There has been a lot of talk lately that in order for HR to be a better strategic partner, the function has to learn to understand and collaborate with other business functions.
A new survey by EY has revealed organisations are on the right track, as business leaders reporting strong ties between CHROs and CFOs led to better business results.
On average, high performers were found to spend 50% more time on the CHRO-CFO relationship, reporting better integration between finance and HR in the areas of processes, teams, technologies and systems.
Just over half (51%) of the high performers also said their company’s CFO is heavily involved in identifying and tracking HR metrics, versus 10% of others.
“To really maximise employee engagement and improve workforce productivity, while keeping pace with the ever-changing dynamics of the global labour force, the CFO and the CHRO need to find ways to increase collaboration effectively and efficiently,” Dina Pyron, global human capital leader at EY, said.
“This collaboration will empower CFOs to allocate the necessary resources required to deliver the company’s strategy, and the CHRO can ensure the alignment of ‘right people, right place, at the right time’.”
According to the data, companies where there has been strong collaboration between the two functions have seen a “higher EBITDA (earnings before income tax, depreciation and amortization) growth and stronger improvement across a range of human capital metrics, including employee engagement and productivity”.
The study, which surveyed 550 CHROs and CFOs, identified the four key factors behind collaboration between CHROs and CFOs over the past three years, including talent scarcity and increasing labour cost, HR’s growing importance within the corporate hierarchy, companies’ need to change directions and adapt quickly, as well as more organisations altering their business models.
“In the past, the only interaction between many HROs and CFOs was at budget time, but we increasingly find that an ongoing dialogue between these two organisations brings positive results to the business,” Grahame Wright, human capital partner for EY in ASEAN, said.
“This will be an important distinction in Singapore as we seek out substantive productivity improvements across many businesses.”