The head of HR at many organizations reports directly to the chief executive officer, president or owner, according to a new examination of the HR reporting structure. A smaller number report to the chief financial officer and chief operating officer (13 percent and 10 percent, respectively).
The findings are "probably a reflection of the importance employers place on human resources in today's complex working world," XpertHR surveys editor Andrew Hellwege said in a statement about the survey.
The data in HR Staffing and Resources 2021: XpertHR Survey Report is based on a survey conducted with 417 employers across the U.S. in February. The majority (54 percent) of organizations surveyed are in the service industry; 67 percent have fewer than 250 employees; and 89 percent are nonunion workplaces. The survey did not include temporary and contingent workers among the total number of employees at an organization or among the total number of HR employees.
"The shift over the past couple decades is for HR to take on a more strategic role in organizations, which seemingly translates into the top HR position reporting into the top position in the organization," said Tracy Morley, SHRM-SCP, XpertHR's editorial team lead.
"I don't think the pandemic alone had a major part in HR reporting directly to the top person in the organization. However, it likely resulted in HR having more frequent communications across the organization's senior leadership, particularly related to some difficult decisions such as layoffs, setting up for remote work and how to support employees during the pandemic."
Keeping the CEO informed of diversity, equity and inclusion; training; the skills gap; and the like is important, she told SHRM Online, "and having the top HR executive report into the organization's top executive accomplishes this, while also sending a clear message that the organization values its people and understands how important they are to the organization's success."
She offered some tips for effectively communicating with the organization's top leader:
Know your audience and the preferred methods of communication. Be prepared and fully understand what you want to communicate, and convey your message using facts and not opinion. Be confident in your approach.
Speak the language. Have a thorough understanding of organizational goals and how success is measured. Convey projects in terms understood by business leaders, such as ROI, productivity and efficiencies.
Demonstrate credibility, build trust and operate with the highest level of integrity. CEOs rely on their HR executive to help them understand how what they do contributes to the bottom line.
The Society for Human Resource Management (SHRM) released a workplace analytic report in 2016 that studied whether having HR report directly to the chief financial officer (CFO) influences an organization's financial investments in HR. Based on four finance-related metrics, it found there is no financial difference between HR reporting to CFO or the CEO/president/owner and other position levels.
However, reporting to the CFO would afford the opportunity to build a better relationship with that person by showcasing HR professionals' business acumen and "demonstrating how their HR strategy can support the bottom line," SHRM said in its report.
Noted Morley, "As with all things, there are pros and cons for any position into which HR reports. Having a direct reporting relationship into the individual in the organization who controls the money—the CFO—might not necessarily be a bad thing. In the end, I think it really depends on the organization's culture and the importance it places on its HR function."
XpertHR's survey also found that HR departments mostly are made up of a combination of managerial and supervisory staff and professional and technical workers; secretarial and clerical employees make up a minority of HR positions.
A final interesting fact: HR department budgets make up a median of 1.3 percent of a company's total budgeted expenditures.