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Bringing the Discipline of Finance to HR

For finance professionals, a sidestep into human resources can benefit both the company and, believe it or not, their own career prospects.
Marshall Krantz, CFO.com | US
May 23, 2008

Rather than work their way up through the ranks of finance, a small but growing number of finance professionals is taking a career road less traveled — the one that runs through human resources.

The desire by senior managers to gain a competitive edge in the tough, global business environment is driving more companies to adopt "a leading-edge business practice," according to David de Wetter, head of the human-resources transformation practice at Watson Wyatt Worldwide. "Companies increasingly want people in HR who understand finance and business."

To get that edge, many senior executives now demand that HR play a more effective, strategic role in their organizations. They believe that applying quantitative analysis to HR functions can be crucial to that effort, but also that too few HR employees possess the requisite skills.

"The expectations of senior management for HR are changing," says de Wetter. "Over 90 percent of senior executives say HR should be strategic, but only 22 percent say that it's delivering." (The figures are based on a survey of Watson Wyatt's clients, which de Wetter says comprise 70 percent of Fortune 500 companies.)

For their part, HR departments see finance's disciplined approach to problem-solving as a way to improve their organizational standing. For example, HR departments could apply techniques learned from financial modeling to better predict future workforce shortfalls.

But many HR leaders share the view of other senior executives that their staffs are not up to the challenge. A 2006 study conducted by HR consultancy Mercer found that more than half of HR leaders judge their staffs to be weak in financial skills, the highest ranking for weakness among 26 skills measured. "Some people in HR are still struggling to read an annual report," says Bob Schuetz, a principal in Mercer's HR effectiveness business.

In addition to enhancing their HR departments, some companies also move midlevel finance people to HR simply to give them more experience in preparation for higher positions, according to Schuetz. "Most people spend three to five years in HR and then go back to finance at a higher level, where they might have responsibility for a whole operating unit instead of one aspect of it," he says.

Schuetz adds that finance people who move to HR need not fear a drag on their income: "Most new compensation models are built for horizontal movement, so salary is not a limiting factor."

One former finance person who found a permanent occupational home in HR is Stephanie Fore, senior vice president of HR at Hines Real Estate, a Houston-based company that employs 3,600 people in 16 countries.

A business administration graduate from Texas A&M University, Fore worked in Hines's finance department for eight years beginning in 1990, first as payroll manager and last as vice president in charge of payroll, compensation, and cash management.

Then in 1998, Fore played a central role in Hines's deployment of new Human Resource Information System (HRIS) software, which included a payroll application. That prompted Fore to propose moving payroll and compensation to HR — and her along with them. She kept her vice president title and added HRIS to her payroll and compensation responsibilities.

"I had responsibility for the areas of HR where finance is important, so I brought financial expertise to HR," says Fore, who subsequently assumed responsibility in more areas, including benefits, until last October, when she was promoted to the top HR position.

To beef up the financial expertise of her own staff, Fore brought the payroll accountant with her from finance, who is now the HR director in charge of payroll and HRIS. She also moved one of finance's accountants to HR specifically to recruit other accountants. And she recently hired a person with an accounting degree to be the company's compensation manager.

Fore acknowledges that a career in HR, or even a sojourn, can prove a tough sell to finance professionals. "It's a challenge to bring finance professionals into HR because it's hard to demonstrate a career path," she says. "If they want to be a CFO one day, spending time in HR could benefit them because they're getting broader experience. But they could also get sidetracked; HR is never a core business."

Still, Fore recommends that finance professionals, especially those who enjoy working with people, seriously consider a job in HR. "I think a stint in HR is good for anybody who wants to grow a career, because HR plays such an invaluable role in an organization," she says. "It can also be extremely rewarding. You get to deal with people, and you get to use your financial expertise."




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