bipin_baroda Started The Discussion:
Hai Guys,

As businesses grow and begin to add employees, the first HR-type activity needed is recruiting, of course. But, additionally, people must be paid and people need benefits. So, often, the first person holding part of an HR role is the person who pays the staff. And this person generally reports to finance and accounting. Just because this is how a small business usually grows, doesn’t make it the right path for your business to travel. It’s not.

Every organization needs checks and balances. HR reporting to finance ties the hands of the people most likely to advocate for effective people policies and organization development, your HR staff. HR reporting to finance moves your HR person one step further away from where organizational decision making is occurring. When HR reports to finance, policy decisions are likely to be primarily finance driven and often not people friendly.

So HR gurus what is your opinion on this matter…………..???

Should HR report to finance and accounting……………....????
Posted 14th June 2009 From India, Calicut
i feel there is no harm in HR reporting to finance and accounting , and I think the HR person who does not feel to report to finance people they might have inferiority complex, and also it is not a credibility that since HR recruits people he should make policy decisions, even a driver drives the MDs , VPs car, so can we allow the driver to make decisions??

and for your kind information can you give some example where the decision regarding policy is made by Finance People and even if it is made, can you show how it is not people friendly.

Explain with an example.
Posted 14th June 2009 From India, Pune
STRICTLY no........WHY- COZ FINANCE PERSON DONT UNDERSTAND THE hr handle the HR you shuld be aware abt the HR ..u shuld think like a HR..u act like a HR....wat finance dept can do in HR ..?????and HR is not the recruitment only ..its is the big process man....a finance person can not do anything in HR.........he/she shuld have HR in his/her blood...they cant take a decision properly...I have seen some times companies are follwing the same coz of structure and environment of the comp..but its not the right way to find the 100% impact of the HR people.............Head hR shuld be report to top managemnt either Director or CEO......I hope your doubt is cleared now

Posted 14th June 2009 From India, Pune
Ravi, when a policy is framed by a person who is reporting to finance dept do consider financial aspect and people oriented factors are left out. Its not the matter of reporting its related to better people policies and organization development.

Ravi there are many examples which varies from company to company.
Posted 14th June 2009 From India, Calicut

awwwww seems you are too against it,,,,

by the way there are lots of policies,,, Finance Policies, HR Policies, Company Policies,

Finance Policies are made by Finance people
HR by HR n

Company by top mgmt, which in ur case you feel it should be HR, n not finance, it is not and it will not be the case, because a finance person can take more better than HR person in running a company,, Finance is more important than HR , because it gives food to company ,, and enables HR to give food to employees,,
Posted 14th June 2009 From India, Pune
I do agree with your points Ravi. But a person who is reporting to a Finance and Admin Head there is a chance that what ever he see, is through financial aspects which i think is wrong.
Posted 14th June 2009 From India, Calicut
Can you post example, lets do a case analysis,, lets look at all angles and see whether the policy made by finance people is really valid or invalid, we will look at from all angles, OK we need to research on this before confirming
Posted 14th June 2009 From India, Pune
I dont think there is any harm if hr guy repeorts to finance/accounts.Actually it will easy thre job of hr regarding many statutory as well legal issues.My self is also handiling the hr of small sunit comporising 50 peoples along with accounts.

Posted 14th June 2009 From India, Chandigarh
Dear Bipin,

There should be a co-ordinaton with Finance department..But Reporting to them is not a helthy practise coz HR is diffrent from Finance as you be somethings like payrolss and accounting may be similat but agian Policy Making, Recruitments,..etc these all are done by HR professionals..And there is no point in reporting to person who doesnt know head and tail of HR..

So let each department do there own set of work & the final reporting of all the gamets which is related to HR (Finance department, HR Officers,Front-Office Deprtment,etc) should be done to 1 person,,may be to HR Manager or individually to head of their each Departments..That wil be healthy as well as fair way of management

Rashmi Bhalerao
Posted 14th June 2009 From India, Mumbai
Hey Ravi a Simple example….

I think in every company there is a policy regarding leave encasement. It depends up on a person who frames it. For Eg a person driven by finance background would frame that the leave of a person if he wish to en cash, then it have to be done with in the same year. But if it is framed by a person who wish to help his employee would frame it in another way so that his employee gets benefited. For Eg he can frame the policy that the leave can be encased by the employee within his the employment with that company.

The difference in both the cases would be that the employee would be benefited in second case. Because if he resigns the company after 4 or 5 years and en cash the leave he would get more in monetary terms coz his salary might have gone high due to his yearly increments or by promotion.

Posted 14th June 2009 From India, Calicut
Dear Bipin,

There is no harm because if company have senior finance person ,he/she can understand the policy & cost effect or better prospective for a company.

I agree with Mr. Rashmi,she explained in better way.

best Regards
Posted 14th June 2009 From India, Delhi

Simple idea of leave is that employee should utilize them, HR restricts approval of leaves to employees stating reason of work loss, bipin, take situation of a any company, there are lots of people, and each one has his own problems so a person may take sometimes leave above quota and make it LOP or a person may take leave exactly as per quota,, and so on,, but if a policy is made as per finance person, the employees will be forced or they themselves will be motivated to take leaves and give rest to their body and minds, which is a good option, and they will try to spend their leaves or get it encashed at end of the year,

and if there is no limit then there will be pressure from HR, and HR will never sanction casual leaves, HR will tell employee why you want to take leave, let it be encashed,

and i feel leaves are best encashed at end of the year, because dear why keep anything pending with the company,, finish it year after year,, so even if finance person makes decision of encashing after one year, it wont do much harm wot say ?
Posted 14th June 2009 From India, Pune
Here you came Ravi, See HR person is driving a poor employee to encash his leave ( forcing) ........ were as he is not helping the employee but he is looking it from financial aspect.

I don't agree with your point that HR will never Sanction Leaves- This is the right of an employee, there are law and orders.

Dear HR Friends please correct me if am wrong....
Posted 14th June 2009 From India, Calicut
Dear Mr. Sajid,

I do agree with you, but the problem is that a Finance person see every thing through financial aspect. How to make profit for the business even though squeezing the employees. He don't care much about an employee.
Posted 14th June 2009 From India, Calicut
No. HR has as distinct and strategic a contribution to make to organisational excellence and growth as marketing, engineering, finance, ICT. By having HR report to Finance you reduce the critical human component of the business to a numbers game.
Posted 15th June 2009 From South Africa, Christiana
HR reporting to finance would be a mismatch of sorts where there would not be too many benefits to be gained. Normally if one talk about recruitment the process should be a) requisition raised by the dept b) approval from HR in terms of budgeted head count and c) approval from finance from the P&L perspective (do u have money to pay them). A negation in either b or c would send the loop back to a. Here you have your checks but no reporting.
Posted 15th June 2009 From India, Hyderabad
Ravi again strtd ur negative thinking to people come here and share the knwoldge gr8......see both are important but how u can ignore the HR ......?and how finance is more better than HR?? see finance people can run the compnay without HR also no doubt..but whyHR needs in a comp..HRcan make a big gaps btw them..suppose your vision is to being 1000 crores turnover comp within one year...and current turnover is 800 fill these 200 crores gaps u need a HR man..HR roles in comp is very diff...peple shuld think abt ths..HR is not only the making policy and implementing only IS PLAYING THE BIG ROLE...WHICH PEOPLE MUST UNDERSTAND ...I kno you are having sap knowldge but much it wil be effective for your company can not defied by a finace canbe by a hr use of your enhance the skill of Ravi and use effecitiley for the organoisational can not be done by afinance people..coz they dont kno the abcd of HR...Finance persona wil think abt the finance perspective but a hR will not .......if a proffesional HR is not there in comp.,finance person can also hire a person but not effective as HR will...and there wil be capability gaps .....they wil not able to coonect the capability effectively in respect of organizational goal...they can not traineds the person effectively...our business stands coz of emp/Finance/Goal so our frst priority shuld be define the goal of individuials.which finance person can not do effectively.....see HR is not there for the compnies growth only ,now a days HR is helping a lot in Individulas career giving training and all.....hope u understand this....

Posted 15th June 2009 From India, Pune

No Point in reporting to finance or accounts person from HR its absurd. There may be coordination with HR and account/Finance for legal matters, budgeting(Salary), etc.

Will finance/accounts guy report to HR?

Obiviously NO......

Both are different functions in an organisation
Posted 15th June 2009 From India, Chennai
Dear Friends,
The question is not reporting but more important thing is that whether the HOD is people oriented or not. Normally and in general the finance people will look in to all aspects with P&L but some of the areas the people related matters need to be looked in larger interests of the company.
For example when you have started a new company where all the machinery is under warranty and AMCs, recruitment of Maintenance incharge may be an additional burden in the perception of Accounts department or in general but as a HR guy you should visulize in a different perception ie., preventive is better than cure, we feel that a person should take care / monitor / coordinate etc., are more important and these aspects will prevent a major breakdowns so that the down time will be reduced / productivity time will be taken care., if you start thinking and articulating there may be N number of exmaples can be identified.
Payment of salary on or before of 7days from the cut-off date is legally permissable but depositing the salaries on the last working day shows the financial healthiness of the company, comfortability of employees, increased satisfaction levels & securedness of the employees and increased motivation levels of the employees. But if you see in the perception of the Accounts they may think diferently, both of useful and correct in their own areas.
Finally it is not whom the HR is reporting but whether the person is people oriented, knowledgeble & a good leader or not is the more important.
In one Global company, part of their job rotation, the HR portfolio is entrusted to a person who worked as a Manufacturing Head (out side ) for more than a decade but he is accepted by large number of employees and he proved as a good people oriented person.
My conclusion is that whether the HR is reporting to Manufacturing / Accounts / Corporate affiars head or not but whom you are reporting (ie., the qualities of the person whom you are reporting )
Regards - kameswarao
Posted 15th June 2009 From India, Hyderabad
A reporting realtionship may not serve the purpose.

Because finance people will only try to "cut costs" and reduce incetives.
Whereas HR people will try to get employees their benefits.

So a co-ordinating relationship is fine. Reoorting makes finance peopel have an upper hand on deciding if the incentives should be paid or not.

On the lighter side - how abt finance reporting to HR, so that HR would know abt the actual expenses of the company, and decide employee benefits/ incentives based on what is possible..and also keep a contingency reserve as reqd by the Management? ;-)
Posted 15th June 2009 From India, Madras
For the large organizations its not appropriate for HR to report to the finance department in fact that is the serious undermining of HR professional . even for small organizations with highly enriched jobs there is no need for finance department to handle HR issues. it should be noted that when HR issues are coined with finance there is a tendency of undermining HR issues over finance and sometimes i don't have to blame the the finance guys because HR is far beyond their competence. Therefore, I conclude by saying that as organisation becomes complex and larger then the HR issues becomes of more strategic
Posted 15th June 2009 From Tanzania
Those who are in support of HR reporting to or HR working under/with Finance Department, may I ask is it OK to work in reverse way? Which means Finance reports to or work under/with HR? Thanks a lot.
Posted 15th June 2009 From Bangladesh, Dhaka
Obviously there are cultural differences, but in the US, HR has evolved away from reporting to finance in larger companies. In many cases, HR acts as a peer to finance leadership reporting into senior executives. Also, payroll is rarely an HR function - it reports to accounting as a general rule.



Posted 15th June 2009

Sir you have potrayed finance people as people having no common sense but it is not that way and even a simple person will understand the facts, HR is nothing but skills, HR does not develop employees it just makes employees believe they have been developed.
Posted 15th June 2009 From India, Pune
But in middle east its different, Mostly HR have to report to a Finance and Admin head.
Posted 15th June 2009 From India, Calicut
Hi All,

I comment first time in this. Here I am seeing many of you confused with their terms. Reporting and communication.

HR can never report to finance in any grown organization. but the communication goes and if their any bad financial impact, it has to go to higher level(CEO, MD) and discussed in meeting and higher level people will give the final decision after all if there is any discrepancies.

still more their to explain. ...

will join in the next time.

Posted 15th June 2009 From India, Mumbai
Hi there,

As per me you are correct HR & Finance / Accounting are two seperate departments, there is no link or point of HR reporting to Finance
HRD is also involved in financial matters of the company but that dosen't means they will report to finance dept..
HR is an innovative dept. where we try to bring new ideas everyday to make a new culture of working by abiding with various rules & regulations, so HR activities are not finance bounded. And if HR will report to finance then finance will try to cost cut on our innovative ideas also
On the other hand HR means employee relations, retention, organizational development, recruitment, staffing, reward management & various other things which finally says communicating with different people all the time. So its an open dept.(open to questions & suggestions) & finance on the other side is a reserve dept.
Though both the depts. have to be very good in keeping the database confidential & secure from other depts. of the organization but the way of working is entirely different
So no ways, HRD should never report to Finance & Accounting
And it should directly report to the Dirtector or CMD of the any company.

Shilpi Kakkar
Human Res. Manager
Posted 15th June 2009 From India, Delhi
True, I report to the finance, but I also am driven by the director himself. Rightly said, finace thinks from financial prospective only ,I do not agree with Ravi.
Adding to ur example, Leave enchashment, earlier in my company was from year to year, but now with the finance taking over, the policy says, ever person is eligible for leave encashment on his termination from employement . Which means it is all accumlated and not more than 45 days is what is he can enchas at his leaving the organisation.
If I were to frame it , I would have done it other way , may be reducing the number of days, enchasement should be allowed year on year.

Posted 15th June 2009 From India, Madras

Dear Ravi,

Policy should be made by the HR people with the discussion of Senior management team of all dept.

Policy cannot be one dept driven. It should be in interest of the all dept. How ever policy should not be confused with service rule or work flow. Both HR & Finance has their own set of rules & regulation to follow. That should be communicated to both the dept. But HR should not report to Finance.

Posted 15th June 2009 From India, Bangalore
Dear All,
I found a great discussion goin on here and would like to add up my points. But let me make you assure that HR v/s Finance is no pont discussing or wrangling here. It depends on the company policy and the parent country framework.
I worked in USA army and currently associated with a MNC which is world's no. 1 in its operation. We recently started our company in India. According to International or I must say Globalisation, HR works under Finance Department. I AM SORRY BUT ITS A FACT. Rather if you see most of the companies listed in Fortune 500, you can observe that they does not have HR department in isolation as specified. Few good comapnies do have but that too is under Finance department. HR Head reports to Finance controller, Reason being very simple that any operation with HR department leads to an additional cost that might and might not have provision for the month/year. Other Departments specially SCM or in Indian context Purchase department usually have their provison set in advance.
Now though, companies started emphasizing HR department as important as Finance but still it will take time to fill up the Gap.
Here, I want to add up that no Department or work is superior than other. Its all like same and an absence of single can lead to a fail of other
Best Regards
Posted 15th June 2009 From France, Voreppe


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