As a CFO, your job isn’t easy even at the best of times. You’re responsible for managing the company’s financial health, capital investments, and return on those investments. And as if that wasn’t enough, many modern CFOs have now been given ownership over their company’s HR.
This change can be particularly difficult because as a CFO, you’re probably a numbers person – now you’re supposed to be people person too? You may well be wondering how you’re going to juggle it all.
The good news is that, with the right approach, managing HR as a CFO can be extremely rewarding and empowering. You get to guide the financial and people side of your business, coordinating the two to maximize your company’s growth. That’s a pretty good position to find yourself in, as long as you know how to handle it.
Launchways recently hosted a webinar that covers some of the most common issues CFOs face while managing HR. In today’s blog post, we’ll cover some of the main points that were discussed on the webinar. In this post we’ll cover:
- Aligning business strategy with HR strategy
- Owning and leveraging company culture
- Examining HR processes
- Identifying key HR metrics to track and evaluate
Align Business Strategy & HR Strategy
The two main uses of a company’s capital are technology and people. As a CFO who is also responsible for managing HR, you get to guide the success of your investments in human capital. Instead of seeing your hybrid role as an irritating added responsibility, you can see it as an opportunity for greater control over your company’s growth and financial health. You get to use your financial expertise and familiarity with the company’s business strategy to maximize the return on investment in your company’s people.
The best way to do this is to align the HR strategy with the business strategy so that all parts of the company are working in sync towards the company’s goals. That doesn’t just mean approaching HR from a finance perspective, though. For the best results, you must aim to see things from an HR perspective.
It’s important to bring in the right people and to make sure that they stick around for the long-haul. At the same time, cross-department alignment is critical. Every department needs to be aligned with each other and with the company’s goals so that the company can work as efficiently and productively as possible.
Many companies dismiss the impact that HR can have on their growth and continued success. They underestimate the cost of turnover and so under-invest in their people. But the fact of the matter is that talent acquisition, development, and retention are critical to a company’s long-term success. And as a CFO in charge of HR, you have control over these processes.
Build and Maintain Your Company Culture
Company culture is one of the main drivers of employee acquisition, productivity, and retention. A culture based on the company’s mission/vision and in-line with business strategy motivates exceptional employee performance. Employees who are driven by the company mission are not just contributing to a company’s profits in exchange for a salary, they are part of a greater community working towards higher goals.
That matters because providing meaningful work is one of the main challenges that companies face in today’s market. The truth of the matter is that a good salary and benefits package isn’t enough to keep employees around anymore, and as a result, turnover rates continue to increase year over year. By creating an intentional culture that is genuinely integrated into company operations, you can solve many of your HR challenges and reduce talent-related expenses.
When it comes to company culture, you need to establish a strong foundation that will set you up for future success. Mistakes early-on will lead to bigger problems down the road, so it really is worth taking the time to get your company culture right. That’s especially true for growing companies since maintaining a focused and effective culture and strategy gets harder as companies scale. Not taking the time to get things right while you’re still small can come back to bite you as you grow.
You want your team to be aligned with your vision, driven by your values, and focused on your core objectives. The first step to accomplishing that is deciding what your values are and how you can express them in your company culture. After that, you should establish an excellent team of key management-level employees who will direct how that culture will become part of the lived reality for their departments or teams. Then make sure that all of your managers are dedicated to the company’s mission/vision and driven by your culture, objectives, and career progression.
Examine HR Processes
Now it’s time to get down to the nitty-gritty of how your company operates. In order to effectively guide your company’s HR, you need to understand how the processes in place work and start to mold those processes to support the company’s business strategy.
The first step is to conduct an audit of your HR situation. Take a look at what the current HR processes are and who owns what responsibilities. Examine workflows and interview key employees to get a sense of the current state of affairs. Then, think about what works and what can be changed to establish an effective and sustainable workflow.
The next step is to look at your own responsibilities as the company’s “HR generalist”. Generally speaking, these are:
- Human capital decisions: who to hire, promote, or fire.
- Day-to-day people operations: ensuring individuals, teams, and departments are operating smoothly and working together towards the company’s goals.
- Compliance: making sure that your company is following labor rules & laws regarding fair labor standards, anti-discrimination, sexual harassment and more.
- Payroll: managing employee salaries, adding new employee files and editing existing files, complying with tax laws.
When examining these responsibilities, it’s a good idea to think about what you can handle yourself, what you can delegate, and what you can outsource to third-party providers. You want to establish a sustainable HR approach that leaves you with enough time and energy to manage your more traditional CFO responsibilities. Think of your managers as allies in establishing and maintaining effective HR processes in addition to the company’s HR professionals.
Once you’ve established your HR processes, it’s time to figure out how to track and evaluate HR performance.
Key HR Metrics to Evaluate
Identifying key HR metrics can be a huge asset when evaluating your current HR situation and future HR performance. That way you can make your human capital decisions backed by concrete data and clear trends. You should look for metrics that you can use to measure performance on the individual, team, department, and company level.
Starting with the broad-strokes metrics, you can establish departmental KPI’s and objectives to track performance between departments. These metrics should help you answer the question of which departments are performing better than others, and why. You also can and should track turnover rates on the company, department, and manager level to measure employee engagement and avoid the costs associated with turnover.
Ultimately, the most important metrics for planning and evaluating your HR initiatives and processes occur on the individual level. After all, HR is about building, maintaining, and leveraging the company’s people power – which is made up of individual contributions. That means that some of the most useful metrics to look at include employee engagement, employee happiness, and cultural health. These may seem difficult to measure, but you can collect invaluable data by gathering employee feedback.
Learn More About Managing HR as a CFO
In this article, we’ve covered several of the basics of effectively managing your HR responsibilities as a CFO, including:
- How and why you should align business strategy and HR strategy
- Building and maintaining an effective and sustainable company culture
- Evaluating and establishing HR processes
- Identifying key metrics that will allow you to plan and measure the success of your HR initiatives
There’s a lot more to learn about becoming an effective HR leader as a CFO, though. That’s why we put together a webinar that covers many of the key aspects of managing HR as a CFO. Learn what webinar panelists Dan Gloede, President and CFO of Codeverse, Jim Taylor, Founder and CEO of Launchways, and George Nissan, Director of Finance at BenchPrep have to say about what they’ve learned about guiding HR as a CFO.