Should HR Report To Finance And Accounting……………....????

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……………....????

I feel there is no harm in HR reporting to finance and accounting. I think the HR person who does not feel to report to finance people might have an inferiority complex. It is not credible that since HR recruits people, he should make policy decisions. Even a driver drives the MDs' and VPs' cars, so can we allow the driver to make decisions?

For your kind information, could you provide some examples where decisions regarding policy are made by Finance People? Even if they are made, can you show how they may not be people-friendly? Please explain with an example.

STRICTLY no........WHY- COZ FINANCE PERSON DONT UNDERSTAND THE hr PROCESS......to 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

Ravi, when a policy is framed by a person who is reporting to the finance department, financial aspects are considered, but people-oriented factors are often left out. It's not just a matter of reporting; it's related to developing better people policies and organizational development.

Ravi, there are many examples that vary from company to company.

Bipin,

Can you post an example? Let's conduct a case analysis. Let's examine all angles and determine whether the policy created by the finance team is truly valid or invalid. We will assess it comprehensively. Okay. We need to research this thoroughly before making any conclusions.

Hi,

I don't think there is any harm if an HR professional reports to finance or accounts. In fact, it will make the job of HR easier regarding many statutory and legal issues. I myself am also handling HR for a small unit comprising 50 people along with accounts.

Regards,
Pradeep

Dear Bipin,

There should be coordination with the Finance department. However, reporting to them is not a healthy practice because HR is different from Finance, as you know. Maybe some things like payrolls and accounting may be similar, but again, Policy Making, Recruitments, etc., are all done by HR professionals. There is no point in reporting to a person who doesn't know the head and tail of HR.

So let each department do their own set of work, and the final reporting of all the elements related to HR (Finance department, HR Officers, Front-Office Department, etc.) should be done to one person, maybe to the HR Manager or individually to the head of each Department. That will be a healthy as well as a fair way of management.

Cheers,
Rashmi Bhalerao

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.

Dear Bipin,

There is no harm because if the company has a senior finance person, he/she can understand the policy and cost effect or have a better perspective for the company. I agree with Mr. Rashmi; she explained it in a better way.

Best Regards,
Sajid

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 ?

Dear Mr. Sajid,

I do agree with you, but the problem is that a finance person sees everything through a financial aspect. How to make a profit for the business even though squeezing the employees. He doesn't care much about an employee.

No. HR has as distinct and strategic a contribution to make to organizational excellence and growth as marketing, engineering, finance, and ICT. By having HR report to Finance, you reduce the critical human component of the business to a numbers game.

HR reporting to finance would be a mismatch of sorts where there would not be too many benefits to be gained. Normally, when one talks about recruitment, the process should be: a) requisition raised by the department, b) approval from HR in terms of budgeted headcount, and c) approval from finance from the P&L perspective (do you have the 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.

Ravi, you again started your negative thinking towards people coming here to share knowledge. Both are important, but how can you ignore HR? How is finance better than HR? Finance people can run the company without HR, but why ignore the need for HR in a company? HR can bridge big gaps. For instance, if your vision is a 1000 crores turnover company within a year, and the current turnover is 800 crores, to fill the 200 crores gap, you need an HR. The role of HR in a company is very different. People should think about this. HR doesn't just make and implement policies; it plays a significant role that people must understand. I know you have SAP knowledge, but how effective will it be for your company? Finance people can't define it, only HR can. To use your knowledge effectively for organizational growth, a professional HR is needed. Finance personnel may think from a financial perspective, but an HR won't. If a professional HR isn't present, finance can hire, but not as effectively as HR. There will be capability gaps as they won't effectively connect capabilities with organizational goals or train individuals. Our business thrives because of employees, finance, and goals. Therefore, defining individuals' goals should be the first priority, which finance personnel may not do effectively. HR contributes not only to the company's growth but also helps individuals in their careers by providing training and more.

Hi,

There is no point in reporting to a finance or accounts person from HR; it's absurd. There may be coordination between HR and accounting/finance for legal matters, budgeting (salary), etc. Will the finance/accounts guy report to HR? Obviously NO...... Both are different functions in an organization.

Dear Friends,

The question is not about reporting but the more important thing is whether the HOD is people-oriented or not. Normally, and in general, finance people will look into all aspects with P&L, but in some areas, people-related matters need to be considered in the larger interests of the company.

For example, when you start a new company where all machinery is under warranty and AMCs, recruitment of a Maintenance Incharge may seem like an additional burden in the perception of the Accounts department or in general. However, as an HR professional, you should visualize it differently; preventive measures are better than cures. Monitoring, coordinating, and taking care are crucial aspects that can prevent major breakdowns, leading to reduced downtime and improved productivity. By thinking and articulating in this manner, numerous examples can be identified.

While the payment of salaries on or before the 7th day from the cutoff date is legally permissible, depositing salaries on the last working day demonstrates the financial health of the company, enhances employee comfort, increases satisfaction levels, ensures employee security, and boosts motivation. Although the Accounts department may have a different perspective, both views are valid and correct within their respective domains.

Ultimately, it is not about whom HR is reporting to, but whether the person is people-oriented, knowledgeable, and a good leader that matters most.

In a global company, as part of job rotation, the HR portfolio was entrusted to a person who had worked as a Manufacturing Head outside the HR function for over a decade. Despite this, he was widely accepted by the employees and proved to be a good people-oriented leader.

In conclusion, regardless of whether HR reports to Manufacturing, Accounts, Corporate Affairs heads, what truly matters is the qualities of the person to whom you are reporting.

Regards - Kameswarao

A reporting relationship may not serve the purpose because finance people will only try to "cut costs" and reduce incentives, whereas HR people will try to get employees their benefits. So, a coordinating relationship is fine. Reporting makes finance people have an upper hand in deciding if the incentives should be paid or not. On the lighter side - how about finance reporting to HR so that HR would know about the actual expenses of the company and decide employee benefits/incentives based on what is possible, and also keep a contingency reserve as required by the management? ;-)

[Single line break]

For large organizations, it's not appropriate for HR to report to the finance department. In fact, that is a serious undermining of HR professionals. Even for small organizations with highly enriched jobs, there is no need for the finance department to handle HR issues. It should be noted that when HR issues are mixed with finance, there is a tendency to prioritize finance over HR, and sometimes I don't blame the finance team because HR is beyond their competence. Therefore, I conclude by saying that as organizations become more complex and larger, HR issues become more strategic.

Those who are in support of HR reporting to or HR working under/with the Finance Department, may I ask, is it okay to work in the reverse way? Which means Finance reports to or works under/with HR?

Thanks a lot.

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.

Regards, ResnickHR

Note: The link provided no longer exists.

Sir, you have portrayed finance people as lacking common sense, but it is not the case. Even a layperson can understand the facts. HR is about skills; it does not directly develop employees but rather fosters the belief in employees that they have been developed.

But in the Middle East, it's different. Mostly, HR has to report to a Finance and Admin head.

Hi All,

I am commenting for the first time here. I see that many of you are confused about reporting and communication in HR. In any well-established organization, HR should never report to finance, but communication should flow. If there is a significant financial impact, the matter must be escalated to higher levels (CEO, MD) and discussed in meetings. Ultimately, decisions will be made by senior management to address any discrepancies.

There is more to explain, and I will elaborate next time.

Goodbye

Hi there,

As per me, you are correct. HR and Finance/Accounting are two separate departments. There is no link or point of HR reporting to Finance. HRD is also involved in financial matters of the company, but that doesn't mean they will report to the finance department. HR is an innovative department where we try to bring new ideas every day to create a new culture of working by abiding by various rules and regulations. Therefore, HR activities are not finance-bound. If HR were to report to finance, then finance would likely try to cut costs on our innovative ideas as well.

On the other hand, HR focuses on employee relations, retention, organizational development, recruitment, staffing, reward management, and various other things that ultimately involve communicating with different people all the time. Thus, it is an open department, open to questions and suggestions, while finance, on the other hand, is a reserved department. Both departments must excel in keeping the database confidential and secure from other departments of the organization, but their ways of working are entirely different.

Therefore, HRD should never report to Finance and Accounting. It should directly report to the Director or CMD of any company.

Regards, Shilpi Kakkar Human Resources Manager

Hi Bipin,

True, I report to the finance, but I am also driven by the director himself. Rightly said, finance thinks from a financial perspective only. I do not agree with Ravi.

Adding to your example, Leave encashment, earlier in my company was from year to year, but now with finance taking over, the policy says every person is eligible for leave encashment on termination from employment. This means it is all accumulated, and not more than 45 days is what he can encash upon leaving the organization.

If I were to frame it, I would have done it another way; maybe reducing the number of days encashment should be allowed year on year.

Regards,
Kavitha.

Dear Ravi,

Policy should be made by the HR people with the discussion of the Senior Management team of all departments. Policy cannot be driven by one department alone. It should be in the interest of all departments. However, policy should not be confused with service rules or workflow. Both HR and Finance have their own set of rules and regulations to follow. These should be communicated to both departments. However, HR should not report to Finance.

Tapati

Dear All,

I found a great discussion going on here and would like to add my points. Let me assure you that HR vs. Finance is not a point of discussion or argument here. It depends on the company policy and the parent country framework.

I worked in the USA army and am currently associated with an MNC that is the world's No. 1 in its operation. We recently started our company in India. According to international, or I must say, globalization, HR works under the Finance Department. I am sorry, but it's a fact. If you observe most of the companies listed in the Fortune 500, you will see that they do not have an HR department in isolation. Some good companies do have one, but it is also under the Finance department. The HR Head reports to the Finance controller. The reason is simple: any operation involving the HR department leads to an additional cost that may or may not have provisions for the month/year. Other departments, especially SCM or, in an Indian context, the Purchase department, usually have their provisions set in advance.

Although companies are now emphasizing the HR department as important as Finance, it will still take time to fill the gap.

I want to add that no department or work is superior to another. They are all equally important, and the absence of one can lead to the failure of others.

Best Regards,

Sakshi

Dear Bipin,

I strongly feel no HR professional should report to Finance. For what GM/VP HR are there for in that case? We have to maintain our hierarchy level in HR.

Secondly, the finance head would only think about cost-cutting from a financial point of view, whereas one of HR's functions is to keep employees satisfied through innovative measures.

Mr. Ravi - Please don't comment as: Finance gives food to the company and HR is nothing but skills. If that's the reality, then every Tom, Dick, and Harry would be in HR. Without HR, a company can't run smoothly. I am sure you are not in HR; your series of comments proves that.

Deepa

dear
if yoy are real HR then you cant think such type of bogus question.
Please left this type of questions from non HR person like K. Ravi.
dada

Hi,

I believe that both people in HR and Finance can coordinate themselves together in making certain decisions associated with costs. It is not advisable for a HR person to report to finance or a finance person to report to HR, as this could lead to differences in opinion that may affect the smooth functioning of the company. Furthermore, both finance and HR are support functions of a company, and they need to work in coordination without being linked in the reporting structure.

Regards,
Vidhya

Dear Bipin,

I don't think you belong to SATYAM. Kindly learn from the episode of Satyam. HR doesn't have their say; only top management and finance people will decide the whole policy. They keep fake employees in their records, and their accounting department processes their salaries without obtaining any clearance from the HR department.

Thank you.

There is no final yardstick or any rule that so and so should report to so and so. It depends from company to company. Finally, there is no harm in reporting HR to finance provided the head of finance is senior to the head of HR. In today's scenario, finance is given the steering of the organization. These days, the function of finance is not just keeping accounts. Rather, it involves administration, liaison, negotiation, etc.

HR Reporting to Finance!

This depends on what culture the organization has. How much importance is given to employee-related matters, organizational development (OD), training and development (T&D), and grievance handling over finance or money? What vision does the top management have? If everything is viewed from a monetary perspective, then yes, HR has to report to finance, and this holds true in many organizations.

Saurabh

Dear Sakshi,

I think most MNCs fall under this category... they all tend to report to a Finance head... this is what is being followed in the Middle East.

Hi,

This has been a great discussion so far. I am presenting my point of view.

I believe all the policies and processes are dependent on the vision and mission of the organization. Each department aligns itself with the objectives of the organization.

Based on the alignment, each department provides the budget for themselves, whether on a monthly, quarterly, biannually, or annually.

Policies are also prepared by the respective departments, but I feel they don't serve any purpose until they are in sync with your objectives as well as the rest of the resources in your organization. I think this will be the process followed in any totally aligned organization, irrespective of its size, location, or industry.

So each department has its task cut out, and yes, it will have to be approved by the management, which would include the CEO, Head of HR, Head of Finance, etc.

Now, whether an HR department can report to a Finance person, I don't think it is wrong.

I can cite an example here: Mr. Mohan Das Pai has worked in almost all the departments in Infosys, and he now heads the HR department. He has been successful in all his roles.

My point is that a finance person can also be a good HR person, provided he knows the work involved in HR and vice versa.

I might not completely agree with the point that a finance person will look only at the cost-cutting perspective, as he/she knows that if it is not employee-friendly, then they might also face the same situation sometime in their career.

Dear Bipin,

It's not a matter of who reports to whom. HR policies form a framework for a cohesive work atmosphere. HR is a part of an organization, which cannot be sustained by itself (without money); hence, it is extremely important that HR policies are framed based on the company's financial strengths. The need is to have a close coordination between HR and Finance for policy-making, and with all departments in the organization in general.

I am at a loss to understand why many HR executives feel it is inferior to report to anybody except the very top management. HR is supposed to create healthy respect for each employee, not create harassed renegades. If you look closer at TATA's HR, you will realize that they form the tires of the carriage (which take the brunt of the humps for a smoother ride for the people in it) and NOT the whip in the hands of the driver. So, it's not whom they report to that matters, it's what they deliver that does.

Warm Regards,
Kiran

Bipin,

I do not agree with you. It's wrong practice. I cannot understand that the money comes from organizational profits, not from individuals.

You must take care of your employees with the available resources, keeping in mind your organizational goals and vision.

Thank you.

HR reporting to finance augurs the HR team to think more on financial aspects and deliver more value to employees.

HR reporting to finance is prevalent in most MNCs currently. Even German companies follow this pattern.

I never asked during interview in my 10 yrs career : "sir, whom I will be reporting to".

I had a similar role in HR where I used to administratively report to Finance and Accounts, and functionally to HR at Head Office. These are the usual things when it happens this way.

Finance & Accounts works on the fixed guidelines and approvals, certification from admin or HR for everything, which is 100% correct. They would look forward for all these documents for any kind of payments internal (staff, or a different department) or external (vendors etc). No deviation from their routine work is tolerable to them; things like expenses on staff welfare would make their eyebrows rise.

But when it comes to internal payments or any kind of benefits to Finance and Accounts department they don’t require the approval or certification from HR. after all HR is reporting to them.

One thing every one must acknowledge that 90 % of people in finance and accounts have the background of a little administration work, and payroll. Most of them start their career from a small organization where in admin, HR and Accounts are merged under one department. Later they join big organizations but still think functioning of HR is same as in their earlier organization where the volume of staff was very less.

Every one has limitations and eligibility defined by the policy, but finance and accounts can fly (flight) or hire (vehicle) beyond eligibility. Audit…? They have approvals from Finance Head and they cannot explain the emergency which made them to….. oh ! and the traveling reimbursement doesn’t require the certification of HR they can see the Policy and certify by themselves.

Since, PF, PT ,Tax, is calculated / intimated by Finance and Accounts. They feel the payroll / Payslip of 100+ staff done on SAP by an HR is just a small effortless thing. They would call it a routine copy paste business.

Time and money spent on Recruitment and job portals is waste of time you have better options like outsourcing.

Induction is not that necessary since new recruits will get acquainted with the time but don’t forget to take the contact address and phone numbers………( would any HR recruit people without these details?) did we asked for induction with bankers or vendors but we are managing or not?

Tax plans? Why ? why it has to be explained to all the staff? People should know their Tax liabilities they should come to us (Finance and accounts) for guidelines, If no we would advise HR to deduct.

End of the year…………………HR is flooded with complaints.

Why ? you should be smart enough to handle these type of things, that’s hat we have an HR otherwise we would have managed it on our own.

At last we (HR) gathered and made a representation to the Sr. HR in Head Office now we are functionally and administratively reporing to HR at HO Things have changed a lot, every little problems solved since we go by policy of course with a human touch.

Now I am not surprised when a candidate asks me during interview Sir, to whom I will be reporting to? Rather I would appreciate he knows more than I do.

Dear Mr. Vinodkumar,

These are the problems that we need to discuss. If everything falls under finance & accounts, there are high chances of misusing resources due to departmental issues. However, if everything is well defined by policy, there are fewer chances of misuse. In fact, the employees' tendency will change, and they will not try to misuse the available resources. It may be easy for individuals, but the company will lose its values and money. This situation is more prevalent in small organizations. For a larger organization that is policy-driven, it becomes tough to manage in this manner. Now, you can decide the approach you prefer.

Thank you.

You know what, guys? I think people are misunderstanding here. Reporting and liaising/consulting are different animals. HR professionals should always report to their superiors, who are neither Finance nor Accounts professionals. These two or three professions are intertwined, and for HR to have control over their wage bill, they need to consult with the Finance/Accounts team, and vice versa. Finance/Accounts professionals always consult with us (HR) on, for instance, financial statements and paying statutory levies. Even HR can present their departmental budgets to Finance and Accounts. So, this is more about consulting rather than reporting. Unless, of course, in some setup where Finance/Accounts are the immediate bosses of HR, although this is very unprofessional and degrading to other professions. I welcome any corrections.

Hi All,

Most popular discussion of the day... But in spite of the fact that each department has its own importance, in every organization, there should be a finance department. It means without a finance department, a company cannot work, but they may work without an HR department.

If we consider the government as a company and ministers as departmental heads, the situation is the same. Finance ministers are more powerful than HR ministers. Friends, these are the requirements of the country/company; they will have to give more importance to finance.

Mr. Bipin,

Corporate policies are not a one-man show; each and every department head is involved in this process. Obviously, companies strive to save their costs, but at the same time, they value their potential workforce too. In order to compete in the market, they have to prove that they are the best in the industry; otherwise, there is no way to win the hearts and minds of their people.

It doesn't matter to whom you're reporting, but what matters is understanding the policies. How can one not adhere to policies once they are approved and circulated? The major aspect of management is to formulate and implement the policies.

If salaries, perks, and bonuses are approved, how can the finance guy interpret them? Despite heading HR, the Finance Manager reports to someone else and will have to answer to them for non-adherence to policies.

Best

Just to add a bit on the part of reporting by HR to Finance, I don't see why such a question has been raised. A company comprises various units functioning together to achieve a single set of goals - referred to as the VISION, MISSION, and OBJECTIVES of the company. All units have to humbly report to this, and each unit has to work hand in hand with one another. You cannot simply have HR policies heading south, Finance policies heading north, and not to mention the corporate policy heading east. All must be aligned in one direction. This means that HR, Finance, and all other respective departments must have clear "COMMUNICATION CHANNELS" set up so that one policy will not conflict with another. In modern terms, there is no more "reporting." It's not relevant in today's context. The new term is "Consulting," and this is very powerful when done correctly.

I hope I didn't say too much, and to tell you this is my first post ever on CiteHR.

Dear,

Before I put my view forward, I would like to remind all fellow members that HR is not an authoritative function but merely a coordinating agency among various departments. Many people make a mistake at this very initial stage of understanding.

Now coming to the point, there is no harm in HR people reporting their activities to the Finance/Accounting department. However, I would like to modify the statement. The HR department should function in coordination with the finance department and not report directly to them. There is no point in hiring a person or conducting a training session that only benefits the revenue side of the HR department.

This practice, although good, will only add to the revenue side of the HR department.

Therefore, instead of just reporting, HR personnel must coordinate their activities with the finance department, and there is no harm in doing so. Some of the best companies follow this practice, where not only recruitment but also training data (man-hours) is shared with them.

HR department is the two-way communication channel between the management and the employees. It has its place in the organization. Not everyone can handle this.

HR policies are reviewed and approved by both Finance and Top Management and are usually designed to benefit both the organization and the employees. Like it or not, wherever money is involved, Finance will have its say and is required as well.

When it comes to reporting structure, there is no harm in HR reporting to Finance from an organizational structure perspective. However, it depends on the persons occupying the HR and Finance Head positions, after all.

As long as things don't get too personal and remain objective-oriented, reporting structure hardly matters.

Dear Bipin,

I am glad that you did not hint at HR reporting to Marketing guys. First of all, why should HR report to non-HR people? It is not the hierarchical matrix. HR has to coordinate with the Finance department at the time of approval and posting of payroll with banks, decisions on fixing the % of hikes, allocation of bonuses, approval for motivation cash rewards, printing of certificates, marriage gifts, annual budgeting, and so on.

Each department is a separate entity and one should not dig into the other. Finance people always have an eye on the 'cost factor' and would not easily allow things to happen. What is a must for HR is a waste of expense for Finance. So the basics of coordination itself are blown off. If the Finance man himself happens to head the HR, then he has no escape. You are the boss in your domain, and what would happen if the roles are mixed up? Let me narrate an interesting story.

Three men, a musician, a cook, and a doctor, decided to exchange their job roles. The musician began to boil water in a mud pot to cook rice. The Ayurvedic doctor went out to purchase vegetables. He looked at the vegetables, potato... oh, no... full of gas, brinjal... brings skin scratches, lemon is too acidic, cucumber is watery, yam... not good for arthritis, ... and after analysis, he finally returned home buying nothing.

The cook was trying music with children at home and wanted to see how their voices are cooked for singing. He gave a concoction of various herbs and pastes to strengthen their voices. Finally, the kids were taken ill with the new recipe to their throat.

In the meantime, the rice was boiling in the mud pot. Inspired by the bubbling sound, the musician got into 'thal and jathi'. Out of enthusiasm, he played with the serving stick and tapped the pot. Oh! The pot broke and spilled over the fire.

So the moral of the story is 'everyone has to look into their own domain of work'. Bipin, your idea may hold good for a small-sized company, and if applied to a major setup, it would lead to chaos.

Regards,

Chandru

Why are we getting into reporting structure? HR and Finance should have good coordination and work as a team. HR cannot report to Finance, and Finance cannot report to HR as both play entirely different roles. However, support and coordination are definitely required from both departments.

Hi,

We cannot generalize or conclude who should report to whom. It depends on the structure of the organization and also the size. In a smaller organization with a very lean workforce, it is not the department that matters but the person responsible, perhaps a senior in the organization. Our organization is one such with a very small staff of 12 members. In this case, it is not the position or portfolio we hold but the presence of the person in charge who reports to the boss.

Dear Mr. Chandru,

I fully agree with your view, but there are many organizations where the HR person has to report to the head of Finance and Admin. For example, a HR Manager reporting to the Head of Finance and Admin.

So, whatever decisions are being made are based on the cost factor. Policies are not employee-friendly, and they are least bothered about employee welfare.

Regards,

Bipin

Hi Bipin,

First of all, I would like to make one thing clear that HR is one of the sub-systems similar to finance that forms the whole organizational system. Both play entirely different roles and are interdependent. Every functional unit has to "coordinate" with the finance department when it comes to financial matters, but that does not mean the functioning of the individual department is directed by the finance department.

If the finance department were to dictate terms, then not only HR, but also marketing, logistics, everyone would have to report to finance, which would shatter the basics of the organization.

As for your example regarding Mr. Ravi, the policies in the organization are prepared keeping the previous policies, their pros and cons, and the organization's viability in mind. Therefore, it has nothing to do with the individual who prepares it and his departmental objectives.

This is my view, and I am open to your critiques.

Dear Mr. Bipin,

Of course, it is a debatable point as far as the reporting part is concerned, i.e., who is to report to whom (especially, should HR report to Finance?). No doubt both HR and Finance of every organization are the responsible departments; therefore, there shouldn't be any clash of egos amongst them at the cost of organizational growth and interest. HR is normally supposed to be involved in every administrative activity being carried out and to be carried out by every department of the organization. On the other side, the Finance department has the authority to interfere when financial interests are involved. For example, in my organization, every month, an HR Report is issued addressing the head of the Finance department, taking into account certain facts and figures available with the HR department for the previous month. Based on the monthly HR Report, the salary statement is prepared and released accordingly on the "Pay Day." Such coordination is absolutely essential for the larger interest of any organization.

Thank you.

Biswajit Pani

Email: bjpani@gmail.com

Hi Bipin,

Rather than using a term like "reporting better," we can simplify it by having HR liaise with the Finance team to avoid any feelings of inferiority. However, the main point of contact for all employees will be HR, so it is their responsibility to clarify any queries that employees may have. I see no issue with HR collaborating with the Finance team to resolve any issues.

Cheers,
Amjad

Dear All,

Below are my observations:

The HR Department cannot function perfectly if there is no Finance department. For example, recruitment costs, induction costs, training costs, and appraisal costs need to be communicated with the Finance department. Therefore, HR must communicate the financial aspect to the finance department.

Thanks,
Soju

I think the HR Manager must report to top management but should also coordinate and work closely with finance people regarding expected funds for any recruitment budget or employee benefits. Finance people tend to focus more on monetary matters rather than employee affairs.

Nadine

Hi,

Regarding reporting, HR should inform the finance department and keep them in the loop.

If anyone feels this system is followed only in small organizations and not in policy-driven big organizations, and there is no chance of such incidents occurring in big organizations, I would say no. Either you are working in a corporate office or in a head office, or never got the chance to see or work beyond guidelines.

Earlier in this thread, I have mentioned the facts that happened in my previous organization, which is called the leader in its field, known to millions across the globe.

So here in this thread, we can only discuss. Can anyone here in this form who is a General Manager HR or above this rank shed any light on this? If one of the branches of your organization is headed by a VP of Finance and he is governing HR of that branch, and if this is decided by the BOD itself, would you be in a position to change this system of HR reporting to Finance?

The first thing you would want to know might be, "Why is it required?"

Then your guidelines would be we should be strong enough to face and handle this. Administratively, you ought to report the branch head.

If you have an alternative, kindly let us all know.

Hi, I would like to post my views here. Either way (small or big) companies, this won't work because their areas of expertise and competency are entirely different. As everyone is interrelated and dependent on each other, it doesn't mean that HR should report to finance professionals. Instead, to improve operational efficiency, small companies can ask HR to report to their MD or CEO. However, it wouldn't be fair as finance professionals have no clue about the HR industry and trends.

They can work with numbers but not with people. They can run a company by having HR report to finance professionals, but I am sure they cannot succeed or stand out in this competitive environment.

Why does HR report to Finance? This should not happen in any way. Both departments work separately, and there is no similarity; however, they need to work closely by cooperating with each other. In my view, HR should not report to Finance. The Finance team handles the accounting of all data and provides financial results of the company, while HR is responsible for manpower planning, performance appraisal, and salary advice for all employees, including those in Finance. HR should work independently. There is no reason for HR to report to Finance.

WHO HR SHOULD REPORT TO

People normally perceive, even many in the HR fraternity, the role of HR as a support function, which includes recruitment, processing salaries, maintaining leave and attendance, and handling increments, etc. Therefore, every department/function thinks it can handle HR. However, this is not HR; it is just an administrative aspect of HR. HR plays a strategic role and must act as a change agent. Anyone can conduct interviews, process salaries, and track attendance. Even housewives interview AYAs to hire them as maids, pay their salaries, but this does not constitute HR. HR is about bringing a cultural shift - changing people's mindsets from individuals to productive professionals, transforming them into assets, and aligning this change with the evolving world.

Understanding this facet of HR will help comprehend the status of the HR fraternity, and reporting is merely a tool.

Regards, Shabbir

Strictly no.

HR is staff, and the rest are line. Thus, ergonomically, staff can never report to line. Simple.

Instead of the wheelspin of this debate, I suggest you all read <link outdated-removed> (Search On Cite | Search On Google) by Dave Ulrich and Wayne Brockbank, published in 2005 by Harvard Business School Press.

Until you understand the strategic importance of HR, and that it has nothing to do with the people-orientedness of the HOD or the ability to interpret policy, you will continue to have this inane debate.

Bipin,

Why would you frame the policy to cash in leave within the time that you are employed with the company? If you were not cashing in, you would have taken the leave in a given year. So why not cash in when you are due?

All,

HR reporting to Finance is currently being done in organizations with a view to reduce manpower and save on staff costs. I have seen certain companies that have implemented this synergy and have failed miserably, leading to employee dissatisfaction and IR issues. There are various laws, legislations, disciplinary proceedings, and regular functions that need to be enforced. In such circumstances, the support of the top brass is required for HR.

HR would be responsible right from the employee joining to the separation, wherein a lot of activities are involved which are not possible without the support of the Company's head or the senior management team.

In fact, as HR deals with various categories of associates and is involved in monitoring the performances of individuals as well as the company, it is all the better that finance reports to an HR head who is well conversant with the basics of accounting.

Hi, I am Pratap Kamble.

I work as an HR Manager and sit in the Accounts department. I have been working with the company for 8 months. Here, I coordinate with the Accounts Manager.

What I have found is that the Accounts Manager's policy is to save pennies, but he is losing rupees by creating dissatisfaction among employees. The Accounts Manager is more concerned about daily clearing of cheques, daily expenses, daily cash, and other finance matters. However, he fails to think long term, which leads to not enhancing profit-making.

To make a profit, we have to develop services or products, efficiency, and productivity. This does not happen by reducing costs but by developing manpower. So, he should look at cost as an investment and not merely as a cost.

I don't think any finance people will understand this or be able to practically work on this. I hold an MBA major in HR and a minor in Finance. I believe that costs should be viewed as investments and not as expenses.

What I personally believe is that finance people should not control costs but should rationally coordinate with HR and develop human resources. I have observed that many times finance people try to act like controllers of all costs and attempt to minimize costs, which, I think, should not be their role.

I think if we take care of people, there will definitely be a profit. But if you take care of money only at the cost of employees, I believe you can't prosper in this business environment.

So, have a big heart, make investments, and reap the benefits. That is "Be happy and make others happy."

Regards,
Pratap Kamble

I completely agree with Ravi. Why? Because the financial people can make better decisions than HR people.

Hi All,

I am of the opinion that there is nothing like HR-based and Accounts-based decisions. Decisions have to be taken based on practical situations and not department-based. For example, the finance department cannot say that leaves cannot be encashed, nor can HR establish a rule that leaves should not lapse. Policy decisions should be made objectively based on what is good for everyone.

Tasks that can be done exclusively by HR must be handled by HR without anyone's interference. However, more often than not, staff welfare issues will have financial implications. Therefore, it is always better to make these decisions after a fair discussion with the Accounts/Finance Departments.

HR does not need to report to the finance department because the job responsibilities of both departments are different.

Sumit

HR is bringing about a cultural change in the mindset of people - from an individual to a productive professional, transforming them into assets and aligning the change with the evolving world.

Hi,

The HR and Finance departments should coordinate to run smooth business operations. HR staff should report to the HR manager. The HR manager can discuss or seek advice on any matters related to finance. However, reporting to finance is not acceptable and does not make logical sense. HR handles people, and finance handles money. Finance should only control the cost of money, not HR or people. The HR manager should report to their immediate superior, such as the general manager or regional HR.

Manifaro

Have you studied ergonomics? If yes, then that is the answer.