It’s not a new idea, but its idiocy remains ever-fresh: “Finance should run HR.”
Indeed, that’s the title of David McCann’s recent blog post on the CFO website.
“Some HR folks, especially those at large companies, may indeed be important contributors to organizational success,” McCann writes. “But there are many times more midsize and small companies than large ones, and the consensus among finance types (usually expressed off the record) is that, on the whole, HR is not strategically minded or in some cases even particularly business-oriented.”
McCann suggests that “(maybe CFOs) should make it a priority to hire as HR leaders people who can bring to that area some of the rigor and discipline that is commonly found in finance. In fact, maybe they should routinely rotate finance executives into HR leadership roles.”
HR should be “a field driven every bit as much by analytics as is finance,” he concludes.
Some of the things HR departments do have McCann “rubbing his temples.” His example: A recent case in which a phone-services company was ordered to pay more than $1 million in back wages to almost 15,000 employees because it failed to pay those workers the minimum wage — and had misclassified them as independent contractors.
All HR’s fault, according to McCann.
HR doesn’t add up the hours
Let’s take the wage-and-hour/misclassification issue first. What HR department in the U.S. is involved in the week-to-week calculation of workers’ paychecks?
Misclassifying workers as independent contractors? Again, not HR’s call.
Organizations use independent contractors to avoid the expense of carrying employees on the official payroll. HR departments don’t make that kind of decision — Finance does.
And if Finance execs don’t know the dangers of using ICs following the feds’ recent crackdown on the practice, they’re either willfully blind or not paying attention.
HR not strategically minded?
Now, let’s take a look at McCann’s allegation that “HR is not strategically minded or in some cases even particularly business-oriented.”
First of all, the “not business-oriented” crack is disingenuous on its face. HR’s in charge of finding the best candidates to perform the work management has decided will help the organization turn a profit. How’s that effort — which requires a lot of time, discernment and judgment — not business-oriented?
About the lack of a strategic role:
First off, the simple recognition by C-level execs that HR can, and indeed should, be a strategic player is a recent phenomenon. Even today, many top-level managers continue to look at HR as merely a cost center — or with all of HR’s warnings about compliance with ever-more confusing employment law, an impediment to achieving company goals.
The trend of cutting back on employee training also limits the effect HR can have on overall employee performance — not to mention its deleterious effect on morale and retention.
It’s true, some HR departments have been somewhat slow to take advantage of HR analytics. But many HR practitioners are actively engaged in succession planning, overall strategic analysis and defining the skill sets the organization’s going to need in the future.
Plus, smart HR managers have taken the time to dig into not just where their company is going, but where the larger industry/economy is headed. And they’ve learned to talk about these things in the hard terms the bean-counters can understand.
Finally, we come down to the eternal dichotomy between HR and Finance.
Finance deals in hard numbers. What’s coming in, what’s going out, what department generated how much revenue, which individuals brought in the most new business.
HR deals with human beings. (We’d really love to see how McCann’s idea of putting Finance execs into HR roles would work out.)
Despite our efforts to somehow quantify human behavior — sliding scales for performance, attitude, ability to play well with others — hiring, training, disciplining and just plain living with a workforce on a day-to-day basis simply isn’t a calculation you can plug into a spreadsheet.
At least not yet.