skills such as mentoring, coaching and talent development.

A data-based approach to talent management can enable HR to share common ground with Finance

Leveraging data and analytics

Data and analytics offer a common ground for HR and Finance leaders to collaborate. A more data-driven approach to human capital management would allow HR to share a common language with the business. Essentially, HR needs to demonstrate the value of human capital through hard metrics, such as ‘value per employee’.

Migrating administrative tasks to an SSC or a COE can free up time for strategic discussions

Transforming functions for strategic focus

To better align the two functions with the overall business model, it is useful to migrate administrative tasks to shared services centres, third-party vendors or centres of excellence. Not only this will ensure efficient and effective delivery of services but will also free up time for senior Finance and HR executives to hold more constructive and strategic conversations.

Top management support is key to developing a culture of collaboration

Enabling a healthy work culture

Effective collaboration requires a healthy work culture, one that is supported by the CEO and other members of senior management. Strong personal accountability is another crucial element. At one company, the CFO and CHRO hold weekly ‘no-agenda’ meetings that foster creativity, encourage everyone to share ideas and promote collaboration. Every organisation goes through challenging times and it is ultimately the culture that helps them tide through. It is possible to get rid of old and archaic processes and make the company more agile, all the while keeping the culture intact and strong.