CFO Career Tip: Go to HR School

How finance execs can earn high marks in M&A.

Here’s a tip for CFOs on how to boost your job prospects: Serve an apprenticeship in the human resources department. It could help make your company’s next merger a career-building success.

With the fate of M&A deals often hanging on intangibles like the quality of a workforce or a customer base, many CFOs would do well to bolster their knowledge of people-related issues. For finance executives on the way up, a stint in HR of six months to a year might do the trick, advises Jeffrey A. Schmidt, a Towers Perrin managing director in Chicago.

CFOs with less time on their hands could work on a specific personnel-related project—determining the relationship between employee retention rates and earnings at the company over time, for instance.

At the same time, Schmidt thinks, HR people would benefit, say, by working in the controller’s office. Nowhere is there more need for “a convergence in skill sets,” he says, than in the M&A area.

But don’t CFOs commonly play a big role in HR?

Schmidt replies that while many CFOs are heavily involved in HR decisions and even in program implementation, “it’s more by default than by design.”

Functions like benefit administration and payroll management require information-technology know-how, he notes, and HR departments are frequently not as proficient in IT as finance people are. For that reason, CFOs are often compelled to take over such jobs.

But a background in benefits IT doesn’t supply many CFOs with a grasp of the nitty-gritty people issues that can make or break a merger and hurt a company’s prospects after an M&A deal is done, Schmidt suggests.

For instance, inept, spur-of-the-moment handling of people issues can make a company less competitive in a merger’s aftermath. If frontline employees are confused about their standing in the wake of a merger, “that is going to be carried over into customer relations,” the consultant tells

“Customers can defect if employees defect,” he says. Competitors, sensing an advantage, “will attack at the weakest point” and try to recruit talented employees and lure away the merged company’s best customers. All that can “undermine the positive effect” of the merger, Schmidt adds.

From a career standpoint, CFOs ignore such factors at their peril. “Managing a merger is almost never career-neutral,” says Patrick Donohue, national practice leader for Deloitte & Touche’s human capital M&A services in New York City.

“Companies [that have made] successful mergers have successful executives” who can parlay those wins into even better positions, he adds.

Early HR Involvement Is Crucial

Recently released studies by Towers Perrin and Deloitte & Touche suggest, in fact, that HR involvement in a merger’s early, strategy- setting phase can be crucial.

The survey Towers Perrin did with the Society of Human Resource Management, for instance, found that HR professionals were heavily involved in the M&A due-diligence phase in 72 percent of the successful deals studied.


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