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The latest alliance in the boardroom - CFO & CHRO

The latest alliance in the boardroom – CFO & CHRO


In IBM’s Fifth Biennial Global CEO study in 2012 they identified that Human capital was the key source of sustained economic value. 71% of CEOs stated it as a factor above 66% for Customer relationships and just 22% attributing R&D & intellectual property.

In the 2 years following IBM’s research it is undeniable that the focus organisations have put on human capital has risen immensely. I find a good gauge of growth in any sector is to look at how the support networks have adapted  surrounding the sector and in human capital we’ve seen software providers such as Oracle, IBM and SAP put human capital management (HCM) at the forefront of their development agendas. Whilst newcomer to the enterprise Workday have rapidly established themselves as a credible specialist vendor in HCM and are now expanding out into other areas of the enterprise such as financials.

ibm sustainbility report

Percentage of CEOs indicating that a factor contributed to sustainable economic value.
Source: IBM Fifth Biennial Global CEO Study, 2012

A momentum has been building to propel human capital to the forefront of any organisations priorities agenda. Yet we’re still seeing HR departments not given enough responsibility. In Oracle and IBM’s report with the Economist Intelligence Unit, 80% of CEOs and CFOs stated they wanted their head of HR to be key in their company’s strategic planning, yet only 38% of those CEOs and CFOs said that this was currently the case.

Going back to IBM’s 2012 report another interesting discovery was that Data access & data-driven insights came in as the third most sighted source of economic value. Whilst a global survey of over 1,200 companies conducted by Tata Consulting Services found that HR received the smallest amount of investment into data insight a measly 5% of the budget whilst the sales and marketing department enjoyed the lion share at 30%. Another department to be short changed when it comes to data insight investment was the finance department who Tata’s report showed received just 8% of the budget.

We already know the office of finance and the office of hr work closely together but could there be potential for a new alliance between the two departments to gather more investment into data insight and empower themselves to utilise the data to drive growth? Lets take a look at the sort of advantages that a big data insights could deliver to both the office of finance and hr:

Optimise your pay rates:

Using data insight to identify the impact of different pay scales across an organisation will allow the CFO and CHRO to be able to maintain a level pay scale across their organisation and prevent salary related attrition.

optimise your pay rates

Modern HCM systems all organisations to spot common issues before they occur. An example would be how an HCM system would highlight if an employee is underpaid in correlation to his/her peers. Using data insights to identify these types of issues prevent the negative effects these scenarios put on an organisation from staff feeling demoralised and under-performing through to staff leaving the role in search of a more equal paid opportunity.

More efficient compensations:

Many organisations rely on the individual performance of their work force and they often financially incentivise them by offering performance related compensation in the form of commissions on bonuses. Data insights between the CFO and CHRO could identify what types of compensation drive the best performance and subsequently the CFO and CHRO could together deliver more effective compensation plans saving costs and improving performance.

Hire the right people in the right places:

hire the right peopleWith different geographies demanding different pay rates data insights would allow the CFO and CHRO to work together to ensure they are hiring the right people in the right places. For example data insights could identify that the cost of hire within a certain location is higher than another. It would be easy to avoid this location and concentrate on the lower hire cost locations, but without deeper data insights an organisation would be unable to identify if the location with the higher cost of hire delivers higher qualified hires due to it’s proximity to a successful school or college.

Identify historical issues that may still pose a risk today:

Having data insight into historical issues will allow an organisation to prevent a past issue reoccurring. An example would be an organisation taking on a project which would require several new hires. Data insight could identify that in the same location, or specialised hire field the organisation previously had big problems fulfilling their requirements. Having this data prior to taking on the project would allow the organisation to prepare effectively for similar issues to reoccur. Smoother running projects means the ability co collect revenue faster.

Spotting and nurturing top talent:

spot talentMany organisations run performance reviews and appraisals but without the ability of using data insights the super valuable data accrued from the reviews gets locked away at line manager level. Unless the data is made available to insight throughout the rest of the organisation top performing talent may go unnoticed. This has 2 negative effects, the first is that the talent may move onto another organisation where their talent is more valued, the second is that the organisation may be undergoing the costly process of recruiting talent in their organisation to fill skill gaps where they already have the talent within their ranks.

Maintain a fair and diverse work force:

Today’s modern organisation is focussed on maintaining a fair and diverse work force. Data insights can allow the CFO and CHRO to ensure that diversity and fairness is maintained throughout the organisation by keeping track of staff variables such as, but not limited to age, gender and race. Even though discrimination occurs less in the workplace today it still exists. Without the ability to use data insights regions that maybe seen to be discriminating can be identified.

Diversity in the workforce

Top talent is often attracted to organisations that are seen to be the most diverse so it isn’t just a matter of ethics but about ensuring the organisation is placed to attract top talent in every way.

Bar the exits:

bartheexitsExit interviews are a common enough procedure in a modern organisation but the data so often isn’t captured and exploited. Why someone has left an organisation and where they have gone are two absolutely key pieces of data that every organisation should hold about every member of staff that leaves. If you’re losing your best talent to the same competitor it spells double trouble as you’re not only being weakened by losing your best staff but your competitor is being strengthened by winning them from you.

Paying attention to why staff are departing will allow organisations to stop the rot and retain their top talent and save the expensive costs of replacement.

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Is it time for the Big Data love in of the sales and marketing departments to move over and make space for the finance and hr departments? Maybe not quite yet, but, one thing that is absolutely certain is that data insights can be the tool that can help both the CFO and CHRO to strive forward in the pursuit of organisational greatness!

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