By: S.K. Dutt, Group CHRO – Ampersand Group
Senior HR professional & Post Graduate Alumnus of University of Oxford – Saïd Business School
Both finance and HR professionals share a common objective: improving organizational performance and profitability. While CFOs allocate the financial resources needed to execute strategy, CHROs ensure the right people are hired at the right time, supported appropriately and motivated with effective incentives. When both functions align, the organisation is far better positioned to meet its goals.
Employees – Cost or Asset?
Physical assets are relatively straightforward to measure and manage. People, however, are less predictable and require a more nuanced approach. Employees need competitive compensation, career support and a workplace that helps multiple aspects of their lives. Although HR and Finance are often viewed as separate or even opposing functions, there are clear benefits from fostering a collaborative relationship.
Research by Ernst & Young involving more than 550 CFOs and CHROs worldwide shows that companies where HR and Finance have become more collaborative report higher EBITDA growth and stronger improvements across human capital metrics such as employee engagement and productivity.
When Finance partners with HR to view employees as assets rather than merely costs, organisations can improve long-term performance. This perspective often leads to lower overall costs, streamlined operations, higher productivity and stronger talent management.
Common characteristics that distinguish high-performing companies from lower-performing peers include:
- Adopting shared services as a key enabler of collaboration.
- Deeper involvement of both functions in strategic planning and decision-making, with a forward-looking approach to optimise people and capital.
- Wider use of analytics to track broader indicators of organisational health—not just financial metrics.
EY experts identify several drivers that encourage CFO–CHRO collaboration:
- Rising labour costs and talent scarcity: Higher labour costs and talent shortages raise attrition risks and can undermine investment returns. Organisations need clearer visibility into the link between cost and performance.
- Elevation of HR in the corporate hierarchy: Traditionally a support function, HR must now take a strategic seat at the table. As Rich Postler, HR VP of Global Business Services at P&G, notes, the finance head, HR head and business leaders must work in lockstep so human capital and financial implications of strategy remain aligned.
- Evaluating financial and people impacts: Including both the CFO and CHRO in strategic decisions and new product or service development helps surface the financial and human consequences of choices.
- Changing operating models: The next step for many organisations is to build global data and oversight capabilities that give HR and finance business partners the insights needed to enable business success.
Organisations today have access to more data than ever. When combined with analytics, this data enables Finance and HR to integrate financial measures with human capital insights and improve decision-making. Some of the key questions CFOs seek to answer through HR metrics include:
- Do we have a clear and current picture of our organisation’s structure?
- Where do talent gaps and organisational vulnerabilities exist?
- Do our organisational actions align with the business strategy?
- Are we building a sustainable talent roadmap?
- Can we maximise retention and reduce turnover costs?
- Does our HR technology support efficient end-to-end HCM processes?
- Are all stakeholders, from front-line managers to the board, engaged in HR strategy?
Finance can quantify the value employees add and assess the financial impact of HR processes, while HR can identify where training and development are required. Succession planning, compensation, bonuses, expense management and procurement all trace back to the expectations and culture shaped by HR. With Finance providing fiscal perspective, organisations can better balance the dual goals of maximising profit and controlling cost.
Creating Synergies
A well-functioning company depends on engaged and capable employees. Balancing monetary and non-monetary benefits can improve both performance and retention. By working together, Finance can factor human capital into decisions that go beyond immediate ROI, while HR can design policies that reduce turnover and manage total cost of employment more effectively.
Finance and HR can jointly develop financial wellness and career-growth initiatives—retirement planning, financial literacy, credit enablement and skill development—that become part of routine employee experience and help attract and retain talent. As organisations scale, workforce quality remains a critical determinant of success. To remain competitive in a dynamic global market, companies must continuously optimise their people strategies in close coordination with financial planning.
Ultimately, the most productive outcomes arise when Finance’s analytical rigor complements HR’s people-focused perspective—allowing both functions to contribute fully to sustainable business performance.
About the author: Senior HR professional & Post Graduate Alumnus of University of Oxford – Saïd Business School. The author has held leadership roles in organisations including a former Brooke Bond subsidiary, L&T, Welspun Group, ABG Group and ASB (Nissei).
*Views expressed are the author’s personal views and do not represent any company or organisation.