Maturity

Why the CFO said HR was easy to learn

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Photo credit: Wei Xuan Seow – flickr

I recently co-facilitated a discussion forum between a group of CFO’s and CHRO’s on the importance of their relationship in building business value. During a question on what skills each other should build to understand the other role, an attending CFO said “It would be easy for a CFO to learn HR, but not the reverse”.

There was stunned silence from the room as the heat rose from the attending CHRO’s – they weren’t sure if they had just been told they were less capable, less intelligent or simply would never be considered an “equal” to the power and status of a CFO.

Was the CFO correct?

From the perspective of: CFO right or wrong?
Education and qualifications: Both roles are considered specialist functions which have underlying professional adherence. The CFO learns to comply, manage and manipulate a set of globally defined rules to legally reflect the financial value of their organization. The CHRO complies with medical ethical standards related to psychology and social science practices. Both qualifications are professionally recognized and offer advanced degrees to support this. WRONG
Complexity of the role. At the basic level, CFO’s take their guidance from GAAP and legislation in terms of how they execute the outcomes of their role. They are generally instrumental in guiding the organization in terms of maximising financial value, reducing and effectively managing cost, effective use of capital, maintaining investment community confidence through accurate reporting, analysing financial risk and proposing corrective actions. The CHRO has different complexities to deal with as “people” and society are well, people. Rules for people are less defined or prescriptive. CHRO’s who don’t operate as administrators can juggle 40+ different interrelated elements across people, process, organization, legislation, technology and governance to create business value through people. WRONG
Perception: The CFO is typically regarded as highly important, particularly for listed companies – mainly because their outputs reflect the success of the CEO and other executives, and the consequences of anything untoward in financial outputs could result in serious organizational and personal ramifications. In many organizations, HR is often perceived as an Administrative function with little clout at the C-Level. This is often true when HR has low levels of Maturity and spend most of their time executing operational transactions. In most cases this would be easy to learn. RIGHT

 

So the CFO was both right and wrong, but we should be cautious to blame the CFO for his views. We can assume that in this case, the HR leaders the CFO has interacted with have probably been of a lower maturity level, more administratively focused and had executive leadership who have yet to realize the importance and value of Human Capital  from a shareholder perspective.

For a CHRO or CFO to really learn each others jobs would not be easy. Yes, you could easily learn the stuff like administration and basic accounting, but the underlying knowledge is far more complex than meets the eye.

How does your CFO view HR?

 

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How to get the best value out of HR systems
originally posted in Inside HR Magazine  http://bit.ly/13ocsjj
There is a correlation between technology and organisational maturityThere is a correlation between technology and organisational maturity. Source: iStock

There is a direct relationship between organisational maturity levels and the value derived from HR systems, writes Rob Scott

Clients often ask me what the primary influencer is when selecting new HR software, and are generally surprised when I respond that they should first ask their executive management team what they really think of their HR department and what current and future expectations they have of this function.

The executive view is generally very telling, and while there are many factors which influence the selection of HR software – including key business drivers, people focus areas, industry challenges, budget availability and existing vendor relationships – one overriding influencer, and one that is rarely applied sufficiently, is the impact of organisational maturity. Your maturity level is a direct result of how your executive team defines and drives the concept of value (including people value) through the business. It is also the lead indicator of what the HR function will succeed at, and hence the likely value an organisation will get from an investment in HR software.

Your views of people
I like to think about HR software as a mirror. It generally reflects the reality of management’s view of people. In many cases, I see HR departments being blamed for “poor service” and “terrible software” – and while HR incompetency may be a contributing factor, the real issue is often a misalignment of what the HR function does and what the organisation needs in relation to its maturity level.

Some organisations see people primarily as a cost, whereas others see people as a means of producing broad financial and societal returns. While there is no right or wrong position, what your organisation maturity level reveals is the true “expectation” executives have of employees. It also frames any value they would assign to proposed HR initiatives and tools.

According to the Maturity Institute’s framework (ARC) there are nine other “pillars” aside from how people are viewed that when measured together, determine an organisation’s stage of maturity . The “stage” effectively shows the current limit of HR’s value and expectations.

Aligning to maturity levels
When a company has a low level of organisational maturity (e.g. stage 1 or 2), it is unlikely that senior management would regard the HR function as strategically influential, nor see significant benefit in introducing solutions like performance management, career & succession and analytics. In this scenario we often see HR managers using a “stick” approach to drive process compliance with line managers, but few managers actually derive any business value from these HR tools, because the executive team fundamentally don’t see the need to use them to execute their goals. At a maturity level of four or five, there is a completely different expectation of people by executives who understand the importance of these tools to create business value.

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The argument against using maturity for software selection is tied into the “HR best practice” and “best practice technology” belief. Stories of engaged employees, massive cost savings and improved shareholder value are the typical rationale provided by software vendors to buy all their software. I am yet to meet a vendor who is prepared to accept financial accountability if the “best practice” they want you to buy does not work.

Aligning your HR software selection and purchases with your maturity level will give you the greatest opportunity to succeed in HR and build credibility at the executive level. As you improve your maturity level, the need for more strategic and sophisticated HR systems will become obvious and support from executives will easily be attained.

HR systems and organisational maturity

  • There is a direct relationship between your organisational maturity level and the value you derive from HR systems.
  • HR systems are like a mirror – they reflect how your organisation views people. When people systems are in disarray, it is often a sign of a low organisational maturity level, not poor software or process.
  • When HR managers and executives understand and accept what their maturity level means, the role of HR and expectations become clear to both parties.
  • Improving your level of organisational maturity is the real catalyst for HR to become a strategic influencer in your company.

Rob Scott is global lead: HR strategy & innovation for Presence of IT, a leading consultancy in HR, talent, payroll and workforce management solutions.