Mixing together major disciplines can be problematic in any organization, however there must be enough generalists at the top to meld all of the separate functions of a business together to result in a smoothly running, bottom line producing entity.
When you get high enough in any organization, you will find one person guiding and directing the ship. Whether that person is an accounting type, marketing type or a (insert the type of your choice here), integrating all of the disciplines of a business must occur or the fierce fires of capitalism will rapidly eliminate this business. The point is, whoever is leading the company must be able to overcome tunnel vision.
One of the more difficult transitions I had to make a few years ago happened when a high-powered sales team began to report to me. I had some small experience with sales (for a short time I sold Electrolux Vacuums door to door while working my way through college). If you think that experience helped much with a multi-million dollar sales force, with extremely high commissions, spiffs and promos, you would be mistaken.
When working with this team of individuals, I literally put on a sales hat (just a modified Indiana Jones adventure hat), walk around our building to shake off all other focus, and then sit down with these guys to go over advertising campaigns, seminar plans, incentive programs, closing and conversion statistics, etc, etc. We did not eliminate the numbers, but used the messages contained in their depths. If you think the gap between HR and Accounting is large, the gap between a sales force and accounting makes it pale by comparison.
Any successful leader must be able to guide all of those disciplines and by the way, get functions like HR and Finance to work together to achieve the companies goals.
Marc: I suggest you have missed the point entirely. The point is not 'putting on' various hats or getting people to work together or having vision and leadership qualities. What I, and I think most of the others here are saying, is that Human Resources issues are typically either unappreciated, unbelieved or are found irrelevant and non-value adding, by a majority of accounting types. We could guess as to the causes for that until the chickens come home to roost. Several have made good explanations above as to the way accounting minds seem to function. The way I see it, the mindset is "If you can't make it look like you want to on the columnar form, then simply sharpen your pencil".
I've never met an accountant, for example, who saw any value added by placing a telephone call to a labor attorney, with this exception: If the barn is on fire, totally involved, then place the call. But, unless the place is ablaze, do not obligate us for the $33.
I've diligently laid out, above, all of the HR pieces that I feel are ignored or unappreciated by accountants of all stripes, no matter what hat they claim to have on when they stroll down the hall. I really think what has happened years ago, was that someone purposefully infected a batch of slide rules at the factory with some agent that transfered systemically into the brain cells of accounting matriculators and that has continued to spread throughout the discipline. They cannot help it. Send me to hell, but don't make me work for another accountant!
Labeling an entire profession and forcing pesonalities to fit into a box called bean counters is necessary to make your arguement work. If your companies supervisors tried similar exercises on EEs that happened to fall into a protected status you would have them on the carpet in the middle of a disciplinary process for discrimination. If you did not terminate them at the end of that process perhaps you would send them to some gender sensitivity classes to gain a better understanding of how their actions were perceived and the damage they may be causing people with their actions.
We all desire respect and understanding for our expertise and knowledge. Believe me when I say that working day to day with nitty gritty HR issues is markedly different than directing those that are doing the work. Researching overlapping Acts, titles, regulations and best practices takes it's own level of discipline that is difficult to grasp for those not doing the work.
Lest you chastise me for missing your point again, I would opine that HR as a profession and as a discipline is a relative newcomer to the business world. Now that employment related legal actions comprise more than 50% of all business legal actions, many companies are giving HR matters the attention they deserve.
In this context, size does matter. How large should a company get before they add in the HR function as a stand alone job description. That topic has been discussed in a number of threads, but most responses indicates that when the employee base gets somewhere around 100, a company can justify the need for full-time HR. Since small business is accounts for the majority of employees in our world, is it any wonder that the HR function is a shared hat and logically falls to those that are already handling some of the day to day tasks, like payroll and benefit?
Marc, When we say 'bean counters' where I work, it's spoken with respect. It's not meant as a degredation. Our treasurer knows a level of finance that my experience can't match. Persons in this field; however, do not parallel any person in a protected class since being a 'bean counter' is not an immutable trait.
I agree totally with your last paragraph. Many small companies do not have the luxury of having a full-time HR person or department. The duties that would typically fall under HR are divided among secretaries, bookkeepers, and managers. I think the point at which a company can justify a full time HR professional is somewhere closer to 80 employees. Then, the HR person should be on the chart at the same level as the finance department, not as a direct report to it. Clearly the two will need to communicate, but as peers, not as HR being subordinate to finance.
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Those of us who refer to accountants as bean counters do so to their face and it is a term of endearment. Life is a Dilbert strip and I refuse to think otherwise and let you turn that into a slanderous criticism akin to a Title VII violation. I suppose we could call them pointy-headed nerds with pocket protectors, but that would not be fair and would mislabel those with flat heads. I don't know where Marc has been for the past 50 years, but I always recall the 'personnel managers' in my community, growing up and they occupied a similar station at work and in the community to that of the bookkeepers and accountants in the mercantile stores, factories and farming operations that dominated the landscape where I grew up.
Neither occupation is a Johnny-come-lately, as I infer from your comments; however, both professions have seen dynamic growth in size and scope in the past 30 years, maybe 35. Labor law profusion, financial mismanagement and audit trails and such have together caused both professions to expand at a huge pace sort of in a parallel fashion. Sarbanes-Oxley is about to cause another growth explosion for the group with the slide rules. Although this discussion is not about level of importance, I agree with S Moll that neither should feel subservient to the other or be automatically 'boxed' above the other on a chart. Another way to look at the discussion is this: I'll bet you a dollar to a donut that if you were to poll 100 in each profession, you would learn that all of the HR Professionals would absolutely agree that a company cannot do without excellent accounting personnel; but, I guess that you might get 70% agreement from the other group regarding Human Resources. I've gotta get coffee. I've been here a couple of hours and the accounting staff are beginning to arrive. x:-)
(edit) I think by black and white, several posters mean 'numbers are what they are'. They fit in rows, columns, cells, lines and you manipulate them and stack them to derive outcomes. And you make projections about them and track the truth of those projections. That's the extent of my accounting knowledge/observation. Rarely does HR exist like that. With absolutely no malice toward accountants as a group or as a discipline, to sum up, this thought occured to me an hour ago: Accountants are taught to look at their discipline through a magnifying glass. Human Resources professionals are taught to look at their discipline through a kaleidoscope; occasionally a person comes along who uses both instruments well.
>Accountants are taught to look at their >discipline through a magnifying glass. Human >Resources professionals are taught to look at >their discipline through a kaleidoscope; >occasionally a person comes along who uses both >instruments well.
Great analogy, Don. The magnifying glass is the 'left brain' and the kaleidoscope is the 'right brain.' The 'integrated' mind can use both brains, logically and intuitively to solve problems. Your rendition is more colorful.
"Accounting is black and white. HR is fuzzy grey and off white at times. The two do not mix well at all."
Just for the record, accounting is far from black and white. We strive for "consistency" in policy interpretation just as much in HR as we do in finance, but neither area is black and white. That is probably why I love both areas. I agree with marc's comment "Any successful leader must be able to guide all of those disciplines and by the way, get functions like HR and Finance to work together to achieve the companies goals." It all comes down to the person in charge of the functions and the company. I have worked with accounting managers that I would not allow to oversee HR, but have worked with just as many that would be great in that role. I have never worked with a marketing manager that would be good overseeing HR or accounting, but I'm sure there are some out there who could do a good job.
As HR types should well know, it is never a good idea to generalize or label any group of people.
Though a little late, I just read this thread and feel a need to chime in. I have several points to make, so please bear with me.
1) SW is correct, accounting is far from black and white. Lower level clerks push numbers around, but higher levels do a lot more. Finance, like HR, has a lot of laws to comply with. In addition, there are all those 'generally accepted accounting principals'. The methods the CFO chooses to use for such things as depreciation can have a profound effect on the bottom line (ex: Enron), so being creative in problem solving and deciding which method to use is essential.
2) The CFO based the budget on past experience, what is expected in the coming year (ie: we increased our legal fee budget once to allow for updating our contracts to comply with HIPAA), and what the people who use those expenses tell him/her. The CFO is the one ultimately responsible for the budget and has to explain to the CEO and Board of Directors when actual income/expenses don't line up. So if X amount was budgeted for legal fees and you are suddenly spending XX amount, the CFO wants to know why and in enough detail so he can explain it to the Board and be prepared when they ask questions.
3) I remember an HR person who was hired to report to the CEO. The person was a generalist and was required to take care of approving benefit bills (such as insurance) and getting it to A/P for payment. This person messed up this job, as well as many others, so much the CEO got tired of messing with him and made him start reporting to the CFO. Every other HR person I have known has worked for the CFO. It made sense because of the connection between payroll, HR, benefits, etc. Of course, none of these positions were in large companies or were top management. I think in a large company there should be a top management HR position that reports to the CEO. Of course, this top management person should be responsible for thier department's budget and answer to the CEO and Board of Director's themselves when it doesn't match up to actual costs.
I think Don just felt a need to blow off some steam, but I think it might be a good idea to try to see this from the other person's side. HR, of all departments, should be the most aware of the diversity of personality types in an organization. We should keep those personality issues in mind when dealing with other employees, especially if we answer to them or find our personality type clashes with theirs. I suspect Don's CFO has a budget issue. His CFO needs to understand the importance of calling the lawyer. It's possible the prior HR person never did, and the CFO thinks this is stuff you should already know. This CFO needs to understand that the call is to protect the company and necessary. Talk compliance and expense avoidance and they will understand you.
Nae Nae: Your opinion is valuable and your points are well made. But, it's not productive for you to critique me as needing to blow off steam in order for you to make a contribution to the thread. I don't need to blow off steam because as I said, my entire chain of command and reporting structure is composed of Human Resources people, not accountants. My comments on this thread which I initiated are based on experience with four jobs in very large organizations. I don't intend for any of my comments here to be based on the personalities of the players as was suggested in your post. It has nothing to do with personalities in my view. I think you said it best when you said HR was assigned to a CFO because the CEO didn't want to mess with it. I've found that typical in those organizations who do the same. Divest yourself of subordinates while increasing your perk package is indeed a good idea on occasion.
I remember in a former life a company I worked for went from being run by a "pro-employee" CEO to being run by the former CFO and the controller. Needless to say...the comments we started hearing were all money related...."Employees sure cost a lot of money" "Employees don't need a dental plan...I never had a dental plan!" "We sure pay a lot into the retirement plan for employees."
The long termers who could retired because they got the distinct impression that they were costing the organization a lot of money and could be replaced very quickly with someone making half their salary.
I guess a balance is what you want in a company. You can't be all "bottom line" oriented and you can't be all "touchy-feeley" in a corporation.
I was concerned with comments which I have heard in the past, not just on the Forum, but from some business people in general who have the idea that Human Resources can be "handed over" to a secretary or a clerk to administer. It only takes one or two Title VII suits to change your mind on this one. If your company is large enough to start falling under government regulations such as FMLA, you'd better have someone on staff that knows the laws and how to administer them.
The first time I read your original post what I got out of it was a sweeping condemnation of accounting types so that I could easily have been offended (being an accountant). Since that is not how I have come to know you, I assumed you were just letting off steam and didn't get offended. I guess I just didn't get your post.
Your response surprised me as I didn't intend in anyway for it to be offensive. I know I do not have your way with words, nor am I fond of debating. So, it would be stupid to intentionally tangle with you. (I don't post often because I tend to avoid debates and confrontations.)
I understand your position about the players and personalities. I think ANY communication issues involves personality types. I guess we will just have to agree to disagree on this point.
"This person messed up this job, as well as many others, so much the CEO got tired of messing with him and made him start reporting to the CFO. Every other HR person I have known has worked for the CFO. It made sense because of the connection between payroll, HR, benefits, etc."
Shame on the CEO who got tired of messing with him and did nothing but shift the responsibility.
"The connection between payroll (HR?), benefits, etc." - I get the connection between payroll and benefits, but HR? That budget connection merely establishes the need to communicate with, not report to finance.
What happens when Title VII complaints arise in finance?
"Shame on the CEO who got tired of messing with him and did nothing but shift the responsibility."
I agree. She should have just fired him. He made a bad name for HR everywhere. Indeed, this company has not hired a person with an HR degree since.
To me there is a strong connection between HR and the other items mentioned. HR is all about work comp, fmla, ada, and compliance with all sorts of laws. These laws are written for the benefit of the employee. The HR person is often an employee advocate. This ties closely with other benefits. HR also has some responsibility when it comes to hiring, reviews, raises, employee education, etc etc. Part of this ties to payroll.
I have frequently noticed postings here which say HR is completely separate. Sometimes posters are advised to stay clear of employee situations as it doesn't involve HR. If this is so I guess I don't get HR at all! It must be the accountant in me. ;;) Maybe one of you can explain the difference to me, coz I just don't see it. How is HR NOT closely related to benefits and payroll. Why wouldn't HR get involved if an employee has an issue?
Oh, BTW, we have never had a Title VII complaint. But if one arose in Finance the CEO would have taken over the investigation as she did in another case involving another department (too long a story to put here).
I think the only reason HR is involved with payroll is because some organizations insist on it. Payroll is an accounting function in my book. Money in & money out. The only part of my job that relates to payroll is making sure that any wage increases, benefit elections, terminations or W-4 changes are documented on a checklist for Accounting to review prior to processing payroll. I to this every two weeks & it's up to Accounting to process.
I too am not fond of HR reporting to a CFO. Mainly because our organization is involved with manufacturing and in that setting I now subscribe to a functional management system for our organizational model. In that setting, there are 7 main functions of upper level management: Leadership (usually CEO/President), GM, HR, Marketing (sales reports to marketing), Operations, Legal/Prof. Associations and Finance. In this model, all seven functions must work together in order to grow the company & maintain or improve the Statement of Purpose and Business Plan. If any one function outpaces or exerts itself too much, then the whole mix falls out of balance. In our organization, the GM reports to the CEO/President, and all other managers of each function and including an IT Manager, report to the GM. This model works best for us, but I suspect other organizations as well as there is a lot written about the subject. I agree with Marc that it all can really boil down to who happens to be in the CFO position and their capacity to be a great manager, however, philosophically, I think HR should actually be on the same level on the org. chart as the CFO, Operations, etc. & report the equivalent of the GM or higher. HR is more than just pushing around paper or the occasional (hopefully) EEOC complaints or other like claims. HR can be (and maybe should be) a strategic voice in company growth, people development, recruitment and the department the GM, President or CFO can turn to when faced with company related difficulties. My argument, and maybe it’s a lousy one, has always been that if HR is not an independent agent within an organization, reporting to the highest-level executive, then conflict of interest abounds. If HR reports to the CFO, then not only does HR have to contend with its own development/issues, but it also has to take on the development/issues of the CFO as that’s where the appraisal comes from.
Your reasoning and logic make very good sense as far as where HR should be. I definitely agree with you. The only exception would be in a small company where the HR person had to take on more duties and was more of a clerical/watchdog function rather than a true partner in the future of the organization. (Perhaps to you what I am really describing is not a true HR function.)
I am sitting here confused #-o, however, about your first paragraph. Maybe it's because I do everything here (payroll, accts payable, billing, receivables, financial statments, purchasing, HR, benefits, etc etc) that it all seems so connected to me. You say there is little connection, but the words you use to describe the small connection speak big connection to me. Maybe it's simply a matter of perspective. Of course, I work in a very small company so my HR responsibilities and duties are not called into play very often.
If you look at the traditional organizational structure, the top of that pyramid gets smaller and smaller until you get to one person, or perhaps one executive team. Just one or no more than a couple of people whose knowledge and expertise are guiding the company.
When the rubber hits the road, you typically have one person making decisions. It does not matter if that persons background is in HR, marketing, operations, or whatever. That person has to make the calls - they have to trust the information and people that have framed the particular problem of the moment.
More importantly, they have to make decisions that are in the best interests of the company, regardless of background. If key advisors have overlooked important segments of the companies needs, the companies results will suffer and natural selection will suggest modifying the approach. That is why all the real room is at the top.
It does not take long for misinformation or missing information to reveal itself. Successful companies will utilize a structure that balances the needs of their organization and will not ignore any important functions. Those that downplay the importance of HR can only dodge the bullets for so long before they start writing big checks.
In those cases, the realization may come to late to save the individuals making the decisions, but hopefully not to late to save the company while it evolves into a structure that has a more successful awareness of these issues.
I like having payroll in my area of responsibility because I see that it's linked. We also eliminate one more set of eyes being able to view confidential employee data (salaries) by keeping it all in HR (and using an external payroll administrator to actually process payroll).
But to the general point being made about HR reporting to Finance, stating that benefits and compensation and other items all deal with numbers means it makes logical sense to have HR report to Finance is a flawed connection. I have never reported to Finance, and at my current employer I have a great relationship with VP of Finance. His only involvement in anything I do is serving as co-fiduciary on the retirement plans, so we both pay attention to investments and assets in the plans and work with our TPA to ensure we continue on track.
And being responsible for benefit plans is so much more than paying bills and budgeting for future payments. It's considering Total Compensation strategy and what role benefits play in achieving it, it's looking at plan design, it's planning for changes to minimize future increases in premiums, it's ensuring high quality vendors, it's keeping up-to-date on not only all the legislation that pertains to benefit plans, but also paying attention to trends in benefit plans (CDHC, elder care and ltc as voluntary benefits, etc).
The end result of all of my analysis and research and discussions with the company president produce an end-result budget figure and that's all the Finance department cares about.
If we put all departments that deal with numbers under Finance, there wouldn't be any departments not reporting to Finance! Well, maybe the mail room, but they have zip codes and postage and .. #-o
"If we put all departments that deal with numbers under Finance, there wouldn't be any departments not reporting to Finance!"
At last, the plan is working - everything will finally be reduced to numbers, balanced and reconciled - - - - - - just in time to turn out the lights and put up the sign stating "final inventory reduction sale."x}>
Ok. So you are saying the logic I presented was flawed because to continue down that line I would have to have all departments under finance. Right?
I see the sense of what you are saying, yet I have to point out that your 3rd paragraph talked numbers so much it took me back to the idea of it being under finance. x:D
I think Gillian explained it very well. I think I get now why everyone insists that HR is so different. Though I always knew it had a different goal, I didn't realize the size and extent of the goal.
Still, if you are not a large company your HR is not going to play as big a role. Though input would seem helpful even to a small organization, most small companies are using all their energy to survive or grow larger. As long as someone is keeping on top of the laws, everything else seems unimportant.
When all that stuff I wrote about above happened with the HR person we hired we were in our first year. (We took 70% of the employees from one company and made up a new one.) The CEO didn't have time for anyone who wasn't in a top management position, and the size of the company didn't justify making the HR person top management. If things had gone well (and if the HR person had been a good HR person), I am sure that would have happened eventually.
Here is my attempt to explain. There are different interests between Finance and HR. HR is not about FMLA, workers comp, discrimination etc. etc. but to understand where the company is going and to put in place the people programs that are needed to get it there. An analogy, I suppose,is that Finance is not about paying bills and collecting money but to insure the financial health of the organization. There is daily administrative stuff and there is total picture stuff. The difficulty that HR often has when reporting to Finance is that the "total picture" understood by the finance person is different that that of HR and when the finance person has the ability to control what HR does by not financing things that don't fit the finance "total picture", then we are stymied in our efforts to do what we know needs to be accomplished. Sometimes the finance person is able to understand the "total picture" from both perspectives and when that is the case, HR reporting to finance is workable. Otherwise, it is not.
Comments
When you get high enough in any organization, you will find one person guiding and directing the ship. Whether that person is an accounting type,
marketing type or a (insert the type of your choice here), integrating all of the disciplines of a business must occur or the fierce fires of capitalism will rapidly eliminate this business. The point is, whoever is leading the company must be able to overcome tunnel vision.
One of the more difficult transitions I had to make a few years ago happened when a high-powered sales team began to report to me. I had some small experience with sales (for a short time I sold Electrolux Vacuums door to door while working my way through college). If you think that experience helped much with a multi-million dollar sales force, with extremely high commissions, spiffs and promos, you would be mistaken.
When working with this team of individuals, I literally put on a sales hat (just a modified Indiana Jones adventure hat), walk around our building to shake off all other focus, and then sit down with these guys to go over advertising campaigns, seminar plans, incentive programs, closing and conversion statistics, etc, etc. We did not eliminate the numbers, but used the messages contained in their depths. If you think the gap between HR and Accounting is large, the gap between a sales force and accounting makes it pale by comparison.
Any successful leader must be able to guide all of those disciplines and by the way, get functions like HR and Finance to work together to achieve the companies goals.
I've never met an accountant, for example, who saw any value added by placing a telephone call to a labor attorney, with this exception: If the barn is on fire, totally involved, then place the call. But, unless the place is ablaze, do not obligate us for the $33.
I've diligently laid out, above, all of the HR pieces that I feel are ignored or unappreciated by accountants of all stripes, no matter what hat they claim to have on when they stroll down the hall. I really think what has happened years ago, was that someone purposefully infected a batch of slide rules at the factory with some agent that transfered systemically into the brain cells of accounting matriculators and that has continued to spread throughout the discipline. They cannot help it. Send me to hell, but don't make me work for another accountant!
We all desire respect and understanding for our expertise and knowledge. Believe me when I say that working day to day with nitty gritty HR issues is markedly different than directing those that are doing the work. Researching overlapping Acts, titles, regulations and best practices takes it's own level of discipline that is difficult to grasp for those not doing the work.
Lest you chastise me for missing your point again, I would opine that HR as a profession and as a discipline is a relative newcomer to the business world. Now that employment related legal actions comprise more than 50% of all business legal actions, many companies are giving HR matters the attention they deserve.
In this context, size does matter. How large should a company get before they add in the HR function as a stand alone job description. That topic has been discussed in a number of threads, but most responses indicates that when the employee base gets somewhere around 100, a company can justify the need for full-time HR. Since small business is accounts for the majority of employees in our world, is it any wonder that the HR function is a shared hat and logically falls to those that are already handling some of the day to day tasks, like payroll and benefit?
I agree totally with your last paragraph. Many small companies do not have the luxury of having a full-time HR person or department. The duties that would typically fall under HR are divided among secretaries, bookkeepers, and managers. I think the point at which a company can justify a full time HR professional is somewhere closer to 80 employees. Then, the HR person should be on the chart at the same level as the finance department, not as a direct report to it. Clearly the two will need to communicate, but as peers, not as HR being subordinate to finance.
Those of us who refer to accountants as bean counters do so to their face and it is a term of endearment. Life is a Dilbert strip and I refuse to think otherwise and let you turn that into a slanderous criticism akin to a Title VII violation. I suppose we could call them pointy-headed nerds with pocket protectors, but that would not be fair and would mislabel those with flat heads. I don't know where Marc has been for the past 50 years, but I always recall the 'personnel managers' in my community, growing up and they occupied a similar station at work and in the community to that of the bookkeepers and accountants in the mercantile stores, factories and farming operations that dominated the landscape where I grew up.
Neither occupation is a Johnny-come-lately, as I infer from your comments; however, both professions have seen dynamic growth in size and scope in the past 30 years, maybe 35. Labor law profusion, financial mismanagement and audit trails and such have together caused both professions to expand at a huge pace sort of in a parallel fashion. Sarbanes-Oxley is about to cause another growth explosion for the group with the slide rules. Although this discussion is not about level of importance, I agree with S Moll that neither should feel subservient to the other or be automatically 'boxed' above the other on a chart. Another way to look at the discussion is this: I'll bet you a dollar to a donut that if you were to poll 100 in each profession, you would learn that all of the HR Professionals would absolutely agree that a company cannot do without excellent accounting personnel; but, I guess that you might get 70% agreement from the other group regarding Human Resources. I've gotta get coffee. I've been here a couple of hours and the accounting staff are beginning to arrive. x:-)
(edit) I think by black and white, several posters mean 'numbers are what they are'. They fit in rows, columns, cells, lines and you manipulate them and stack them to derive outcomes. And you make projections about them and track the truth of those projections. That's the extent of my accounting knowledge/observation. Rarely does HR exist like that. With absolutely no malice toward accountants as a group or as a discipline, to sum up, this thought occured to me an hour ago: Accountants are taught to look at their discipline through a magnifying glass. Human Resources professionals are taught to look at their discipline through a kaleidoscope; occasionally a person comes along who uses both instruments well.
>Accountants are taught to look at their
>discipline through a magnifying glass. Human
>Resources professionals are taught to look at
>their discipline through a kaleidoscope;
>occasionally a person comes along who uses both
>instruments well.
Great analogy, Don. The magnifying glass is the 'left brain' and the kaleidoscope is the 'right brain.' The 'integrated' mind can use both brains, logically and intuitively to solve problems. Your rendition is more colorful.
HR is fuzzy grey and off white at times.
The two do not mix well at all."
Just for the record, accounting is far from black and white. We strive for "consistency" in policy interpretation just as much in HR as we do in finance, but neither area is black and white. That is probably why I love both areas. I agree with marc's comment "Any successful leader must be able to guide all of those disciplines and by the way, get functions like HR and Finance to work together to achieve the companies goals." It all comes down to the person in charge of the functions and the company. I have worked with accounting managers that I would not allow to oversee HR, but have worked with just as many that would be great in that role. I have never worked with a marketing manager that would be good overseeing HR or accounting, but I'm sure there are some out there who could do a good job.
As HR types should well know, it is never a good idea to generalize or label any group of people.
1) SW is correct, accounting is far from black and white. Lower level clerks push numbers around, but higher levels do a lot more. Finance, like HR, has a lot of laws to comply with. In addition, there are all those 'generally accepted accounting principals'. The methods the CFO chooses to use for such things as depreciation can have a profound effect on the bottom line (ex: Enron), so being creative in problem solving and deciding which method to use is essential.
2) The CFO based the budget on past experience, what is expected in the coming year (ie: we increased our legal fee budget once to allow for updating our contracts to comply with HIPAA), and what the people who use those expenses tell him/her. The CFO is the one ultimately responsible for the budget and has to explain to the CEO and Board of Directors when actual income/expenses don't line up. So if X amount was budgeted for legal fees and you are suddenly spending XX amount, the CFO wants to know why and in enough detail so he can explain it to the Board and be prepared when they ask questions.
3) I remember an HR person who was hired to report to the CEO. The person was a generalist and was required to take care of approving benefit bills (such as insurance) and getting it to A/P for payment. This person messed up this job, as well as many others, so much the CEO got tired of messing with him and made him start reporting to the CFO. Every other HR person I have known has worked for the CFO. It made sense because of the connection between payroll, HR, benefits, etc. Of course, none of these positions were in large companies or were top management. I think in a large company there should be a top management HR position that reports to the CEO. Of course, this top management person should be responsible for thier department's budget and answer to the CEO and Board of Director's themselves when it doesn't match up to actual costs.
I think Don just felt a need to blow off some steam, but I think it might be a good idea to try to see this from the other person's side. HR, of all departments, should be the most aware of the diversity of personality types in an organization. We should keep those personality issues in mind when dealing with other employees, especially if we answer to them or find our personality type clashes with theirs. I suspect Don's CFO has a budget issue. His CFO needs to understand the importance of calling the lawyer. It's possible the prior HR person never did, and the CFO thinks this is stuff you should already know. This CFO needs to understand that the call is to protect the company and necessary. Talk compliance and expense avoidance and they will understand you.
Sorry to be so long. Thanks for your patience.
Good luck!
The long termers who could retired because they got the distinct impression that they were costing the organization a lot of money and could be replaced very quickly with someone making half their salary.
I guess a balance is what you want in a company. You can't be all "bottom line" oriented and you can't be all "touchy-feeley" in a corporation.
I was concerned with comments which I have heard in the past, not just on the Forum, but from some business people in general who have the idea that Human Resources can be "handed over" to a secretary or a clerk to administer. It only takes one or two Title VII suits to change your mind on this one. If your company is large enough to start falling under government regulations such as FMLA, you'd better have someone on staff that knows the laws and how to administer them.
Your response surprised me as I didn't intend in anyway for it to be offensive. I know I do not have your way with words, nor am I fond of debating. So, it would be stupid to intentionally tangle with you. (I don't post often because I tend to avoid debates and confrontations.)
I understand your position about the players and personalities. I think ANY communication issues involves personality types. I guess we will just have to agree to disagree on this point.
Good luck!
Shame on the CEO who got tired of messing with him and did nothing but shift the responsibility.
"The connection between payroll (HR?), benefits, etc." - I get the connection between payroll and benefits, but HR? That budget connection merely establishes the need to communicate with, not report to finance.
What happens when Title VII complaints arise in finance?
I agree. She should have just fired him. He made a bad name for HR everywhere. Indeed, this company has not hired a person with an HR degree since.
To me there is a strong connection between HR and the other items mentioned. HR is all about work comp, fmla, ada, and compliance with all sorts of laws. These laws are written for the benefit of the employee. The HR person is often an employee advocate. This ties closely with other benefits. HR also has some responsibility when it comes to hiring, reviews, raises, employee education, etc etc. Part of this ties to payroll.
I have frequently noticed postings here which say HR is completely separate. Sometimes posters are advised to stay clear of employee situations as it doesn't involve HR. If this is so I guess I don't get HR at all! It must be the accountant in me. ;;) Maybe one of you can explain the difference to me, coz I just don't see it. How is HR NOT closely related to benefits and payroll. Why wouldn't HR get involved if an employee has an issue?
Oh, BTW, we have never had a Title VII complaint. But if one arose in Finance the CEO would have taken over the investigation as she did in another case involving another department (too long a story to put here).
I too am not fond of HR reporting to a CFO. Mainly because our organization is involved with manufacturing and in that setting I now subscribe to a functional management system for our organizational model. In that setting, there are 7 main functions of upper level management: Leadership (usually CEO/President), GM, HR, Marketing (sales reports to marketing), Operations, Legal/Prof. Associations and Finance. In this model, all seven functions must work together in order to grow the company & maintain or improve the Statement of Purpose and Business Plan. If any one function outpaces or exerts itself too much, then the whole mix falls out of balance. In our organization, the GM reports to the CEO/President, and all other managers of each function and including an IT Manager, report to the GM. This model works best for us, but I suspect other organizations as well as there is a lot written about the subject. I agree with Marc that it all can really boil down to who happens to be in the CFO position and their capacity to be a great manager, however, philosophically, I think HR should actually be on the same level on the org. chart as the CFO, Operations, etc. & report the equivalent of the GM or higher. HR is more than just pushing around paper or the occasional (hopefully) EEOC complaints or other like claims. HR can be (and maybe should be) a strategic voice in company growth, people development, recruitment and the department the GM, President or CFO can turn to when faced with company related difficulties. My argument, and maybe it’s a lousy one, has always been that if HR is not an independent agent within an organization, reporting to the highest-level executive, then conflict of interest abounds. If HR reports to the CFO, then not only does HR have to contend with its own development/issues, but it also has to take on the development/issues of the CFO as that’s where the appraisal comes from.
I am sitting here confused #-o, however, about your first paragraph. Maybe it's because I do everything here (payroll, accts payable, billing, receivables, financial statments, purchasing, HR, benefits, etc etc) that it all seems so connected to me. You say there is little connection, but the words you use to describe the small connection speak big connection to me. Maybe it's simply a matter of perspective. Of course, I work in a very small company so my HR responsibilities and duties are not called into play very often.
If you look at the traditional organizational structure, the top of that pyramid gets smaller and smaller until you get to one person, or perhaps one executive team. Just one or no more than a couple of people whose knowledge and expertise are guiding the company.
When the rubber hits the road, you typically have one person making decisions. It does not matter if that persons background is in HR, marketing, operations, or whatever. That person has to make the calls - they have to trust the information and people that have framed the particular problem of the moment.
More importantly, they have to make decisions that are in the best interests of the company, regardless of background. If key advisors have overlooked important segments of the companies needs, the companies results will suffer and natural selection will suggest modifying the approach. That is why all the real room is at the top.
It does not take long for misinformation or missing information to reveal itself. Successful companies will utilize a structure that balances the needs of their organization and will not ignore any important functions. Those that downplay the importance of HR can only dodge the bullets for so long before they start writing big checks.
In those cases, the realization may come to late to save the individuals making the decisions, but hopefully not to late to save the company while it evolves into a structure that has a more successful awareness of these issues.
But to the general point being made about HR reporting to Finance, stating that benefits and compensation and other items all deal with numbers means it makes logical sense to have HR report to Finance is a flawed connection. I have never reported to Finance, and at my current employer I have a great relationship with VP of Finance. His only involvement in anything I do is serving as co-fiduciary on the retirement plans, so we both pay attention to investments and assets in the plans and work with our TPA to ensure we continue on track.
And being responsible for benefit plans is so much more than paying bills and budgeting for future payments. It's considering Total Compensation strategy and what role benefits play in achieving it, it's looking at plan design, it's planning for changes to minimize future increases in premiums, it's ensuring high quality vendors, it's keeping up-to-date on not only all the legislation that pertains to benefit plans, but also paying attention to trends in benefit plans (CDHC, elder care and ltc as voluntary benefits, etc).
The end result of all of my analysis and research and discussions with the company president produce an end-result budget figure and that's all the Finance department cares about.
If we put all departments that deal with numbers under Finance, there wouldn't be any departments not reporting to Finance! Well, maybe the mail room, but they have zip codes and postage and .. #-o
At last, the plan is working - everything will finally be reduced to numbers, balanced and reconciled - - - - - - just in time to turn out the lights and put up the sign stating "final inventory reduction sale."x}>
I see the sense of what you are saying, yet I have to point out that your 3rd paragraph talked numbers so much it took me back to the idea of it being under finance. x:D
I think Gillian explained it very well. I think I get now why everyone insists that HR is so different. Though I always knew it had a different goal, I didn't realize the size and extent of the goal.
Still, if you are not a large company your HR is not going to play as big a role. Though input would seem helpful even to a small organization, most small companies are using all their energy to survive or grow larger. As long as someone is keeping on top of the laws, everything else seems unimportant.
When all that stuff I wrote about above happened with the HR person we hired we were in our first year. (We took 70% of the employees from one company and made up a new one.) The CEO didn't have time for anyone who wasn't in a top management position, and the size of the company didn't justify making the HR person top management. If things had gone well (and if the HR person had been a good HR person), I am sure that would have happened eventually.