Should HR Follow Finance in Innovation? 

We all know that HR technology threatens to make many in our function obsolete. We’ve heard that HR tasks can be outsourced or that systems can take the place of people. What I don’t believe anyone has pointed out is that Finance weathered this storm beautifully a long time ago, stepping in front of their transaction-based business into the role of core management, disseminating and becoming indispensable as advisors who use the tools to make the business faster and more agile. We’ve never tied these two departments together in their migration from transaction-based to innovation-based. I think it might make for a good read.

 

 

As HR professionals, we’re often threatened by obsolescence. We hear threats of outsourcing, that we’re mere paper pushers, that we can’t keep up with our internal business partners, nor do we speak the language of the business. Many of us seek our own counsel, gathering together to figure out what best practices could lift us into higher esteem with our C-suite, breaking our organizational structure and twisting our business models to appear more productive and current. But there’s a simple solution not many of us may have considered, another division who was much maligned for years until they rose to prominence over the past few years: why don’t we ask our friends in the Finance department?

 

Those of us who’ve been around for a couple of decades or more can remember how maligned our financial partners were: seen as necessary number crunchers who just ran reports, they suffered much the same threats as HR does today: outsourcing, deconstruction of the department, reengineering because they didn’t understand the business. But one look at the transformation of the Finance department of today, and they’re some of the most respected individuals in the business. Why not follow their lead?

 

Before we go further, I understand in many organizations the Finance and HR departments might be at loggerheads. Where Finance sees HR as the defender of decisions that might be better for the workforce than the bottom line and where HR may have issue putting return on investment on their activities for the needs of their Financial partners, I argue that a closer partnership is invaluable, and that we can learn a lot from our math-savvy teammates.

 

We’ve suffered many of the same failed reorganizations, by the way. Massive IT overhauls, shared service centers, process reengineering, etc. But where Finance has evolved is the focus on what the team can offer their clients versus how they offer it.  Back office transaction processing is virtually invisible to the internal client, and the most client-savvy among them are front-facing with their C-suite and management team, offering analysis and decision support. They operate with a clear vision of the activities which create value and drive business outcomes and those that don’t. Finance understands the skills and competencies their staff needs now and in the future in order to build stronger talent capabilities in areas of weakness. They evolve as a service provider. They keep their eye on how their processes and tools can help their clients succeed. They mind the bottom line, and they speak the language of the business.

 

The evolution of the back office of the Finance department is a critical example of what is possible if you maintain a client focus during a transformation. Both Finance and HR have undergone massive technological revolution. The differences between these processes is simple: HR technology brings HR processes to the desktops of the masses, while Finance technology brings the mindset of the masses to financial processes. Their job is to make it easier to enter data and run reports. General ledger information is rarely visible when filling out an expense report. Can we say the same about HR desktop technology? Are benefit, compensation and performance management desktops that fluid? We could learn something.

 

But the most crucial item to come of the evolution of the Finance department is their migration into the C-suite as consummate business partners. They know their businesses, and they’re able to forecast where the business wants to go and what it will take to get them there. They’re quick to suggest process improvements, technological advances, and tough decisions that will lead to the fortitude of the company. They’re one of the first to be pulled into a crucial decision-making meeting. They’re involved in all the major moves of the business because they’re seen as a trusted advisor and a crucial aspect of the business. It’s admirable. It’s also repeatable for the HR side of things.

 

I believe strongly in HR as the business partner that Finance has become. We must evolve and use our tools to solve the problems of our corporate clients. Align with Finance and follow their lead. Where their success has taken them, we only have to follow and surpass.

 

About the Author: Rita Trehan is the Founder and Principal of Rita Trehan, LLC, a change management and leadership advisory firm focused on corporate leadership, emerging technology, and cutting-edge organizational design. As a seasoned top executive that has successfully transformed organizations at the Fortune 200 and beyond, she has extensive experience working with CEOs and top corporate management on process and organizational improvement for maximum profitability. A soon-to-be published author, Rita regularly speaks at industry conferences around the world. You can contact Rita on twitter at @rita_trehan and connect with her via LinkedIn. Rita’s blog can be found at www.ritatrehan.com.

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1 Comment

GrumpyLecturer

There appears to be gathering discontent amongst the blogging HR community and practitioners not before time I hasten to add. A growing despondency is spreading through the ranks of the once masters of the business universe as many are trying to come to terms with their role in the employment relationship which once seemed so clear. Confronted with a lack of employee engagement, employee increasing mistrust and a upsurge of questioning what exactly the role of HRM is some soul searching is finally beginning to emerge.

Rather than be examining the endless processes of their profession HR should revisit their trade from the macro level as, I feel. the major problem for HR is that it is a philosophy interfering in an ideological minefield. The philosopher looks to reason as to why life is the way it is, in this particular instance, why work relationships between employees and employers are at some stage likely to turn hostile. The philosopher adopts, it can be argued, a more pragmatic approach to the principles that guide the employment relationship in trying to eradicate this tendency to hostility. Though they do appear to think that all hostility is to be found in employees as this is where their endless processes are aimed at.

The ideologue, on the other hand, applies a universally held view, weltanschauung, about the nature of, in this particular case, the employment relationship. This weltanschauung is deeply based in historical events, political interests and is concerned more about the creation of an ‘ideal society’ which in the case of the employment relationship is one based on fairness of both wages and effort.
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So what is the point of this preamble?

Well as far as the employment relationship is concerned the HR philosophy is trying, from a practical and reasoning perspective, to alter it from one of distrust and often open hostility to one of engagement, cooperation and loyalty between employers and employees. Unfortunately, and this is where HRM fails miserably, employees and to a large extent employers, still view work from the old, let’s say traditional, ideological perspectives in which the weltanschauung of both sides is one of monetary and effort mistrust. Employees wanting the most wage for the least effort the employer the most effort for the least wages. Current trends support this argument.
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The philosophers of HR find themselves, more often than not, in the midst of this ideological battle. This is not of their making however; it is their failure not to recognise the historical antecedents to the employment relationship or worst still be arrogant enough to think that they can change things through ‘rational argument’ as this raises the question as to whose ‘rationality’ is being applied which unfortunately brings us back to ideology. In a way HRM is naive and childlike in that it sees a harmonious employment relationship as possible but based on historical evidence this not achievable due to the very nature of capitalism. As briefly mentioned above the side that has to change the most to bring about this harmony are thought to be employees they appear to be the ones who act ‘irrationally’ in the employment relationship. Employees see no evidence of a balance in HR activities in that it appears to them that all the burden is being placed on their shoulders to comply with the every wish of employers.

HR appears to have failed somewhat in trying be ‘strategic’ employers are unwilling to bestow this privilege on HR. Ideologically employers still ‘think’ it is their prerogative to manage their employee, who they are paying, as they see fit without any third party interference. Possibly HR is seen as trade unions were as interfering with this ‘right’.

HR ‘looked the part’ in those heady day’s of boom and ‘load’s a money’ full employment breads a false sense of security. In a depression the atmosphere changes pretty quickly. For the first time ever in a recession the wages of ordinary employees have not only failed to rise but they have declined enormously whilst those of their bosses have increase exponentially. The poor decision making of managers and employers are resolved by sacking employees. Employees are forever expected to work harder for little or no monetary reward. Employees are browbeaten into acting individually as the world of work is expressed in Olympic competitive terms.

These things are not knew the ideologue will point back to different periods of history pointing out the same reoccurring themes. What is different now is that rather than collective action being taken to curb the excesses of employers in these times all eyes on are on HR who have ‘sold themselves’ in the past as being totally different from personnel departs in that they HR, are more interested in ‘humanising’ work. What is being experienced in the employment relationship today are all happening under the watchful eye of the HR managers or directors and employees appear at last to be coming to terms with what HRM is.

To employees who may have once thought HR may have been an idea worth trying, philosophically speaking, are now more inclined to think of it, HR, as yet another cynical ideological system of employer control.

HR has to revisit the macro argument to establish it’s reason for being if it wants to sustain itself as a profession in the future otherwise it will find itself being increasingly marginalised by employees and then by employers who will just move onto another fad in their quest for control over the labour process. +

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