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The High Performance Organization: Is it Being Driven by HR or the CFO?

HPO

When looking at organizations that have started transitioning to high performance using the HPO (high performance organization) Framework, one thing can be noticed: there is at least one person present who is the promoter of HPO thinking in the organization.

That person takes the position of advocate and champion of HPO and makes sure that people get and stay excited about the prospect of becoming a world-class organization. This is a person who doesn’t give up, takes hindrances in stride, keeps at it, and finds great satisfaction in seeing the organization and its people improve over time.

That person, preferably, is placed high enough in the organization so he has enough power to exact resources and time for the HPO transition activities, and to hold other people accountable for their actions during the transition. The big question of course is: who ideally should be the spider of the HPO web?

HR vs the CFO

Logically, this person is the chief executive officer, who, as the highest in the organization and the face of the organization to the outside world, has the main task of making the organization successful. However, precisely because the CEO has such a visible position he just doesn’t have the time to be the spider. He is normally so busy dealing with outside parties (shareholders, board of supervisors, customers) that he cannot put in enough effort.

So we have to look inside the company and then two functions spring to mind: Finance and Human Resources. Let’s investigate the suitability of both.

The Finance Manager (or CFO) is generally part of the management team and has a high enough position to really get things done. In addition, virtually all the organizational information flow heads to the finance department, so the Finance Manager has an excellent view of what is going on in the organization and what needs to be done. Finally, the CFO moves all around the company as he has performance talks with every unit, so he knows everybody and everybody knows him. In conclusion: an excellent choice to be the spider in the HPO transition web.

But what about HR?

The HR Manager often is still not part of the management team but at the same time is often placed on an organizational level that should have enough clout. As people are the most important asset of an organization, the HR Manager is charged with one of the most important tasks in the company: to keep this asset happy, satisfied and motivated. Two-thirds of the HPO characteristics have to do with people (managers or employees) so what better choice than to nominate the expert in the “people field” as the spider?

How both roles actually function

So it seems we have a tie. To be able to make a choice, after all, we need to look at how both positions function in practice.

Several years ago, the Finance Manager was on his way to become the business partner of management. Of course, the finance processes had to be efficient and low-cost but management increasingly expected more than just management reports from the CFO. Management wanted advise on the strategic consequences of the data and wanted ideas how to improve the organization.

In short, the CFO was squarely on his way to become the spider. However, the financial and economic crises, and especially recent financial scandals, have thrown the Finance Manager far back in his attempts to provide added value. The time of most CFOs is now swallowed up by looking at the reliability of data and reports and risk management activities. So exit the Finance Manager or CFO.

However, the HR Manager doesn’t seem to be a realistic option either. This is because, unfortunately, many of them are mainly busy with basic personnel activities, like collecting and maintaining personnel data, implementing all kinds of evaluation and reward systems, and setting-up training schemes for professionals.

The latest activity is implementing HR metrics which are supposed to show the added value of the HR function. If you say this doesn’t sound on par with the sophistication needed to become the HPO spider, I’m afraid you are right. So exit the HR Manager.

This means the position of spider in the HPO web is for grabs. Will either the CFO or the HR Manager think better of it and start spending more time on developing themself toward the level needed to be the spider? Or will they be overtaken by operational managers, like the Chief Operating Officer, or business unit managers, or department managers who increasingly take the lead in the HPO transition? The race is on!

Note to readers: In What Makes a High Performance Organization: Validated Factors of Competitive Advantage that Apply Worldwide, I have published many interviews and cases with true HPO Leaders!

André de Waal, PhD, MBA, MSc, is Academic Director of theHPO Center, an organization which conducts research into high performance organizations. He is also Associate Professor of High Performance Organizations at the Maastricht School of Management, guest lecturer at Vrije Universiteit Amsterdam and Erasmus University Rotterdam, and visiting fellow at Cranfield University (United Kingdom). André has conducted several years of scientific research, examining 290 international studies and analyzing studies in 50 countries involving over 1,470 profit, non-profit and government organizations.
  • Y Telting

    “That person, preferably, is placed high enough in the organization so he…” Or she… “has enough power to…”

  • Ginny Schlosser

    Thank you for the article – it is an interesting question.  As a former CFO who is passionate about Talent, it got my attention.

    For me, the most telling sentence in the entire article was this:  “the HR Manager is charged with one of the most important tasks in the company: to keep this asset happy, satisfied and motivated.” 

    I strongly disagree with that statement.  I view HR’s strategic role as one that coaches and develops strong managers and leaders to effectively engage and inspire their employees to reach the business objectives of the organization.  The major difference between my view and the one stated is that the responsibility rests with the Business Leaders (not HR), and happiness and satisfaction can be a great outcome, but are not goals to be pursued alone.

    I do look forward to reading more about High Performing Organizations. 

    One last thing – please don’t discount the female CEOs and CFOs out there.  :)

  • Linda Hovius

    Why would an HR manager of Finance manager want to “win the race”?
    I am staff; I am on the payroll to help line management reach its target. They are the movie stars; I help write the script or – for that matter – comb their hair if that helps.
    If a COO wishes to “own” HPO, Leadership or Performance Management, I’ll be more than happy to step aside and help him/her in any way possible to make this a success.

  • Andredewaal

    Thanks everybody for their comments, very helpfull in this discussion. I would like to react on two points:

    1) He versus She: of course I do not make a difference here between gender, certainly not because diversity is one of the HPO characteristics! The fact is that in the Netherlands we often don’t longer write “he or she” and “his or hers” as we known that when we read “he” it means both “she” and “he”.

    2) There is some confusion with what I meant with words like “charged”  and”win the race” and I apologize for this. My key point is that I am looking for someone who can take the lead in the HPO transition. In my view line management is responsible for performance and staff is in a supporting role. But, as I described with the example of the CEO, line management often does not have the time to be the full force the organization needs for the transition. Therefore we need to go to the persons that support line management, and that are FInance and HR. Using the phrase ‘win the race” is a bit tongue in cheek and at the same time I wanted to convey that having the driving role is an honor and a great thing to experience.