HR Management & Compliance

Why CFOs Do Not Trust HR and What to Do

Special from Chicago—SHRM Annual Conference and Exposition

CFOs are often reclusive and cautious, and HR avoids them in general and knows little about them, says consultant Karl J. Ahlrichs, SPHR. But HR isn’t going to be successful without being able to sell ideas to the CFO.

Why is the relationship with the CFO so important?

  • CFOs often have the final approval of HR projects.
  • They are a trusted advisor to the president.
  • They are often directly responsible for Human Resources and related areas like training.

Ahlrichs, a consultant with Gregory & Appel in Indianapolis, offered his take on CFOs at SHRM’s Annual Convention and Exhibition held recently in Chicago.

Alhrichs says the C-Suite lines up like this:

  • CEO does “the vision thing.”
  • COO makes it happen.
  • CIO runs the metrics.
  • CFO is “Dr. No.”

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Who Is the CFO?

Ahlrichs offers three examples to help HR understand CFOs:

  • The CFO is the only person in the C-Suite who brings lunch because it’s efficient, says Ahlrichs.
  • If you ask the CFO whether the glass is half full or half empty, the CFO says, “It’s twice as big as needed.”
  • If you ask the CFO where he or she is going on vacation, the CFO will say “305.” (That’s the efficient way to say Disney; it’s Central Florida’s area code.)

According to Ahlrichs, CFOs are:

  • 90% male
  • On the job 4 to 6 years
  • Fired from last job—personality conflict with the CEO—and will probably be fired from their current job
  • Under pressure from every angle—new regulations, slow economy, tight banking
  • Embarrassed by Enron, Worldcom, Conseco, etc.

Today … CFOs Are Feeling the Heat

Before Sarbanes-Oxley, CFOs were generalist business partners, Ahlrichs says, but new regulations are forcing CFOs to spend more time on compliance issues, leaving little time for strategy and new ideas.

In addition, new external pressures are forcing accountability on the organization.

Ahlrichs offers seven reasons it stinks to be a CFO in 2013:

  • New accounting rules—FASB, stock options.
  • Healthcare costs are out of control.
  • Every action is scrutinized for ethical lapses.
  • Managing technology dollars is tough.
  • Forecasting cash flow is tougher.
  • Data “stovepipes” are slowing commerce.
  • Frustration with people issues.

What the CEO Thinks About the CFO

“In which skills and qualities does your CFO excel?”

  • Financial expertise
  • Personal integrity
  • Strategic vision
  • Line experience
  • Industry experience

“Which skills and qualities does your CFO lack?”

  • People development skills
  • Communication skills
  • Leadership
  • Strategic vision
  • Interpersonal skills

(from a CFO Magazine Survey of 500 CEOs)

Key Point: HR Can Help

All of the CEO’s gripes about CFOs are about issues that are part of HR’s core competencies, Ahlrichs points out.

Ahlrichs offers the following characteristics of CFOs:

  • Very high learning index
  • High technical
  • High independence

But …

  • Low sociability
  • Low enterprising
  • Low assertiveness
  • Low decisiveness

Refine your picture of your CEO with two questions:

  • How much information does he or she want?
  • How much of a relationship does he or she want?

Information questions:

  • How much do you want me to keep you up to date on details?
  • How important is it that I help you gather, synthesize, and understand data?
  • To what extent do you want me to inform you about trends and new technologies?

Relationship questions:

  • To what extent do you want me to advise you?
  • How important are a mutually beneficial relationship and joint long-term goals?

You’ll find that most CFOs are either transaction-oriented or information-oriented, Ahlrichs says.


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Transaction-oriented CFOs

Transaction-oriented CFOs are low information, low relationship. Most CFOs are this type. They think:

  • Price, Price, Price
  • Speed, Speed, Speed
  • Accuracy, Accuracy, Accuracy

“I just want good, fast, and cheap.”
“We need it tomorrow by 4 p.m.”
“The specs are.…”
“I want to go out for competitive bid.”
“I faxed you my order.”

Information-oriented CFOs

Information-oriented CFOS are high information, low relationship. They:

  • Want you to keep them informed
  • Don’t necessarily want to be your friend
  • Love info on trends, big picture issues

“Here’s my e-mail. Keep me posted.”
“I need to stay up-to-date.”
“What’s the latest….?”
“Give me the information; I’ll make the decision.”
“My e-mail address is….”

Key Learnings

Treat CFOs as they want to be treated, Ahlrichs says.  Most never want to be a partner. You do have a valuable, free gift for them—not wasting their time.

In tomorrow’s Advisor, Ahlrichs’ specific tips for selling ideas to the CFO, plus an introduction to?

3 thoughts on “Why CFOs Do Not Trust HR and What to Do”

  1. The irony is that, among employees, HR is often regarded as “Dr. No”–so HR and CFOs have more in common than they might realize.

  2. In my 45 years experience in the business world, and much of it overseeing/running an H. R. function, I have found that a reporting relationship of HR to the CFO to be unwise. Why? Because a person in HR cannot always ‘quantify the reason certain things need to be done’ while the CFO insists that this information be provided before the action is approved. Some business decisions HR has to make have a wonderful ‘qualitative aspect to them’ and make for good business sense. I had this relationship for approximately 3 years and it almost drove me crazy. It was the most frustrating time in my professional existence.

    In my view, here’s how it should work:
    . HR should always report to the CEO, not the COO, CIO and certainly not the CFO.
    . HR must be a good business partner for all of management in an organization and never should be considered an impediment to running the business.
    . HR needs to be credible and respected in order to be effective. If your employees are ducking into doorways when HR is coming down the hallway, that’s a bad sign.
    . CFO should count the beans and report the numbers accordingly to the CEO and perhaps the COO as well. Nothing more; nothing less.

  3. Just an comment: 305 is one of the area codes in Miami Florida along with 786 and not the area code for Central Florida in particular Orlando.

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