With the increased importance of data analytics, CEOs are turning to HR for the actionable data they need for strategic decision-making. Companies where HR reports to the CEO have a better understanding of employee dynamics at the executive level, and leverage HR analytics to improve retention, attract new talent, and increase productivity.
DOWNLOAD THE E-BOOK: The Executive’s Guide to People Insights
Understanding why HR should report to the CEO of your company is especially important if your HR department doesn’t already have a seat at the executive table. Traditionally, HR has usually reported to the CFO, limiting the influence the department has with the CEO and restricting the power of HR analytics.
Why HR Should Report to the CEO, Not the CFO
The CEO and CFO play very different roles in an organization. The CEO molds the path the company will follow, a responsibility that requires vision and creativity. The CFO, by design, is primarily concerned with profits and the bottom line. When HR operates under the CFO, the department’s effectiveness is invariably reduced to serving the bottom line, with the risk of the company’s most valuable resource, its staff, being reduced to mere numbers.
HR and the CEO have more closely aligned priorities. The CEO is ultimately the person responsible for keeping the company–and its employees–moving in the right direction. HR’s mandate is the welfare and wellbeing of the company’s employees. It simply makes sense to make communication between the two as direct as possible.
The CEO molds the path the company will follow, a responsibility that requires vision and creativity.
Ethical considerations also come into play. HR needs to be able to advocate for employees and, where necessary, protect whistleblowers. If HR reports to the CFO, conflicts of interest can occur that make advocating difficult and sabotage the department’s role as the voice of employees.
HR Analytics and Culture
Corporate culture is something that develops with or without a CEO’s influence. Letting corporate culture grow without guidance can lead the company into disruptive territory. Canny CEOs shape and guide company culture, but they cannot do so without HR data.
HR analytics provide insight into the employee perspective of corporate culture, which can be quite different from the culture executives experience. Armed with this knowledge, the CEO can resolve cultural problems in their early stages, thereby improving employee engagement and retention.
HR and the CEO have more closely aligned priorities.
Attracting New Talent
Nearly 60 percent of CEOs report their organization’s potential is negatively affected by an inability to find qualified talent. HR analytics can streamline the process of matching qualified applicants to available positions and use data to create talent pipelines of potential new hires.
HR Analytics and Strategic Decision Making
HR analytics offer a unique set of data. While financial data, marketing, and similar data indicate how well a company does within its industry, HR data demonstrates a company’s status with its own employees. With HR reporting to CEOs, employee decisions that were once made through intuition and instinct can now be resolved with data.
HR analytics can determine whether employee engagement strategies are working, which departments are most productive, and what type or types of talent the company needs for the future. A robust HR analytics system provides predictive data–identifying what the company workforce needs for the future.
People are your company’s most valuable asset. By maintaining a direct link between your HR department and your CEO, you create an environment conducive to organizational health and wellbeing while providing your executives with the data needed to move the company into the future.
DOWNLOAD THE E-BOOK: The Executive’s Guide to People Insights