CFO and HR Head Don't Mix

There are many industries in China where the CFO prides him/herself with overseeing not only Finance and Accounting departments, but also the HR department, the Admin department, and the IT department. At the same time though, the CFO does not seem to be entirely responsible and accountable for the quality and results of the HR function and the HR team they assemble. This is the status quo and even the most creative companies will not disrupt this bizarre and ill-advised reality.

For a deep-seated change to arise, shareholders and the CEO must understand the significant price of entrusting a numbers cruncher with power and authority over an HR department that is expected to drive leadership development, talent management, and a high-performance culture. Major issues include:

1. Mediocre Leadership
The CFO rarely has the time to guide human capital management. As their title suggests, the CFO is consumed with finance and accounting matters of an organization.

It is difficult for the CFO to successfully balance finance/accounting and HR/talent as these are diverging activities and require different knowledge and skills. Furthermore, the HR team's effort to develop human capital of the organization (investment) clashes with the Finance team's focus on lowering expenses (savings).

2. Mediocre Framework
The CFO rarely has the know-how of human resources management in areas such as hiring and selection, staffing, training, organizational structure, and employee engagement to drive an organization's people agenda. So, the CFO tends to ask one-dimensional questions and therefore lacks a talent-oriented perspective in many HR matters. Consider the different perspectives of the CFO and HR Head on the following HR responsibilities:

Hiring and selection
• CFO: How much does it cost to get the Candidate onboard?
• HR Head: Does the Candidate have the skills and talents required to execute our strategy?

Staffing
• CFO: How large is the total workforce budget?
• HR Head: Which segments of the workforce create the value for which we are most rewarded in the marketplace?

Training
• CFO: How big is the training budget?
• HR Head: What training does the organization need to garner skills and talents to deliver our strategy and what skills will we need over the next five years that we do not currently possess?

Organizational structure
• CFO: Do we really need additional headcount, can 50 percent of our workforce work 15 minutes harder each day?
• HR Head: How can I help my people be more productive?

Employee engagement
• CFO: Who will pay for it?
• HR Head: What programs shall we institute to increase employee engagement and involvement?

Consequently, HR departments in China are left with no guidance in the War for Talent and instead continue to do what the CFO does best, ensure legal compliance, save money when hiring, rewarding, and terminating people, and above all, administer, administer, and administer.

3. Meager Commitment and Accountability
In their own choice of words, the CFO tends to separate him/herself from the HR department by referring to the HR team as "they" and not as "we". Furthermore, the CFO does not fully accept responsibility for the HR department's focus on lower-end HR tasks and does not see him/herself accountable for HR function's lack of skills and capabilities to manage and optimize human capital.

4. Inferior ROI
The CFO's salary and perks is partly justified with his/her supervision of the HR function. However, the HR department is rarely managed to add value to the bottom-line. Thus, the HR function’s Return on Investment does not materialize. Thus, organizations would be better off by committing a share of their total budget to a skilled professional with 100% concentration toward the talent agenda.

No doubt, the CFO can oversee a HR department that focuses on rewards and benefits and HR operating efficiency. But, when it comes to people related strategic issues such as leadership development, talent management, and workforce productivity, the CFO needs to either go back to school or open the door for a talent minded HR Head that first and foremost represents “talent” in management meetings.

The Inconvenience of People Metrics

Even in a stagnant economy, top management rarely questions their responsibility to deliver revenue and profit. However, when it comes to people metrics, management remains reluctant to push for and overtake them and be held personally accountable for realizing improvements. For example, being responsible for voluntary staff turnover of over 40 percent seems bizarre to executives in China and instead they resort to common excuses as these: “This is normal for our industry” or “It is part of doing business”. Other questionable excuses include:
• (Regarding reasons for leaving) There is always a company that will pay more. We did not intend to keep them anyway; we do not think that they deserve any promotion or salary increase. Their expectations do not match their skills.
• (Regarding unsatisfactory employee satisfaction scores) We did not have 100 percent participation in the employee survey; so, we did not really get a full picture here and people probably did not understand the questions.
• (Regarding the low amount of training hours per employee) We train on-the job primarily. We have no time for in-class training. Our client meetings always overlap with training times.

Under such circumstances, a hands-on and strong HR function that tracks and calls for Managers’ co-responsibility for people metrics would create enormous headaches for one-dimensional senior management. Therefore, a weak and supportive HR function is preferred by many in power positions. In addition, a mediocre HR department is easier to staff and unable to measure people metrics in the first place. So, the problem is solved and solving problems is a Manager’s primary duty after all. Until of course, a bigger problem arises; the talent in the company has dwindled greatly, workforce apathy is all around, recruitment costs have gone out of control, and the company's reputation has suffered. Now, there are no more quick, easy, and cheap fixes; the competition has soared past your organization.