To maximise impact, HR leaders must build strong relationships with the CFO and communicate their value effectively.
With only 2% of FTSE 250 companies having a chief people officer or HR director on their board (according to research published last year by the CIPD) this alignment is more crucial than ever.
People leaders are now tasked not only with creating a positive employee experience and improving retention but also with understanding the financial impact of each initiative. Traditionally seen as a cost centre due to employee-related expenses, HR often faces scrutiny from finance during budget cuts. This trend is likely to continue.
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To address this, it is important to keep the lines of communication open. Our CFO at Lattice, Gabe Cortes, told me that “sharing information proactively and aligning our strategies means that we can better anticipate challenges, optimise resource allocation and ultimately drive business growth.” For example, collaborative and transparent hiring forecasts allow us to invest strategically in talent while maintaining financial vigilance. Cortes said that ultimately, a strong HR-finance partnership is essential for navigating economic fluctuations and achieving long-term success.
To foster that partnership, HR has to think like a CFO. A key question for HR is: “What might keep my CFO up at night regarding HR?” Anticipate expenditure questions and back your initiatives with data.
Think like a CFO: review expenditures, identify high-risk areas, and focus on high ROI. For example, if you’re proposing new HR technology, highlight long-term cost savings, revenue potential and reduced administrative hours.
HR's ability to present data-driven insights is crucial for securing buy-in from the C-suite. When HR can quantify the impact of their initiatives and demonstrate a clear ROI, it elevates the conversation and fosters a more strategic partnership with finance.
Questions your CFO might ask, and how to prepare
1. “How are you measuring cost per hire or revenue per hire?”
Comparing in-house versus outsourced hiring times offers finance meaningful metrics for determining cost per hire. Additionally, review data on year-over-year retention and departmental hiring expenses, to prepare.
Example: I reviewed our quality of hire data and found that managers are reporting X% satisfaction with their team members’ performance, and that is a Y% year-over-year improvement.
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2. “How are you measuring ROI on your HR initiatives?”
As is the case for all metrics, ROI measurement depends on what you’re tracking. Engagement scores, time savings for onboarding new employees, turnover rate, and employee satisfaction are all great data points to bring to finance meetings.
Example: After reviewing our engagement scores, I saw that there is a X% increase in job satisfaction since last year, and our retention rates have improved by Y% as well.
3. “How are you measuring the effectiveness of our HR tools?”
Annual metrics on cost per employee and human hour savings can help justify HR tech investments to CFOs.
Example: Our team was spending X amount of time onboarding, and now with Y tool we save Z amount of time, which translates to £V in total cost savings.
Emily Laflin is head of HR EMEA at HR platform Lattice
