Your New Business Partner: Human Resources

There is a major transition in corporate America when it comes to the Finance division. It’s those folks in Human Resources. They’d like to become better friends with you. We will explain why, and how helping them out can help your career.

Believe it or not, you do share some common language with Human Resources. For today, we’ll just start with the phrase “Performance Metrics.” According to a recent survey by Electronic Data Systems Corporation and Harris Interactive, 90% of corporate executives in the Fortune 500 use only three metrics for analyzing the performance of their Human Resources groups. Those metrics are:

- Employee retention and turnover rates.
- Employee morale and satisfaction.
- HR expense as a percentage of operational expense.

The problem is clear. You simply cannot improve something you are not tracking. And in the case above, corporate America is hardly tracking or measuring Human Resources performance at all. Nine out of those ten executives reported the disconcerting news that their opinions of Human Resources performance were mostly subjective – and not based on detailed performance metrics.

Where Finance can be a strategic partner to Human Resources and help overall corporate performance:
1.) Recognize the strength of this new relationship. According to an exhaustive survey conducted by CFO Research Services, when Human Resources and Finance work together, things usually improve.
2.) Educate Human Resources about your job. They need to get a laymen’s explanation of how to read spreadsheets, how to read financial reports and understand, from a global perspective, where the costs are, and how the company is doing financially.
3.) Learn their language. You need to learn the basics of union contracts, labor laws, and issues of wrongful terminations. Why? Because the gains you make in hard, measurable corporate savings, can be quickly lost due to these less tangible, yet very expensive, issues. It all affects the bottom line to profits.
4.) Collaborate on developing programs with Human Resources. Be a part of decision support. A classic example: HR wants to propose an increase in staffing costs. They need to cost out and analyze program options, and, together with Finance, be able to defend their position from a Financial, Strategic and ROI standpoint. Your challenge: taking HR out of their comfort zone. Show them, without being intimidating, the decision criteria used by CFO’s.
5.) Recognize what brought these two groups together. There are two major factors, and both are fairly recent. First, the economy is getting tighter. Second, there is greater government scrutiny of corporate activities. In the first case, corporations now view dollars and cents much more closely – including previously intangible elements of Human Resources. In the second case, anyone who reads the papers and trade journals knows of the skyrocketing cases of legal suites brought about by disgruntled employees. Those Finance only decisions to gut certain HR programs have often been proven to cost, in the long run, far more than they saved.

You can see the future of this newly developing relationship. If you can help bridge the gap between these two groups, you’ll be doing your employer, HR, and yourself a long lasting service. And it’s not that hard to learn a new language. It just starts with a few words...

On a final and sobering note. This, from a survey done by CFO Research Services: Only 16% of the CFO’s surveyed stated they had a ”considerable or great” understanding of the ROI on their human capital investments.