We’d love to see HR report primarily on its impact on value. As I mentioned earlier, cost avoidance and control are secondary issues that come after high quality execution.
E. Recruiting Top Talent
For the most part, HR arrives at meetings with data about averages. They tell anecdotal stories and generalize time scales across the firm. Our operational issues have to do with getting the right person in the right place at the right time. Averages do little to shed light on these issues in particular instances.
We’d love to see HR report primarily on its impact on value. As I mentioned earlier, cost avoidance and control are secondary issues that come after high quality execution. In the Finance department, we use data to illuminate differences and discover opportunity. The HR data always runs in the opposite direction.
Averages are useful when cost control is ascendant. During times of growth or inflection, the question is more like “How fast can we get someone who will multiply value?” Recruiting is the search for the best value for the money. The closer a given employee is to that value, the more attention we should give.
HR’s predisposition towards across-the-board fairness requires uniformity that compromises our ability to acquire truly astonishing people. As is the case elsewhere, a comprehensive view includes data that can be sorted and understood in a variety of ways. That organizational view is the backdrop for the more important conversation about maximizing the firm’s capacities and ROI.
F. Optimizing Training and Development Investments
In Finance, the maintenance of any asset is always a decision between replacing it or investing resources to make repairs and improvements. The concept of ‘sunk cost’ is how we talk about the problem of throwing good money after bad. One of the reasons that training and development expenses are so high is that HR doesn’t really have a concept like ‘sunk cost’.
Again, the conversation happens on two levels. First, how is the workforce, as a whole, responding to training expenditures? Second, on an individual basis, will more training result in operational improvements and efficiencies? The conversation at the aggregate level is simply the prep for a harder conversation about specific jobs and people.
What we want to know is: How do we do obtain the training now, what improvements will training bring, and is there a better way? Generally, the HR input gets to the costs (if we’re lucky). It usually ignores the really important questions about why it matters.
The effective utilization of employees involves conversations and analysis that are very similar to what we do in the Finance department. While it is critical to have solid accounting and the ability to slice that data, the important information is at the next level. As with most everything, the question is “What are we trying to accomplish?” followed by “what’s the most productive way to accomplish that goal?”
The series
- The View From The CFOs Office 1: Overview
- The View From The CFO’s Office 2: Overtime and Benefits Analysis
- The View From The CFOs Office 3: Turnover Analysis
- The View From The CFO’s Office 4: Training and Recruiting
- The View From The CFO’s Office: Conclusions (BI)
