One of the things I have learned over the years is to not take HR jobs where HR reports to finance. It is the trivializing of the function. It turns HR into another “wing” of accounting versus a department focused on people and organizations. Here is a 2004 article that addresses this issue.
HR reporting through finance pure folly
HR PROFESSIONALS face a number of obstacles in playing an important role in any organisation, however the “ultimate stupidity” is when CEOs report HR to finance, according to Steve Vamos, CEO for Microsoft Australia.
Speaking at the Australian HR Awards 2004, Vamos said there was no excuse for reporting HR to finance and encouraged CEOs to actively involve their HR executives.
“If people are to be treated as our greatest asset, then the relationship between the CEO and the HR executive, and consequently the management of the business and the HR function, is the most important relationship that exists within the organisation,” he said.
If organisations really believed that people were their greatest asset, they would do things very differently, said Vamos.
“For a start, we’d measure it. Up to 80 per cent of the value of listed companies is intangible,” he said. “How do you ever know when you look at the financial results whether the full potential of the staff of that organisation delivered the best result possible?”
Vamos also said that while most people believe they put in well over 100 per cent in terms of working hard, most feel their potential is under-utilised at just 20 to 60 per cent at the most.
“So if people are our greatest asset, then why would we tolerate wasting 40 per cent of that asset. Any CEO who wastes 40 per cent of the cash or the stock in a business is not going to be long for this world,” he said.
Another challenge organisations faced was in aligning staff with business priorities and direction. Vamos said leadership teams were responsible for making sure business strategies could be simply articulated into easily understandable priorities for all employees.
Vamos also said that employees were often afraid to tell their bosses what they are really thinking, especially when it came to a difference of opinion – despite these opinions often being the most valuable.
“Managers often fear giving open and honest feedback to their staff. So we avoid dealing with poor performance, and poor performers take jobs that good people could have had,” he said.
“But worse still is the fact that those people aren’t being given the respect of knowing where they stand and therefore addressing the issues that they might face.”
Vamos said that employees often thought the HR department was responsible for morale and managing people, rather than people managers taking full responsibility.
As such, it was important for the HR team to work with the CEO to make sure all people managers put that responsibility first, he said.
“You’ve got to make sure that you’re developing managers in the organisation,” he said. “As great people managers, that’s their number one job and if they don’t believe that they won’t pay attention to it.”
Vamos also pointed out the need for more holistic leadership, and said the days of divide – and – conquer leadership were over.
“We’ve grown up in siloed worlds where we’ve optimised the HR department, finance, sales and marketing,” he said. “And we’re wondering why, at the end of it all, everyone’s not focused on their own objectives and why we don’t deliver great customer satisfaction and we don’t get the best out of our people.”
Vamos acknowledged the important role culture played in this, particular at the top of an organisation. If the leader lives it then everyone else will believe it, he said.
1 November 2004
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