What Does a CFO Do? Pt. 8, Human Resources
In our continuing series detailing the duties of a CFO, today we discuss the CFO’s role as it relates to Human Resources. HR is an area that encompasses many of a company’s competitive advantages (its people), contains huge portions of a company’s cost structure (people again), and is always a source of great risk to an organization. It’s no wonder that your CFO should have HR near the top of the list.
Managing benefits and related policies is a major source of cost containment. As such, the CFO should play a direct role in the management of health insurance and other employee benefit costs. With regulations and pricing constantly changing, your CFO needs to have strong relationships with experts in this area. Likewise, he or she should have these same kinds of relationships in the areas of work comp, general liability, and other business insurances. These insurance costs are often a huge expense for even the smallest businesses. A strong CFO should help you stay on top of these costs, negotiate the best deals, and design programs to keep costs in line.
Small, growing companies will likely face a point where the management of their employees becomes unwieldy. At this point (preferably prior) you really need to take the time to develop an employee handbook, in addition to an HR policies and procedures manual. Your CFO should assist in the development of these documents, along with building and implementing benefit programs, and should have prior experience in these areas. Having well-defined HR policies is very important, and should take into consideration the long-term viability of the company, employee retainment, risk tolerance, productivity concerns, and more.
Related to employee retainment, the CFO should be a key contributor in developing a company wage scale. The wage scale should establish pay ranges for employees in various positions and seniority. It should be based on local and industry cost and wage data, as well as the company’s unique circumstances. Again, the CFO must keep an eye on long-term company viability while also offering wage potential to attract quality talent.
Finally, your CFO should be invaluable in developing incentive or bonus programs that align employees with the company’s goals. A properly constructed incentive program can motivate all levels of employees to new levels, really bolstering performance and profitability.
There are many variables and possibilities to consider when designing effective HR programs, and your CFO should be well-versed in the methods in addition to having strong relationships with specialized experts in the various areas.
Stay tuned for Part 9 next time, as we discuss the CFO’s role in “Pricing and Cost Analysis.”
If you missed the previous posts, here they are:
- Part 1 Introduction, click here.
- Part 2 on Cash Management, click here.
- Part 3 on Financial Reporting, click here.
- Part 4 on Accounting, click here.
- Part 5 on IT Development, click here.
- Part 6 on Strategic and Financial Planning, click here.
- Part 7 on Stakeholder Relations, click here.
About Gateway CFO Solutions, LLC:
Based in St. Louis, Gateway CFO Solutions helps small businesses grow profits and revenues, and bring peace of mind to their company’s financial picture through part-time CFO services. Many small business owners are without a trusted advisor for the financial side of their business, and they have seemingly few resources to turn to for expert guidance. We provide that guidance and act as a trusted, strategic advisor for our clients. We provide both broad, global planning and “roll up the sleeves” technical services.