With this crazy world we live in today, it is more important than ever for business functions to work together. This includes HR. It also includes Compensation.
Although Compensation needs to work with every function, it probably needs to work more closely with Finance. Reason? They both impact company costs, and Finance holds the company’s purse strings.
HR/Compensation and Finance have traditionally had a rather "tense" relationship --at least in some companies.
- HR is solely focused on people and not the business
- Is mathematically challenged and not involved in “numbers”
- Doesn’t think about the bottom-line
- Finance enjoys saying “no” to everything
- Are pencil-pushing bean counters who discount HR’s input
- Finance only cares about the bottom-line
We have all had the experience of the CFO plugging in the same merit budget percentage ---- for all countries worldwide. Compensation then has to “fight” for different budgets for different countries. And as a part of that fight we have to convince him/her that India really does need 15% while the U.S. only gets 2%.
Regardless, Finance and Compensation need each other. Somehow our relationship needs to change. Companies that base their total rewards strategy purely on cost (as Finance might recommend) could end up at a competitive disadvantage in the labor market, especially when the job market heats up again. But those moving aggressively to acquire and retain talent by ratcheting up their total rewards (as Compensation might recommend) face other risks in the form of an uncompetitive cost structure for the company.
The right decisions need to reflect an appropriate balance — between investment in the workforce and a healthy cost structure for the company. Achieving that balance depends to a great extent on the ability of HR and Finance to work together.
I have been fortunate to have had very good working relationships with CFOs. Contrary to what you might think, they tend to be pretty colorful characters.
There was one that was a confirmed “tippler”, and one that was my mentor. There was also one that summoned his minions on either side of his office by pounding his fist very loudly on the walls and yelling their names. (I kid you not!)
Saving the best for last, there was a CFO that truly saw the value in HR. I was fortunate enough to work on some very worthwhile projects with him. Through the years, we have kept in touch.
Working with CFOs need not be difficult. Give them the benefit of the doubt. And, though they might never admit it, they need us as much as we need them.
Compensation and Finance, when partnered together, can be a formidable force. Together they can manage the company’s top and bottom line and make financial and people decisions to help achieve the company’s goals. After all, people and money run the company!
Jacque Vilet, President of Vilet International, has over 20 years’ experience in International Human Resources with major multinationals such as Intel, National Semiconductor and Seagate Technology. She has managed both local/ in-country national and expatriate programs and has been an expat twice during her career. Her true love is working with local national issues. Jacque has the following certifications: CCP, GPHR, HCS and SWP as well as a B.S. and M.S in Psychology and an MBA. She belongs to SHRM, Human Capital Institute and WorldatWork. Jacque has also been a speaker in the U.S., Asia and Europe, and is a regular contributor to various HR and talent management publications. She lives in Dallas and has 3 four-legged children and one Chinese daughter (it’s a long story). She’s had a life-long love of animals and the ocean. So what is she doing in Dallas?
Image courtesy: productiveflourishing.com