Should HR report to Finance? Here are 3 things to consider

For decades, human resources has fought hard to gain a seat at the table where decision-making processes take place. Previously they were the minority of the organization, but recently HR has rightfully been given a seat at the table and now they are looked to to lead the future of work. In fact, it is estimated that more than 60 new HR jobs will be created in the next 10 years Harvard Business Review.

Despite the need and growth of People and Culture, when companies desperately want to save money, their first choice is to eliminate the HR department. Typically, companies retain at least one recruiter who then reports to the finance department. While it’s understandable that companies have to make sacrifices to cut costs, the consequences of letting other employees perform HR tasks, especially finance, are detrimental.

Here are three things to consider before having your HR department report to fund.

They are two different functions

Traditionally, HR and Finance have been nested under one function. While both roles have overlapping goals, HR and finance were separate because they operate as two different parts of the business. Employers are realizing that today’s HR is more complex than ever and that they cannot afford to risk potential lawsuits for failing to keep abreast of new HR changes and regulations. Jake Hill, CEO of DebtHammer, explains that while it is important for these two departments to communicate and collaborate, their overall focus is vastly different. So it becomes a conflict when they are merged.

Here are some of the areas HR focuses on:

  • Team building events; developing innovative employee programs and initiatives
  • Training and development
  • Drafting, implementing and enforcing policies
  • Ensuring compliance
  • Manage Benefits and Benefits
  • Keep employees Medewerkers
  • Recruitment and onboarding
  • Terminations, layoffs and exit interviews
  • Building internal and external relationships; promoting the employer brand
  • Creating an inclusive and engaging culture; Diversity, Equality and Inclusion (DEI) Efforts
  • Employee relations and more

Rather, the role of Finance is to ensure that the company meets its revenue targets, manages its accounts successfully, looks for ways to save the company money and ensures that each department follows its budget and does not waste financial resources. Hill claimed that while both functions are fundamental to the company’s success, they are two completely different disciplines that require different skills and experiences. He added that it is irresponsible and reckless to have HR and finance as one function.

Companies that have a dedicated HR professional to manage all people’s business undoubtedly have a competitive advantage over those that have their heads of finance who try to combine both roles. Creating a people-centred culture means that a department has been designated where employees can turn when they need help, support and guidance. Without a designated HR person, employees don’t feel supported and don’t know where to go for help. As such, employees become disconnected, disconnected, unhappy and this leads to more burnout.

Culture prefers profit over people About

HR is known as the face of the company, both internally and externally. Therefore, when the HR department is eliminated, there is no one to advocate for the employees. As such, the company relies more on profits rather than employees. In addition, it puts undue pressure on HR staff to focus on monetizing and achieving financial goals. As a result, people suffer from the fact that HR’s hands are tied. So it becomes increasingly difficult to promote a people-centered culture when finances dictate the needs of employees. I have no doubt that there are organizations with exceptional financial leaders who can successfully manage both functions without their financial blinders getting in the way. However, there are very few of them.

As the workplace evolves and the new generation of employees takes over, there will no doubt be more unique situations, requiring more gray areas for HR to be deciphered. For this reason, it is crucial to have a dedicated, people-oriented professional who advocates for effective policies, employee development and the creation of a safe space for all employees. For financial professionals, who operate in a more concise and dry manner, having to switch between multiple requirements of two different functions is quite an undertaking. Sooner or later, people’s experience will be negatively affected.

There are no checks and balances

By responding to finance, HR professionals are one step away from where the business decision-making process takes place: at the boardroom. This is detrimental to the company and not only a disservice to the employees, but also to the employer brand as a whole. Brenda Neckvatal, HR professional and bestselling author, explained that finance and accounting professionals who deal with HR matters often become frustrated with solving employee problems. This is because they are more linear thinkers. They don’t understand why problems take so long when there are policies and procedures to make them clear. However, any tenured HR professional knows that problems with people are not that simple and that they require careful time and analysis of all the facts to arrive at a successful solution.

When it comes to HR, nothing is as it seems and there are many gray areas. The approach to the solution is therefore never the same, the variables are constantly shifting and depending on the details there is a lot of attention and contemplation around the labor law that needs to be evaluated. Keeping abreast of new regulations and changes in employment law is no small feat. If Finance manages both functions, there are no checks and balances to ensure that the company is not exposed to potential legal problems.

Willie Greer, founder of The product analyst, added, “this is what makes these two departments different. Therefore, when HR reports to Finance and Finance reports to the CEO, the latter will always be biased, as their job is to ensure that everything spent good is accounted for and primary costs.” Greer explains: “Finance doesn’t matter whether an employee needs to improve or not, as it’s not in their job description to emphasize that. As a result, there is no balance in the team, as business and decisions are always in the spotlight.” benefit from the finance team.”

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