Why Do Finance Teams Often Clash with HR, and How Can HR Navigate This Power Struggle?

Dear Friends,

I have observed that in most organizations, HR personnel often encounter challenges when working with Accounts and Finance staff during day-to-day administrative activities. Why is this? In some organizations now, the top management holds titles such as GM/DGM (Commercial & Administration) and they tend to dominate HR activities, leaving HR professionals in a passive role. Management also seems to prioritize these individuals. How should HR personnel handle this situation? Comments, please.

Regards,
:wink:
PBS KUMAR

Hi Kumar,

I agree with your comment. Even I have come across such a situation where the accounts department tries to get involved more in HR activities.

From my observation, I can say this is mostly due to the management's failure to give a specific job description to each department individually. Another issue is that the accounts department is not very aware of what all is included in HR activities. The accounts department often assumes that all monetary matters, including dealing with vendors, relate to them. This situation is mostly found in small companies where there are no separate accounts and finance departments. They are not aware that it is the responsibility of different departments to create their budget plan and have it approved by higher management. The final approval of the budget is the management's decision, and the accounts department has no right to reject it; their role is to sanction the approved budget and maintain a record of it.

To avoid this, the management needs to be more specific in providing clear job descriptions, specifying the duties of each department.

Sirisha Reddy

Hi Kumar/Sirishan,

In my view, both HR and Accounts departments are interrelated. In the issuance of salaries, reimbursements, and all monetary-related accounts, HR should approve the reimbursements, sanction leaves, etc. These approvals are required for accounts to keep track accurately.

Hi Kumar/Sirisha,

In my view, both HR and Accounts departments are interrelated. In the issuance of salaries, reimbursements, and all monetary-related accounts, both departments are involved. HR should approve reimbursements, sanction leaves, etc. These approvals are necessary for Accounts to maintain accurate records.

Siva

Hi,
I totally agree with Siva because I am familiar with both departmental activities. Finance and HR are inter-related. Salaries benefit payments, compensation and insurance schemes etc. require both department inputs. Building up a harmony with both departments and having an understanding with regard to the activities can help smoothen the relationship for both departments.
Having a negative attitude such as finance thinking HR dominates and vise versa may lead no where. Cooperating and assisting each others activities may help achieve both departments' objectives.

Hi,

It is very true that the HR department is a favorite department for the accounts personnel. It is because both departments are interrelated with each other. Accounts personnel always bang on the HR department because it is a regular practice that employees come to accounts people for LTA claims or any types of claims and want them to pass these without proper bills.

This makes accounts people angry and they want the HR department to intervene and have control over it. The HR department, on the other hand, raises its hand, saying that it is a matter you have to solve.

And the battle keeps on going...

Dear PBS,

I agree with you that there is unnecessary interference in day-to-day activities of the HR Department. It is a weakness of the management that it fails to provide clear job descriptions, and above all, the role of the management head is very important.

While in India, working in the same group, I felt a change in the working atmosphere with the change of management. At one time, there was no coordination and just unnecessary struggle to prove one's importance in the system. On the other hand, after the management change, there was perfect discipline, the interfering mentality disappeared, and I had the opportunity to work in one of the best working atmospheres.

It's the attitude of the management that determines the type of work culture they want in their organization. HR has its own role, and Finance has its own. When there is positive and mutual coordination, it creates the best environment to work, but it is very rare.

I do agree with Siva and Asra that both HR and Accounts are interrelated. But the problem arises when one interferes in the other's issues. A clear-cut job description should be given to them to make them aware of what all includes their responsibilities.

Sirisha Reddy

Dear Friends,

Thank you for your valuable comments. In general practice, if any problems arise, they are usually only recognized by the HR department or during important occasions related to public relations. Typically, management shows a keen interest in the Accounts Department due to all the financial dealings and aspects of the company. However, it is essential to acknowledge that HR is equally important. From birth to death, HR plays a crucial role.

Regards,
:D
Pbs Kumar

Dear PBS,

To some extent, I agree with you. However, the business culture is changing, and HR is also being given more importance. Since Accounts is closely linked to the company's finances and financial condition, it is understandable that they may have a slight advantage over HR.

Thanks,
Aditya Gupta

Dear Kumar,

I agree with you, Asra, and others where you have voiced that Accounts personnel bossing over HR personnel.

If you critically analyze, there have been and still are lots of companies and organizations where a separate HR cell does not exist, but HR activities are taken care of by accounts personnel. As rightly pointed out by you, there could be DGM - Commercial & Admin, or Manager - Accounts & Admin which will include HR functions too. But you would not find an HR Manager taking care of accounting functions as well.

This fact could be due to the reason that non-HR and non-Personnel department employees can handle some HR functions - though not in a professional way but can manage jobs like issuing appointment letters, attendance and salary administration, and preparation of salary sheets, etc. Even with the existence of an HR department, I know organizations where ESI, PF, P Tax payments are the responsibility of the accounts and finance department.

To top it all, the accounts and finance will send xerox copies of the proof of payment of these statutory obligations to the HR department for their information and records and retain the originals with them.

Well, at the time of statutory inspections, I have also experienced the ordeal we have to undergo to get the original proof of payments/challans, etc., from accounts to be produced to the inspecting authorities.

The above being the case, have you come across any organizations/companies where there are no accounts personnel? Can the HR department take care of the accounting procedures? Even in unorganized institutions, we will find an Accountant who takes care of the accounting functions of the organization. Can HR or anybody else other than accounts take care of this function?

The above concept has certainly taken a beating and is changing. Many orgs have realized the importance of HR professionals in their org - to fix employees' salaries appropriately, award rational increments, etc., with utmost care given to retaining employees.

HR professionals have been and are being recognized for their part in the org. The status of accounts personnel ill-treating HR personnel will have to and will change.

As we are supposed to be - have patience which will bear the desired result. Patience pays.

Regards. All the best and good luck.

:: Dhinakaran

Dear Friends,

I have noticed that in most organizations, HR personnel often encounter challenges with Accounts and Finance staff during day-to-day administrative activities. Why is this? In some organizations, the senior management holds titles such as GM / DGM (Commercial & Administration) and tends to exert influence over HR functions, leaving HR professionals feeling marginalized. Management also seems to prioritize these individuals. How should HR personnel navigate this situation? Your comments are appreciated.

Regards,
:wink:
PBS KUMAR

In any organization, the concept of dominance can be detrimental. Each department has its own role to play in achieving the organization's goals. Therefore, it is essential to focus on HR functions and results-oriented tasks rather than on power dynamics. Clearly defining roles and responsibilities is crucial to prevent overlap and potential conflicts.

If an organization values its HR department, it should establish clear policies, expectations, and targets in terms of quality and quantity. When these elements are missing, a lack of professionalism may lead to the issues you described.

Dear friends,

Thanks for the wonderful topic and the opinions shared by fellow professionals.

Yes, in small organizations, Accounts & Finance can handle routine HR activities which are referred to as Transactional HR. Please note there are certain core activities that very few accounts people would be keen to handle, just to state a couple:

1) IR issues, negotiations, wage settlements, disciplinary proceedings.
2) Identification of training needs, design and delivery of training programs, etc.

The present trend is towards strategic HR, wherein HR plays the role of a strategic partner. People's function has evolved into sub-specializations, and performance measurement has become common. It's no longer a layman's domain.

Hence, play your role to its fullest. Other functions will cease to thread into your area.

GS

Hi,

In my opinion, this relationship is mutual. It is not only the Accounts department that goes crazy on HR; sometimes the HR department goes crazy on Accounts, especially when any problem or delay occurs. Both departments are jointly responsible for the same, and both pass the buck on each other.

Regards,
Jyoti

Dear PBS,

You have raised quite an interesting hot issue. What I believe is purely a fault at our end... I mean we, the HR professionals. We mostly don't take care of the numbers/figures portion of our job. I have noticed that most of us don't know much about the following:

- Payroll ratio
- Selection ratio
- Retention ratio
- Calculation for wrong hiring
and any other financial/business ratio.

The finance guys mostly take advantage by playing with just figures. The owners and directors seem to like this approach. According to my observation, most of the finance guys just maintain their jobs with number gimmicks.

I hope most of the participants will agree with me.

Regards,
Yousuf

Harmony is key to resolving differences. Both parties want to do their jobs, but their roles often overlap, leading to confusion. Having tea or lunch together regularly could help solve these issues.

Dear Mr. Kishore,

Your suggestion to have a cup of tea is fine. However, please do not mistake - the problem between HR and accounts exists only in official matters. Off the official matters, almost all the departmental employees in an organization are friendly with each other and should not mix up with official matters.

Regards,
Dhinakaran