Should Finance Run HR? A Balancing Act for CFOs

Efficiency. From cleaner consumption of energy to improved workflow processes, efficiency is the top workplace trend according to recent Gallup results. These findings highlight a growing movement among businesses to neutralize an uncertain economy with sustainable business practices.

With new technology and increased competition, many companies have found that return on workforce isn’t where it used to be, raising the question, “Should the finance department run HR?” Of course, while finance-operated HR departments won’t be a nationwide trend anytime soon, the reality is that when it comes to complex payroll responsibilities, the finance team can definitely play a role in efficiency. After all, considerations like earnings codes, bonuses, deductions, records, incentives, and other tasks are arguably more suitable for the finance department.                                                                                             

Furthermore, the highly publicized case with kgb USA Inc. and the $1.3 million it paid in back wages to 14,568 employees highlights the importance of not only efficiency, but the knowledge needed when it comes to payroll and other financial matters. Like kgb USA Inc., the HR Director of most companies generally doesn’t have real-time data available to him when making key strategic decisions. So while the finance department doesn’t have to run HR, chief financial officers should certainly be an advocate for HR efficiency and resource development.

Integrating HR and Finance for an Efficient Team

Knowing how to balance the HR department within a business can be a tricky challenge. From compliance issues to the use of independent contractors, the boundaries that once defined internal compartments are no longer as distinguished as they once were. The HR team should be influenced by:

  • Operations. If the HR department is responsible for hiring and managing multiple employees on a regular basis, then the thrust of these efforts should be mostly influenced by operations. These are primarily administrative duties that would be enhanced with help from the operations team.
  • Finance. On the other hand, smaller companies that hire sparingly have a different function for HR, which is now more responsible for payroll, legal compliance, benefits, and other duties separate from operations. In this situation, the finance department and CFO would be better suited to manage (or at least assist) the HR team.