When I became an executive in HR, I was surprised at how disconnected the lines of information were throughout the company. Finance, legal, and marketing each had their own data sources, not to mention the lines of business. But I didn’t know how disjointed we were until we joined forces to adopt one set of data. The opportunity gave us the detail to understand how we were doing and allowed leadership to be in lockstep in execution.
As the role of finance, and the chief financial officer (CFO), evolve, what’s needed for the modern finance professional? Quartz turned to Derrek Gafford, CFO of TrueBlue, to discuss the partnership between HR and finance and the skills needed to be an impactful CFO.
Quartz: As a CFO, your job revolves around numbers. In your opinion, what are the most important numbers to track?
Derrek Gafford: In the same way that I believe weight, body fat, and strength are essential metrics for personal fitness, there are a few key metrics I look at to determine the financial health of our business. The most important financial metric to track: employee satisfaction.
Low satisfaction leads to low productivity, which leads to low morale, and this cycle can rapidly upend organizations. When employees are satisfied, there is a palpable sense of shared purpose. When we earn the hearts of our employees, they have more energy, are more committed, and stay with us longer. This ultimately impacts the services a company provides and creates resilient revenue streams.
Our environmental impact is also becoming more important to track. We’re a professional services organization, so we don’t have a huge supply chain, but we operate on a planet that is feeling the effects of climate change. We need to play our part in reducing emissions. We take a broad view of ESG, and the social element is very important. These initiatives help to connect our employees to a sense of mission and purpose. It’s not only employees who are demanding action. Candidates—the next generation of talent—and investors are also expecting us to make progress on ESG initiatives.
Most people wouldn’t pick employee satisfaction as a critical financial metric. What are some other ways that the role of finance is evolving?
Every job in the company impacts the customer experience, including our finance employees. As the speed of business continues to accelerate, the need continues to grow for every employee to understand how their role can make a positive difference in the customer experience. That is why internal customer satisfaction is our second most important metric.
Technology is playing a bigger and bigger role in finance. As AI and machine learning enable more automated reporting and business insights, finance leaders can focus more on future performance and strategic initiatives that drive the business forward.
How has your relationship with HR changed over the last few years?
For too long, finance and HR have operated off different sets of data. While many organizations have troves of data, it’s often trapped in silos, which makes decision-making challenging. For example, I used to go to meetings with our CHRO. They would have their report based on the data in the HR system, and I would have my report based on the data in the finance system. If these reports came to different conclusions, we had to determine who was right.
In contrast, now that we’ve moved finance and HR data to a common Oracle platform, we now have one set of data that is ultimately more insightful and leads to better business decisions. We now come to senior leadership meetings looking at a single source of truth, which improves the speed and accuracy with which we operate.
Can you speak to a few tangible ways to bridge the gap between finance and HR functions?
- Share responsibility for data and insights. You want your HR team to have full visibility into the numbers and not feel they need to go to the finance team to get them. There shouldn’t be a scenario where one line of business owns the numbers. That’s not a healthy way to operate and leads to conflict, which slows down processes and essential decisions.
- Invest in common technology. When it comes to breaking down silos between HR and finance departments, technology can help. An integrated suite of applications can help finance and HR teams to collaborate more effectively versus separate “best of breed” systems that compete with one another. A single employee record across finance and HR streamlines processes and creates joint process ownership, leading to more collaboration and innovation.
- Lead by example. It starts at the top. When CFOs and CHROs collaborate, they set the standard for a high-performance culture within their organization and empower their workforce to achieve their strategy and growth objectives.
What advice would you give to younger finance professionals with CFO ambitions?
If you want to be a CFO someday, focus your development path on becoming a well-rounded business person first and a finance person second. Seek diverse work assignments. Finance provides great opportunities to gain exposure to other business functions. The importance of communication and technology skills can’t be overstated.
The next generation of finance leaders needs to view change as an opportunity and be champions of innovation. As we push towards new digitally enabled ways of working in finance, these upcoming leaders will face critical choices around advanced technologies such as AI, automation, blockchain, and chatbots. The best path forward is embracing change enthusiastically and developing approaches to generate tangible value and drive disruptive new business models.
Invest in relationships. Finance is now a people business just as much as a numbers business. Cross-functional collaboration across the entire organization is crucial to success. The finance leaders of the future need to invest in cultivating meaningful relationships with sales, operations, and, most importantly, HR leaders. Every company needs this type of leadership union to execute a solid and cohesive vision.
This story has been updated.