As businesses grow and begin to add employees, the first HR-type activity needed is recruiting, of course. But, additionally, people must be paid and people need benefits. So, often, the first person holding part of an HR role is the person who pays the staff. And this person generally reports to finance and accounting. Just because this is how a small business usually grows, doesn’t make it the right path for your business to travel. It’s not.
Every organization needs checks and balances. HR reporting to finance ties the hands of the people most likely to advocate for effective people policies and organization development, your HR staff. HR reporting to finance moves your HR person one step further away from where organizational decision making is occurring. When HR reports to finance, policy decisions are likely to be primarily finance driven and often not people friendly. Keep your check and balance in place. HR should never report to finance and accounting.
