As more states pass pay transparency laws and the financial metrics of computing total rewards become increasingly challenging, CHROs soon may find a new twist on their job titles on the horizon: chief human financial officer, or CHFO.
That’s according to a panel of HR leaders who spoke last week in a session titled “Total Rewards and the Dawn of the CHFO: How to Use Hard Data to Harness the ROI of Workplace Equity” at the WorldatWork Total Rewards conference in San Diego.
“HR has the largest item on the P&L list with its employees, so CHROs need to be thinking of tying their people metrics to the business,” advises Maria Colacurcio, CEO of workplace equity platform Syndio, one of the panelists.
That means they will need to excel at analyzing “time and cost” for employees in the way that chief financial officers excel at analyzing time and cost for products, Colacurcio said.
A CFO, for example, can estimate the percentage of pre-orders that will become sales with delivery for the last month of a quarter based on the percentage of those numbers in the first two months of the quarter. Similarly, a CHRO needs to be able to estimate the costs and retention impact of a pet insurance benefit based on the costs and retention rates connected to a healthcare coverage program.
5 opportunities to flex your CHFO mindset
In order to make the shift from being a CHRO to a CHFO who can crunch data on workplace insights, HR leaders need to have a close working relationship with their CFO, Colarcurcio says. And they should know how to tell stories and make presentations using data and analytics since these bolster credibility.
In terms of where to focus, she offers five opportunity areas where CHROs can dive into data and become stronger business leaders.
- Representation: Gather data on demographics, such as the percentage of women to men at your company, which is the starting point that will help you understand the composition of your workforce as a CHRO. It can also serve as a metric to present to the board of directors or management team when justifying, for example, the expense of a breast milk delivery service or lactation room in the office. With that data, you can speak like a CFO on the return on investment as it relates to attracting job candidates, for example.
- Promotion: This data will not only help inform your DEI efforts but can also shed light on equity issues. For instance, if you know the average time it takes for an engineer to be promoted, you can then drill down and understand how long it takes for both men and women in that position to be promoted. Like a CFO, you will be able to analyze if one area of your resources or assets is receiving more funding than the other and adjust accordingly.
- Attrition: What is the retention gap between women engineers and their male counterparts? In analyzing promotions and their distribution among women and men, you can couple that data with attrition rate figures. And like a CFO, you can draw conclusions from the data, such as the attrition rate if promotions are not doled out equitably.
- Pay equity: Using that same example, what is the unadjusted pay gap between women and men engineers? Pay equity data is not only important for CHROs in determining fairness in pay but, like a CFO, you can make budget projections as salaries are adjusted upward to be comparable.
- Benchmarking: How are women represented compared to all others in engineering? As with CFOs, CHROs can benchmark available data to compare where the company stands on a number of fronts against its competitors.
Add storyteller to your resume
Another way that CHROs can bolster their roles as reliable business leaders is by providing this robust return-on-investment data to business leaders and the board, and doing so in a digestible way. After all, employees are most organizations’ biggest asset and biggest expense, so decision-makers need to understand exactly where the talent challenges are.
Boardroom presentations built around vague assumptions and not backed up with data may only get a reference in the appendix of a board meeting agenda. But “when CHROs tie the people metrics to the business, you see their presentation move from the appendix to the agenda and then to the top of the agenda,” Colacurcio says.
Such data is vital for presentations and proposals, says Instacart CHRO Christina Hall, who joined Colacurcio on the panel. And just as important is telling the story behind the numbers, she advises.
“That story can drive the data graph home,” Hall says.
She also recommends that HR leaders tell the same story to employees that, for example, they tell the board of directors—although the emphasis and details might vary for each audience.
Not only do employees want the story behind the data but they are also usually the ones pushing for data on pay transparency, equity and promotions, says Danielle Moss, head of global total rewards for Ralph Lauren and also a speaker on the CHFO panel.
In an effort to help Ralph Lauren managers navigate inquiries from employees about pay transparency issues and pay equity, the company provided sample dialogues of what managers could say to employees, Moss says.
It’s steps like these that help HR leaders seek, view and manage data through a business lens or that of a CHFO, say the panelists.
“You need to go from checking off the box on your people analytics dashboard to making sure it’s part of the culture,” says Moss.