HR leaders have earned an increasingly important position at the executive table in many organizations by implementing strategic workforce planning. They’re linking HR strategies and practices to overall business strategies to ensure that the right people are in the right place at the right time and at the right cost. And they’re connecting these dots with the help of key data.
But while today’s successful HR executives are using business data to predict, plan, and drive gains in HR, much of this activity is happening without insights from the finance department. And that’s unfortunate, because talent and finance are both foundational to the success of any organization.
To make more effective HR decisions and offer even more value to their organizations, it’s vital that HR works more closely with the finance department. When HR integrates financial data with the worker information it’s already considering in making strategic decisions, leaders can optimize their organizational planning and management.
Here are four important ways that collaboration among finance and HR can result in stronger organizations.
1.Align and optimize workforce planning and cost planning. Many HR leaders are already using performance data and other reports from across their organizations to plan for workforce needs. But injecting financial data into those analytics takes planning one step further, allowing HR leaders to quickly plan optimal salaries and other financial compensation for employees at any level, including automatic calculations for taxes and other standards. For instance, if sales data shows that more salespeople are needed to boost sales of a new product, HR decision makers who are privy to real-time financial reports can quickly determine how many sales professionals they can afford to hire, with what skills, and at what salary range.
2.Consider financial effects when making HR policy changes. Every HR policy change has a reciprocal impact on company finances—and many financial decisions have an impact on HR. For instance, if a company decides to set up branch offices and production facilities in a new country to better serve its growing customer base, finance and HR must work together to get things prepared. The finance department must concern itself with setting up cash reserves in local currencies to meet new payroll requirements, and accurate HR personnel data is crucial for effective cash allocation.
Or if the CFO’s office analyzes expenditures and finds travel costs are considerably over budget, HR should work with finance to adopt a new companywide travel policy, perhaps requiring videoconferencing before making a trip or requiring a travel justification report and management approval to reduce unnecessary travel.
3.Clearly communicate the value of talent and talent management programs. When HR and finance collaborate with shared data, the two divisions develop a deeper understanding of each other’s roles and value to the organization. By allowing financial data to inform decisions on a regular basis, HR leaders can learn to communicate in a language that CFOs and financial staff can understand—resulting in more agreements when financial resources are requested.
For instance, traditionally, HR might simply ask financial leaders for the money to fund a new training program, describing the specific skills or capabilities that the program would improve. But a financially savvy HR professional might instead present the training program in language a CFO can understand, showing clearly that investing an additional $500,000 in training would reduce voluntary turnover by 10%, save $1 million, and increase productivity by 5%.
4.Recruit top-notch finance talent. As the role of the finance officer changes and the necessary skills for finance staff continue to evolve, today’s finance leaders recognize that the right talent is an invaluable asset. And HR professionals’ expertise in recruiting for soft skills such as problem solving—rather than technical skills such as accounting acumen—can greatly benefit finance departments.
Technology solutions can help create a seamless connection between HR and finance. For instance, Oracle Human Capital Management Cloud provides a technology framework that supports active collaboration among staffers in HR and finance. Click here to learn more about it.