Ah, the life of a CFO… They manage financial operations, financial planning, analysis, reporting and strategy, they make critical decisions that limit financial risk and ensure the overall success of the business. But wait, what's with all these people problems? Cue the eyeroll and collective groan from all CFOs out there.

It's no secret that CFOs are often left with the task of handling some or all HR duties. This is typically because they are responsible for managing the financial function and some of the highest expense categories are payroll and benefits. That’s logical, especially when a company is starting out, but it doesn't mean they are equipped to deal with the legal, ethical, and personal aspects of human resources. Let's face it, HR is a complex and ever-changing field, and without proper training and knowledge, a CFO taking on HR duties can lead to significant risk for the company. Let's take a closer look at some of these risks.

Legal ramifications - HR is not just about filling out paperwork and processing payroll. There are numerous legal requirements and regulations that need to be adhered to, such as equal employment opportunity laws, labor laws, and anti-discrimination laws. Failure to comply with these regulations can lead to lawsuits, fines, and a tarnished reputation for the company. 

Employee Relations - HR plays a very tactical role in the management of personnel from talent acquisition to terminations to employee performance evaluations and, ultimately, company culture. HR professionals are required to have a level of emotional intelligence and empathy that may not come naturally to everyone, especially a CFO without the proper training. When it comes to managing people, things can get risky quickly. 

The workload on the CFO – It is no secret CFOs have a lot on their plate. As a company grows, the increased HR duties can lead to an overwhelming workload that can cause a backup on keeping up with the financial regulatory requirements and can lead to burnout. Though we encourage the CFO and HR functions to work together, it is important to remember that, as a company grows, these are two separate functions.

So, CFOs, take notes and tune in to our podcast “HR Nightmares”. While it may seem like a logical step to take on HR duties, it's important to consider the risks. After all, you wouldn't want your HR department to start doing the company taxes, would you?

In our latest episode of HR Nightmares, The CFO's HR Rollercoaster: Navigating Nightmares & Triumphs, we talk with Fractional CFO, Chris Capone with Capone and Associates. He shares real-life experiences in business when CFOs take on HR. Watch on YouTube or stream on your favorite podcast platform here. 

At Leath HR Group, we often work with CFOs to delineate the HR function. If you don't have the in-house expertise, consider engaging us for an HR Audit and Fractional HR management.  Our team of senior-certified HR professionals will work with you to create or enhance your organization’s HR function, and when it’s time, we’ll help you hire the right HR leader for your team.  

Contributing authors: 
Gabrielle Plumez, People + Culture Consultant with Leath HR Group
Andy Almeter, President of Leath HR Group