The use of data in business decision-making is an increasing priority at every organizational level. The need for information about demand, costs, productivity, and other areas is more urgent than ever and also shines a spotlight on the need for collaboration and information-sharing to break down siloes. One of the most critical areas to do so is in the unification of HR and finance in back-office software.
Labor costs are both an essential strategic investment and one of the biggest operating costs businesses have. A unified HR and finance team presents enormous opportunities to foster understanding between the two disciplines. Finance can help HR understand the true cost of labor, while HR can help finance understand the value of team members beyond their hard costs. Working together, both teams can improve the value of a company’s employees by identifying opportunities in career development and talent deployment. Here are five ways that unifying HR and finance can get the most out of each line of business.
A unified finance and HR team works best on a unified cloud. Software as a service (SaaS) gives end users, including those without formal training in data or data analytics, access to useful information via self-service dashboards and querying tools. When everyone uses the same interface, training costs decline while productivity and collaboration increase. A move from siloed finance and HR systems to a unified cloud can also improve version control and reduce mistakes that arise from differing and unreconciled data. Team members know they can trust the numbers and work together on better insight and analysis.
Cost-cutting pressures have often hobbled HR teams from contributing strategically to growth. When there’s an emphasis on operating expense reduction, various departments and HR have greatly increased the use of contract and contingent labor because such expenditures are considered capital and not operational. However, such workarounds may cost companies more in the long run.
When cost data is accurately shared with finance, the teams can work in tandem to understand true costs and be more effective with talent-related spending. As a result, financial planning and analysis (FP&A) teams can more clearly understand talent needs and work with HR to plan accordingly. In the short term, this ensures the company has the optimal amount of talent and that spending is not unnecessarily high. In the longer term, FP&A teams can work with HR on strategic workforce planning, ensuring that the company has sufficient talent pipeline to support its business strategy over the next 5 years or more.
In the quest for data-driven decision-making, siloed, cumbersome, and disconnected systems prevent teams from getting the answers they need. Fast and reliable access to the same data allows finance and HR to form a fully realized business partnership in which they can collaborate on critical strategic issues.
For example, if sales are down, the right data can help pinpoint whether the price point is wrong or whether critical sales positions have gone unfilled. Are business segments with lean staffing performing as well as those that have full personnel rosters? Unified information serving both finance and HR make the answers to such questions clear, so that the business can respond sooner.
When HR and business results are connected, talent levels, training programs, and staffing issues become clearer. Chief financial officers (CFOs) can better see how key HR decisions affect the company’s bottom line. CHROs are freed not only from rote work, but from the time and energy spent defending their resources; instead, they can contribute in more consultative and high-level ways to meet the company’s goals.
The reward for all this work isn’t just a more informed CFO and a more informed CHRO. It’s a more empowered finance and HR partnership, equipped with the information and insights necessary to help the enterprise achieve its strategic goals. Integrating HR and finance data is the first necessary step toward creating the integrated, collaborative workplace of the future that most companies want. Trusted, unified and transparent data can pave the way for better collaboration and meaningful conversation between HR and finance—helping them work together to solve problems and seize opportunities.