“HR has to spend money not because they are spending irresponsibly but because they need to invest in initiatives for the welfare of employees, the upgrading of skills, etc.”
This, Toh said, sets up a “healthy conflict” between HR and the CFO in terms of which strategies are really best for the company.
To push through this conflict and mould a more positive relationship with the CFO, HR needs to be aware of a number of key factors, he added.
“HR people need to be familiar with and understand the business very well. There is a general perception that HR doesn’t understand the business, and in the end, the business doesn’t respect HR.”
This means HR needs to understand aspects such as the profitability and cost drivers which make the business tick. With a numeric mindset, they will be able to work together with the CFO to help save money and still fulfil all HR goals.
“Also in order to work well with the finance department, HR needs to really understand the CFO in terms of their priorities and what they can do for the company.”
These priorities include cost management and working capital management.
“And of course mitigation of risk as well,” he said. “Risk management is something important to both HR and the CFO but from a finance perspective, it ensures the company doesn’t have any growing concerns.”
These are the utmost priorities for the CFO and should be aspects which HR is well aware of, he said.
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“In very basic terms, the CFOs are always saving money and HR is always spending money,” said Finian Toh associate director of Kerry Consulting.