- change ups
BDO workshop highlights CFO and HR strategy role
Coming out of the recession, both roles are evolving in parallel fashion.
The realms of people and numbers are colliding as business executives collaborate within organizations to drive company growth.
The Executive and Human Resources Services Group of BDO USA LLP, a professional services firm, recently conducted a workshop to discuss recent trends in finance and human resources.
One of the developing trends for 2014 presented at the seminar is the strategic partnership between human resources and finances, and recognizing how collaboration between the two will help achieve company goals and objectives.
Dan Adragna, director of outsourced financial services at BDO, said the role of a company’s chief financial officer has evolved to become more strategic in improving efficiency and assisting in development of company goals.
“They really need to understand how the organization works, how it competes, who are the competitors, what is the value proposition for the company,” said Adragna. “Where we see ourselves today is that the CFO is really stepping more into the realm of human resources.”
According to Adragna, as a result of restructuring during the economic recession, CFOs ended up assuming roles and tasks that were previously contained in the human resources department.
“In many companies, CFOs have had some role in human resources, but more recently with the financial crisis that we had, I think it pushed more people over into that area, mainly because of cost cutting,” said Adragna. “I think where we stand now is, as we come out of recession … I think CFOs will stay involved and I think it is mainly to help provide information to human resources in terms of maybe some key metric data.”
A recent study conducted by the CFO Alliance surveyed more than 500 business leaders in middle-market organizations based in the United States in delivering growth for 2014; 85 percent of the respondents were CFOs. The CFO Alliance is a global network of finance leaders founded in 2008 and has since grown to incorporate more than 4,500 CFOs in the nation.
“The CFO Alliance 2014 CFO Sentiment Study” highlighted key tactics and strategies financial leaders within businesses anticipate using to drive successful growth initiatives. Of those surveyed, 26 percent of CFOs identified attracting and retaining the right talent as having the greatest impact on budgets and operational forecasts for 2014, while 65 percent said they would spend more in acquiring and maintaining the right talent, and realize a high return on investment in regard to top operational issues impacting 2014 budgets and forecasts.
Maureen Miller, director of human capital solutions at BDO, said human capital has replaced financial capital as a scarce resource in terms of driving organizational growth, due to fewer limitations and constraints in regard to finances.
“Organizations are now seeing more as a system for investment versus just production,” said Miller. “Organizations are seeing that it is important to invest in their talent … and that is what is driving their growth.”
With CFO and human resource executives beginning to collaborate as human capital becomes recognized as a key value driver for growth, the role of the HR executive or specialist is evolving parallel with the CFO.
The finance department is taking human capital into account as a means to drive business success, and at the same time human resource professionals are using raw data to help achieve company goals. According to Miller, both HR and CFO departments began as very transactional positions and have since transformed into strategic roles.
“Some of the lessons that we have seen from the CFO … is understanding how the business works, how it operates, what internal and external factors impact the bottom line,” said Miller.
“Human resources has a plethora of data and uses that data to provide qualitative metrics for the finance department, for your CFO, and turn those into actionable items and bring it back to the strategy to help enhance the vision.”
Miller said the collaboration is a way to refocus resources, run routine tasks efficiently, and emphasize long-term strategy rather than just fixating on daily operations. The interaction between the financial and human resources departments results in new insights in how to attract and retain talent.
According to Adragna, successful companies have developed a strategy and vision based on human capital driving growth, and the interplay between the two departments will occur in trying to balance a cost-effective stance with a competitive draw for talent.
“It is in their best interest to have programs where they can attract and retain. So on the one hand, you have the CFOs who are going to be cost conscious and looking at what they can afford,” said Adragna. “But those who have the recognition and realization that human capital is a value-driver in the business need to work with HR to understand what are the market dynamics, what is the going rate for the type of people we are looking for, and finding that balance.”
The BDO workshop also covered objectives such as identifying key developments and best practices related to managing retirement plans, and recognizing and applying new accounting disclosure requirements related to employee benefit plans.
BDO USA has regional locations in Detroit, Grand Rapids and Kalamazoo. BDO provides assurance, tax, financial advice and consulting services to privately held and publicly traded companies across the nation. The professional services firm is part of an international network of independent member firms in more than 140 countries globally.