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STRATEGIC HR
Jan 15, 2013

The different – and not so different – roles of CFOs, CHROs

How can any senior executive have all the experience we say is needed?
    

By Dave Crisp

I know I’m still an HR guy at heart when an article on the evolving role of CFOs annoys me. Then I take a second, look and ask myself why? We’re all missing something critical.

It’s because we all tend to look at the world from our siloed points of view. Each function is starting to overlap and move toward taking ownership of aspects of management that really shouldn’t be owned by any single function. This McKinsey article goes on to make more or less that point.

First it identifies four core CFO orientations:

1. Finance expert.

2. Generalist.

3. Performance leader.

4. Growth champion.

Then it notes no one could competently fulfill all four roles and the CFO needs to be one of a team. That’s where I get on board. But how?

These are roles senior HR people should fulfill, too. Even finance expert, I would argue, is appropriate for key aspects of HR strategic roles. You can’t manage effectively in hiring, workforce management and narrower roles like senior executive compensation if you haven’t got a pretty good grip on financial impacts and outcomes.

Of course, it would be more common to see "HR expert” added first in the list for CHRO. Someone has to keep the company within the laws... and in the HR segment of business, there are a great many. We don’t have external audit companies and internal teams dedicated to ensuring we follow legislation the way CFOs now have to be equipped. But we definitely expect CHROs to be business savvy, which means understanding finance, markets, customers and what drives profitable business operation in your industry as well as knowledgeable in HR. Whenever there are HR implications in the problems the business faces, you hope the CHRO foresees and heads them off.

Despite extensive support around finance operations — not only internal and external auditors, but board audit committees with teeth and expertise and considerably more time on board agendas than HR gets — the debacles of Enron, Worldcom and others were thought to be rooted in the tendency to hire non-financially expert MBAs as CFOs rather than executives with degrees and designations in finance (chartered accountants or other specialists).

There’s presumably just as big a risk in non-expert HR executives running HR. Lawyers are the support professionals for HR, but asking the right questions remains critical and balancing internal priorities without forgetting legalities is a big challenge.

So the concept of a CFO or CHRO being a generalist who has served time in multiple functions previously might be questionable, but how else is a senior executive to fully understand the business.

Does every executive have to have wide-ranging prior assignments in order to be effective on the senior team? The answer is we’ll never get to test that because it is impossible to put together a team like that.

People will have varied backgrounds when it comes to actual experience, but what really counts more is their ability to work as part of team, to listen to (and actually hear) what other executives are trying to contribute and to be open to other points of view so a joint decision becomes stronger than any one executive could have made alone.

You wouldn’t build an orchestra from people who had to have a couple of years playing each of the instruments one at a time. But you would be concerned about how individual virtuosos were going to relate to each other. In a jazz combo, the players take turns in the lead, advancing the music as a whole along a similar theme without any one person dictating the score. In both types of music, the key is willingness and intent to play together. Does that eliminate egos and one-upsmanship? Most certainly not, but it keeps the importance of the whole result in plainer view than in most businesses.

As we work in our more or less isolated siloes, we can’t hear the screeching, clashing effects our decisions to spend on this or that pet project makes as it crashes against big spending on a CFO’s pet project or marketing’s pet project.

It’s this co-ordination with the team that needs to be evolving most. This is the area where businesses are the weakest and the skill set most consistently overlooked in hiring or promoting senior executives. It’s also the role where HR should be able to provide the greatest expertise to the team, but one which very few members of any senior team seem to spend much time thinking about, working on or paying attention to. Is it changing? Circumstances are probably forcing greater awareness, but we still have to ask how we can speed this up.

Dave Crisp is a Toronto-based writer and thought leader for Strategic Capability Network with a wealth of experience, including 14 years leading HR at Hudson Bay Co. where he took the 70,000-employee retailer to “best company to work for” status. For more information, visit www.balance-and-results.com.
    
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