WHY HR SHOULD NEVER REPORT INTO FINANCE
Whenever I see an organogram or a job description which reflect that HR reports into the CFO or the Finance function, I can feel my eye start to twitch. To be very clear, the function of Human Resources should NEVER report into the finance function.
Don’t get me wrong, I have a healthy respect for the finance function and have worked alongside some fantastic CFOs over my career. But the key word here – is worked alongside – not for.
Why do I have such strong views about this?
Finance is responsible for such things as: bookkeeping, management of cash flow, budgets and forecasting, advising and sourcing longer-term financing, management of taxes, financial reporting and analysis and supporting and guiding strategic decisions regarding investments, etc.
Whilst the function of Human Resource is responsible for primarily the people of the organization and covers such things as hiring the right talent and keeping them engaged and motivated, career progression, the well-being of employees and keeping a company legally compliant from an employment perspective. This by no means is an exhaustive list.
There is a school of thought that states that HR should be more finance orientated and that the emphasis should be on ROI and analysis as this is the language that will win support at the boardroom table. Whilst I don’t disagree that HR needs to be savvy regarding financial investment and where to spend the pounds and the pennies – I disagree that this should be the main focus.
After all, there are enough leaders at the C-Suite table who are focused on ROI and there should be a voice that champions the human element. A bit of ‘yin’ to the ‘yang’.
To this point, Finance and HR are complementary – the each have an important but distinctly different role in the organization. After all, their shared goal should be the increased profitability of the business through enhanced performance of people and product.
What are your experiences and views on this?