Synchronising CFO-CHRO interplay to drive business success
The strategic collaboration between the chief financial officer (CFO) and chief human resource officer (CHRO) has become a growth-driving trend over the last decade. By working together optimally, CFOs and CHROs can focus on the key human capital indicators that drive organisational growth, such as employee productivity, employee engagement, retention, and training.
“We do want to do quite a bit for our people, clients, and markets we work in but the reality is the bottom line has to support all those aspirations and ambitions. In a people-intensive industry such as consumer goods, logistics, or IT and ITES, it is all about deploying people in a manner that helps them grow and helps the organisations’ bottom line prosper. These two things have to come together to create real success in the marketplace,” said Priyanka Sudarshan, Vice President, Human Resources- Americas SBU at Capgemini (Chair) while moderating a panel discussion on ‘Strengthening CFO-CHRO Partnership to protect the bottom line’ in the People Matters Workforce Productivity Conference 2022.
Contribution of CFO-CHRO partnership to the bottom line
HR is typically seen as a right-brain function and finance as a left-brain function. Then, how do both these thought processes combine to contribute to the bottom line?
B Ganesh Shenoy, CFO at MTR Foods, says the right brain-left brain symphony is what drives business forward.
“The partnership between the CHRO and the CFO is all about establishing the primacy of a business orientation mindset in the organisation because it is not just about functional expertise, a business orientation is also needed. This is best served by collaboration between the CHRO and the CFO. The facets that HR skills bring to the table are all about building capability and softer skills to be able to absorb some of the business orientation skills that the CFO can actually bring in,” he contended during the panel discussion.
“The softer side is also equally important because mindsets will need to be shifted and opened up. One will have to be transparent enough to share knowledge and absorb this knowledge. The CFO side will have to impart the non-parent functional attributes to the other functions. This is what establishes an orchestra that really performs a symphony as far as the business is concerned. It is all about finding a rhythm for our respective business,” he adds.
Coinciding priorities of CFOS and CHROs to achieve results
Sumit Agrawal, Group CFO at Subex, says the CFO-CHRO collaboration is a great asset for the people aspect of any organisation, especially a service organisation. “And if they don’t manage to collaborate, it could become a liability. The idea is how to manage them well. If the CFO who is good with numbers and HR who is good with manpower can come together, it will give a great result. In order for that partnership to happen one needs to be cognisant of the key metrics for the organisation and keep clear Key performance indicators (KPIs) around manpower utilisation - how many resources does one need to support a project and provide the right set of resources at all levels,” he adds.
Collaboration, hence, can be done by setting the right set of KPIs for the organisation, which helps both the functions to actually proactively act on things needed to support business.
This not only protects the bottom line but also protects the top line because every delivery is linked to the manpower supply or manpower project, says Agrawal.
“If the project is not executed, it hits the top line as well and in turn, impacts the bottom line. So, syncing between the two is very important. Only a common agenda of both the functions can help an organisation to achieve a common objective,” he adds.
Role of CFO-CHRO in driving innovation
It is said that organic growth is there in a continuum, but it is virtually impossible to get into a discontinuous growth path unless you have the innovation DNA in the organisation.
“Innovation is a buzzword that is often misunderstood. It is not like one gets up one day and gets a fantastic idea and then, you work on it. It's all hard work and the hard work emerges out of a co-created landscape of different functions. Only when there is a cross-functional team, which actually works on a vision, and starts discussing openly and transparently (because there is no boss in a cross-functional team), every idea is valuable. You sift from all these ideas and crystallise into what is really good for the business, not just in the short term, but in the medium term,” says Shenoy.
He adds that every business has multiple lists of ideas which they can work on to take the business forward but when they actually prioritise the top three impactful ideas, they should really build upon them and that is when the organisation can really leapfrog.
“Cross-functional teams are less talked about but the value that these teams bring to the table is enormous. There are no hierarchies, no levels, it is all about insights and every single insight is important to really make that idea big and workable,” Shenoy added.
CFO-CHRO driving digital transformation
A decade back, digital was only looked at as an IT function. Today, digital is at the heart of the business, whether it is at the front end, or the back end, or whether it is all at the transaction processing which is done centrally.
“So, unless you have a digital DNA in the organisation, it is very difficult for us to leapfrog, and build differentiation muscle in our respective businesses. This is where the collaboration of the CHRO-CFO comes in because it’s also providential that in digital skilling, a lot can be done by the CFO. It's all about opening up mindsets and having a very open kind of culture, whereby digital skilling is done right across the organisation. Only when everyone speaks digital display, the same language, and what we call the ‘digital literacy' is lifted up, the organisation's success can really be seen,” says Shenoy.
Importance of proactive CFO-CHRO collaboration in logistics
Around 80% of the value in logistics comes from the shop floor. Hence making a difference to the bottom line has to happen at the shop floor level and that's where both functions need to work together.
Santosh Abbimane, chief financial and transformation Officer at DTDC Express, says one of the biggest challenges that the logistics sector is facing today is with respect to employee workforce and employee productivity and this has two aspects to it - retention and acquisition.
“One of the biggest things we have discovered is that if you're proactive, and reach out to people and make them feel wanted before somebody else approaches them, it's a great game-changer,” he says.
“Workforce productivity also has to do with continuity, especially in a service-oriented industry like ours. For the past couple of years, and maybe the next few years more, logistics as an industry has tremendous tailwinds. But we cannot realise the potential if we don't have the people to work with and what we do on retention, rubs off on acquisition as well,” he adds.
Abbimane says logistics has two components - the management workforce also called the management layer which is thinner, and the larger component which is the blue-collar workforce.
“There are several things we can do and we should do to work with them, wellbeing being a significant area which includes simple things like not only enabling vaccination but getting vaccination to the workplace and flexi working for field stuff which is almost unheard of among others,” he says.
“On the management side, upskilling is something that a lot of people do, but people want to know about related areas, business areas, and want to discuss these issues with other leaders. For example, everybody speaks about digital transformation but what does it mean for a salesperson or say an operations or an HR person? Can there be a conversation around what it means? Each one has a different perspective and they not only want to understand and be part of it but also want to be able to discuss it not only inside but outside the organisation. That is one more game changer from an employee retention perspective,” he says.
Abbimane says using tech for training is the most critical aspect. "These are some of the aspects that have worked, and everybody is doing in their own way. But we need to be proactive in thinking about all of these."