Traditionally, the CFO organization and the HR department have operated independently of each other. Any cross-overs have been in finite, well-defined functions: managing overtime costs, regulatory compliance, taxes, and so forth. The Chief HR Officer (CHRO) or Chief People Officer (CPO) looks at a company from the lens of organizational structure and reporting hierarchy; the CFO sees it in terms of cost centers. The CHRO sees the employee base in terms of skills, capabilities and work histories; the CFO sees headcount costs (from paychecks and fringe benefits to pensions) and outputs.
But ongoing economic, technological, regulatory, social, and cultural changes have stepped up demands on all top executives, especially the CFO and CHRO, to think and act more strategically and more collaboratively, so their organizations can be more agile and resilient.
The modern CFO role: More than cash management
On top of the traditional responsibilities – tracking cash flows, managing costs, financial reporting, regulatory compliance, meeting with banks and investors – modern CFOs also help drive growth. That involves keeping an eye out for potential acquisition or merger opportunities, considering more efficient ways to reorganize departments, and serving as a role model in promoting analytics and making data-driven decisions.
In a larger context, all of a modern CFO’s duties relate to managing risk. Nowadays, that’s not just price spikes in fuel or raw materials, or shocks in the markets for insurance or capital. It includes the risk of not being able to commit to delivering products and meeting service commitments on time, of the expected quality, or at the projected cost because they didn’t have enough people with specialized skills. (We’ve seen this risk play out during the pandemic with everything from hamburgers to ventilators, where the shortages were caused by lacks not in raw materials but people – not to mention health care workers spread dangerously thin.)
The financial impact of poor performance can be enormous, not just in immediate revenue but in long-term brand value.
More and more, driving growth and managing risk require CFOs to think about people. Over the last two generations, increasing productivity has depended on better technology and more skilled labor to create and use it. So finding and keeping people with the right skills and experience has steadily become more important. And as the pace of change itself keeps speeding up, the specialized skills needed keep evolving.
CHROs are expanding their horizons too
Meanwhile, that same rise of the knowledge economy has also been affecting the job of the CHRO. More specialized, value-added work that requires more skills and knowledge means CHROs must plan and budget for more training. Often, the skills needed are so new or reliant on specific technology that schools haven’t kept up; employers themselves must present them.
Just-in-time manufacturing, design, and inventory practices also trigger greater needs for flexibility and an as-needed workforce, with fluctuating costs. And emerging digital tools and analytics make it easier to quantify employee engagement and productivity, and what they add to the bottom line.
Worlds collided in 2020
So the interests of the finance and HR organizations were already converging. And then the pandemic hit, driving a nearly overnight shift to working from home or in socially distanced settings. Meanwhile, longstanding demands for more equitable, inclusive workplaces and social justice boiled over into nationwide protests.
That made 2020 “a pivot point” for any organization trying to stay resilient and productive, as Eric Hutcherson, then CHRO for the National Basketball Association, commented during Anaplan’s Digital CPX 2020.
“What these crises have proven is that the human capital or talent agenda is going to be what leads your organization – and then that’s supported by the finance agenda,” he said. “Things are turning and changing at such a rapid pace that if those two departments are not in sync, you run the risk that either your human capital or your financial plan get out in front of the other, and you’re not going to be prepared to make the pivots you need – because you won’t have the resources you need in order to meet your financial goals.”
Conversely, “If you can get your CFO and CHRO working in synergy, helping each other to think predictably about ‘What do I need from a talent standpoint?’ and ‘Where do we think the finances of our organization are going?’, you’re going to be much more successful in the future,” Hutcherson said. “You can end up with the right resources at the right time, with the right skills, at the right cost.”
Domains can collaborate with a shared planning platform
What does it take to get this kind of synergy happening? It helps to have a shared planning platform that tightly connects the business with its HR, finance, sales, and operations, so they can model and forecast a wide range of business scenarios and strategies in real time and pivot with agility as conditions change.
At Anaplan, we believe that breaking through organizational silos is critical if you want to foster real-time decision-making across functions. Our Connected Planning platform helps organizations move away from planning that depends on an array of spreadsheets that need to be manually updated and shared (with all the extra time, resource cost, and possibility of error that entails). It lets you create a comprehensive, up-to-date digital model and blueprint of your organization on which to plan a wide range of cross-department use cases.
For example, leveraging Anaplan for your long- and short-term workforce planning enables you to layer on top of existing headcounts the historical and projected costs, hiring and attrition rates, production output, and needed skills. The result are accurate financial and resourcing forecasts that align with your business strategy and priorities, so you can respond quickly to changes in top-level goals or market and talent supply changes.
To learn more about how Anaplan can help with the challenges of agile workforce planning, click here for “Mind the Gap,” a webinar we’re offering with customer Queensland Rail. You’ll hear managers discuss the railroad’s experience in agile and strategic workforce planning that helped them set ambitious goals for major upgrades in service and infrastructure.