Finance directors need to thaw out a bit before HR will snuggle up

Have you ever asked one of those questions? You know the ones I mean – they seem innocent enough when the words trickle out of your mouth, but the reaction you get indicates that you might just have touched a raw nerve or two. My innocuous enquiry to a few high-powered peers was: “Should HR directors report to the chief executive or the finance director?”

Answers ranged from the take no prisoners approach: “The HR director should always report directly to the CEO. Anything else is simply not acceptable”, through to the considered: “This is as much about the influence and personal credibility we carry as it is about where we sit on the organisation chart.” They added: “If our breed behave as followers, don’t demonstrate initiative, lack imagination and are risk-adverse, we will continue to have the debate and get nowhere other than sounding like a bunch of saddo whiners.” How true.

But when you move the goalposts a little and ask about HR directors reporting to the finance director, hackles begin to rise, nos-trils flare and even the most mild-mannered people start to turn a nasty shade of puce.

But why? What is it about reporting to a finance director that seems to be the equivalent of offering your teenage daughter to the Marquis De Sade for a bit of mentoring?

Could it be there is such a difference in philosophy between HR and finance people? One view is that, up until relatively recently, HR has remained something of a mystery to finance directors. Employees have been viewed as a cost and HR as a cost centre that must be allocated finance every now and then to fund pay increases.

The view of the enlightened HR department is that the development of employees is an investment that can produce measurable returns. Could it be that the ears of finance directors are starting to prick us as we get better at measurement and demonstrating value, and they now consider HR part of their domain?

In the past, most organisations lacked the ability to apply ordinary financial discipline to their largest investment: people. The finance function in the main has offered little insight into this area, while good HR people can demonstrate that employee input is vital to achieving shareholder value through customer satisfaction, profitability, innovation and new product development.

The ‘perfect world’ solution is that HR and finance directors should work together and both report to the chief executive. However, as HR and performance management techniques become increasingly sophisticated – particularly where they can demonstrably relate to the bottom line – their use becomes more and more attractive to the power-seekers.

HR now has the opportunity to become the guardian of the value of the people in an organisation from a business perspective rather than a purely philosophical one. It will upset some finance directors though, as they will see this as their turf.

Perhaps in HR we still see what we do as pure and principled, virtuous and honourable, while the finance profession on the other hand is seen as cold, calculating and Machiavellian.

Perhaps Dorothy Parker was right when she said: “If you want to know what God thinks of money, just look at the people he gave it to.” Could she be referring to finance directors?

Alternatively, it’s just as feasible that HR directors are as narrow-minded as the rest of the world – that we attribute stereotypical characteristics to finance folk that are just untrue. (I have to admit I have known a few passionate and exciting finance directors in my time – but that’s another story.)

The real killer question, in a time when top HR talent is hard to find, is: would the reporting line put off talented candidates? My little selection of the great and the good in HR may not be a scientific catchment, but guess what? We all spoke with one voice. Would we report to a finance director? Sure we would – when hell freezes over, baby.

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