This document discusses the perspectives of HR and finance on total rewards and business objectives. It provides examples of how HR and finance may see initiatives like training, development, and retention bonuses differently. Specifically: - HR focuses on motivation, upskilling, and retention for employees, while finance focuses on calculating return on investment and impact on the company's bottom line. - For retention bonuses, HR proposed the solution but finance questioned the costs given already high expenses, while missing the ROI perspective. - The document advocates aligning both perspectives by considering the impact of actions on costs and calculating the net savings of initiatives like decreasing attrition. - It also suggests adopting a business lens by understanding initiatives' influence on

1. TOTAL REWARDS
CFO PERSPECTIVE
ANUP BHASIN
March 2016
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2. THE DEFINITION OF BUSINESS
• XYZ is in the “business” of providing marketing services or
manufacturing televisions …..
WHAT DOES YOUR COMPANY DO ?
• It is an undertaking or venture which conducts activities with an
objective of earning profits or gains for its owners and its operators.
Owners are the people/organizations who have contributed money to
run such business; also known as “Shareholders”
WHAT DOES “BUSINESS” MEAN?
• XYZ is in the “business” of providing marketing services or
manufacturing televisions …..with the objective of making profit
WHAT DOES YOUR COMPANY DO?
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3. TOTAL REWARDS - COMPONENTS
Remuneration
• Base Pay
• Short Term Incentives
• Long Term Incentives
Benefits
• Transport
• Health
• Retirement Plans
Career
• Training &
Development
• Lateral Movements/
Promotions
• Stretch Assignments
Others
• Recognition
• Celebrations
• Work-life Initiatives
COST
WHY TOTAL REWARDS?
Attract
Motivate
Retain
Finance Perspective
People
Organization Effort
Money
WHAT DO THESE ENTAIL ?
HR Perspective
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4. THE BUSINESS EQUATION
COST
Process
----------
Manufacture
PROFIT/
LOSS
REVENUE
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5. THE REVENUE AND COST EQUATION
C F O R O L E - T O E N S U R E P R O F I T
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BUSINESS OBJECTIVE : EARN PROFIT, NOT LOSS
excess of Revenue over CostProfit is
excess of Cost over RevenueLoss is

6. THE DIFFERENCE IN PERSPECTIVES
Do These Ever Converge ?
As HR assumes a Strategic Role, both perspectives can be harmonized
HR
Benefits are Investments
ESAT Focus Essential
Health of Human
Resources
FINANCE
Return on Investments
Keep an eye on ISAT too
Health of Company
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7. EXAMPLE – TRAINING AND DEVELOPMENT
HR
Motivation
Upskilling
Retention
FINANCE
Increase in Efficiency ?
Improvement in Quality?
Increase in Customer
Stickiness ?
What is
the ROI ?
How Does This Cost Impact The Company’s Bottom-line ?
• More Business From Customers
• Reduction in number of employees
• Bonus from customers for exceeding SLAs
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8. EXAMPLE – RETENTION
•Business Unit attrition
@8% per month
•Significant challenge
for Operations
FACTS
•Provide tenure based
retention bonus
•Assumptions made
•Cost calculated and
budget requested
HR SOLUTION
•Costs already so high
•Why Incur more?
FINANCE VIEW
ALIGNMENT ON OBJECTIVE / GOAL BUT DIFFERENCE IN APPROACH
What is missing ?? ROI Perspective
Commitment to decrease overall cost through reduction in attrition
Calculate current
cost of Attrition
Calculate cost of
Retention Plan
Factor in reduction
of certain % in
Attrition
NET SAVINGS
CFO
Operations
HR
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9. BUSINESS LENS ON THE HR EYE
Cost Revenue Profit
U N D E R S T A N D I N G I M P A C T O F A C T I O N S O N C O S T
=
P Y R A M I D O R G S T R U C T U R E
V A L U E C R E A T I O N A T E A C H L E V E L
L O N G E V I T Y V S . A T T R I T I O N C O S T
R E F E R R A L M E T H O D O L O G Y
T E E T H V S . T A I L R A T I O
S M A R T C O M P E N S A T I O N S T R A T E G Y
S H A R P C O M P E T I T I V E D A T A
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K E E P I N G O R G A N I Z A T I O N A L P E R F O R M A N C E I N M I N D

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