How to Effectively Debate Investment in HR Priorities with Your CFO

Chief Financial Officers (CFOs) have always been a friend of mine.

Early in my career, I was the human resources business partner supporting the CFO at a global software development company with around 5,000 employees.  My role was partnering with the CFO and the leadership team, aligning around the business strategy, and leveraging the workforce to deliver on that strategy.  That included everything from recruiting, developing, and retaining talent.

I worked on some very cool business priorities – restructuring to financial centers of excellence and transforming the business with technology.  What I learned from that experience is how to effectively negotiate for investment in talent strategies within the construct of the budget dollars and business strategy.  Thankful for that experience!

Now as an industry analyst, researching how HR leaders navigate the technology buying process, I hear lot of different stories about working with the CFO. Across many industries and different HR departments, HR leaders agree on three things – understand the CFO perspective, be prepared with questions and ideas, and engage in the conversation before asking for budget.

Since hearing that from HR leaders, I wanted to learn more about the CFO’s perspective on the matter.  I reached out to some friendly CFOs in my network.  What I learned is CFOs want “healthy debate.” They are inviting HR to join in “healthy debates” on investments in people (note: they are having these “healthy debates” with other functional areas too).

“What is healthy is having the discussion and the debate,” shares Ron Shah, chief financial officer at Radancy, a global talent technology platform, “because there may be things that I’m not thinking of around the impact that a decision may have on our employee population. I like to think I have a 360-degree view of things, but that’s not always true.”

This is an exciting opportunity for CHROs to have a seat at the table with other functional areas and ensure that their business goals are being met. However, it can be overwhelming when diving into discussions around priorities and investments.

Let’s look at how you can effectively debate investment priorities with your CFO.

Understand the CFO’s Perspective

It is important to understand what drives the decision-making process of the CFO. “The main goal of the CFO is partnering with the CEO, the board and the leadership team to drive the business strategy through proper allocation of the resources and investments,” shared Shah.

CFOs will be looking at things from a financial standpoint and will be focused on increasing returns for the company. As such, it is important for CHROs to be prepared to provide facts and data that can help support their point of view or what they are trying to achieve. Having concrete evidence will go a long way in getting buy-in from your CFO.  But don’t go too far into it.

“A very numbers-driven HR function can operate too much like a finance function,” cautioned Jim O’Connor, general counsel and chief financial officer of Axena Health, “Numbers are important, data is important, but don’t lose sight of the investment in people.  I prefer efficiency to be more focused on greater output rather than having less people.”

Be Prepared with Questions and Ideas

CHROs should not take a quick “no” or “yes” as an answer. It is important to come prepared with questions and ideas that will help you reach a decision with the CFO so that both sides are satisfied with the outcome of the discussion. Staffing and compensation are two areas where CFOs and CHROs are already working together to make decisions within the company.

Staffing levels can have positive or negative impacts on employees, customers, and shareholders.  “And so the timing of those decisions becomes important,” shares Shah, “the CFO and CHRO work together to figure out what and when they need to start filling roles.”

Competitive compensation plans also have impact on employees, customers, and shareholders.  “How do we allocate the dollars,” asks Shah, “we need to agree on what the different levers, such as salary, incentives, benefits, training and development, and other perks, are that we want to pull.” This is a balancing act across the organization to ensure employees can develop and grow within the organization.

Engage Stakeholders Early On

“CHROs understand where the company is today and where the company is heading,” shares Shah, “by partnering with the different functional leaders within the organization, they can build the team that has the right skill sets and the right staffing levels.”

Engaging stakeholders early in the process will help you build consensus around your ideas, which will make it easier for you to get buy-in from your CFO. Talk to other departments (e.g., marketing, sales) about what initiatives they might have that could benefit from some of the same resources you need for your project or initiative so that everyone has skin in the game and can help advocate for its success when discussing it with the CFO.

The tipping point for investment sometimes ends up being reactive,” shared O’Connor, “we learn what we are doing is not working and needs to be fixed.  Oftentimes we try to find something that works quickly rather than be able to come up with a plan of building something over time.”

Final Thoughts on “Healthy Debate”

CFOs are increasingly inviting CHROs into healthy debates around investments in people because they recognize how important these investments are for long-term organizational success and growth. By understanding what drives their decision-making process, being prepared with questions and ideas, and engaging stakeholders early on, CHROs can effectively debate investment priorities with their CFO so that everyone involved is satisfied with the outcome of the discussion. After all, people are the number one asset in most companies!

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