HALIFAX, NOVA SCOTIA--(Marketwired - May 8, 2014) - Canadian senior financial executives are becoming more involved in the oversight of HR functions, but despite their increasing sphere of responsibility, a large proportion of these executives rate their knowledge of HR functions as moderate or average. This admission suggests a widening skills gap among finance executives who are starting to oversee HR managers and payroll functions.
These are the results of a study released today by the Canadian Financial Executives Research Foundation (CFERF), the research arm of FEI Canada, and sponsored by Ceridian. An online survey of Canadian financial executives found that 61% of respondents reported that they had taken on more accountability for such functions, including payroll, recruitment, talent management, training, benefits and bonus management, in the past five years. In addition, more than a third expect to see their involvement in HR and payroll expand in the next five years.
Despite the increasing sphere of responsibility, a relatively large proportion of those surveyed described their knowledge of HR functions as moderate or average: three in four ranked their own skills in this field as 2 or 3 on a scale of 1 to 5, while only 11% described themselves as extremely knowledgeable.
Traditionally, finance and human resources executives operated in separate spheres within most corporations. But rapid globalization has caused a growing number of companies to focus much more intensively on labour costs and human capital, as well as their role in delivering value to shareholders.
"Financial executives manage many moving pieces on the modern business landscape. They need to think strategically about all levels of their business, while managing risk, staying ahead of technology, fostering innovation and working with fellow executive team members to build enterprise value," said Michael Conway, President and CEO of FEI Canada. "Human resources is another area where CFOs are being held accountable and we continue to seek insights into helping our executives improve their skills in this area."
"HR is frequently becoming more aligned with the finance areas within an organization," says Rob Rose, senior vice president of product management, Ceridian. "Reporting for Finance and HR can be extensive since employees are typically a large expense for many organizations. In some cases HR reports directly under finance or some type of a parallel relationship exists. Moreover, the relationship between Finance and HR is becoming much stronger than what we've seen in the past."
Many senior financial executives are taking an increasingly active role in the oversight of payroll and HR divisions. As the organizational overlap between these two corporate functions expands, finance executives are looking for better ways to measure and benchmark HR/payroll outlays, which means relying on, and learning to interpret, a wide range of HR metrics.
CFERF canvassed senior financial executives for their views, combining the results of an online survey with insights gathered at round tables. The executives were asked for their views on the relative importance of a range of key HR benchmarks and ratios. The goal was to determine what sorts of measures financial executives rely on most heavily, and whether there are opportunities for companies to develop other useful metrics. Some key findings:
- Respondents said they paid most attention to the average cost of employer-paid sick days, personal leaves, with 73% ranking these HR expenses as moderately to most important in their analysis;
- Almost four in five reported that they rely heavily on a per capita-based formula for evaluating performance management, tracking revenue, cost, profit, EBITDA or return on investment per full time equivalent (FTE).
Yet the survey also found that many finance executives assign relatively less importance to more granular HR/payroll related metrics that focus on areas such as absenteeism, turnover, recruitment and talent management costs and human capital:
- While some participants indicated that the return on investment in human capital metric needs more development, many were seeking a comprehensive measure such as this, with 53% indicating it was moderately to very important.
- 18% said they did not pay any attention to data on voluntary separation of high performers, while only 10% thought such information was crucial.
Several round table participants expressed the view that finance executives should track HR metrics, but felt that the measurement function itself was secondary to the importance of setting legible and clear targets for improvement.
About the Canadian Financial Executives Research Foundation
CFERF is the non-profit research institute of FEI Canada. The foundation's mandate is to advance the profession and practices of financial management through research. CFERF undertakes objective research projects relevant to the needs of Canada's senior financial executives in working toward the advancement of corporate efficiency in Canada. For more information, please visit feicanada.org
About Financial Executives International Canada
FEI Canada is the all-industry professional membership association for senior financial executives. With 11 chapters across Canada, it provides professional development, thought leadership and advocacy services to its members. The association membership, which consists of chief financial officers, audit committee directors and senior executives in the finance, controller, treasury and taxation functions, represents a significant number of Canada's leading and most influential corporations. For more information, please visit feicanada.org.
Ceridian Canada is part of the Ceridian group of companies. Ceridian is a leader in human capital management with more than 100,000 clients across the globe. Ceridian delivers trusted results and transformative technology. Our offering includes the award winning, cloud-based Dayforce HCM, LifeWorks, Powerpay and International Payroll. Ceridian is transforming the world of work. For more information about Ceridian solutions, visit www.ceridian.ca or call 1-877-237-4342.
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