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  • June 28, 2018

Oracle CEO Mark Hurd on the Essential Partnership between CFO and CHRO

Brittany Lindquist
Director Customer Marketing, Oracle HCM Cloud

Managing enterprise expenses is the essential duty of a Chief Financial Officer (CFO) the single largest expense in many organizations tends to be workforce compensation. The high cost of recruiting, training, compensating, and managing a workforce renders critical the need for an organization’s CFO and its chief human resources officer (CHRO) to work closely together. Aligning organizational personnel strategies with overarching financial management requirements and strategies can help the CFO and CHRO build a strong talent system that will be sure to generate more than enough revenue to offset its cost.

Oracle CEO Mark Hurd has noted the need for human resources and finance to communicate, highlighting the tight integration between Oracle’s human capital management (HCM) platform and its financials systems. At Oracle’s HCM World 2017 conference, he pointed out that “Our HCM platform and the financials platform have the same ability to communicate. They have, if you will, the same data model. … If you actually told our controller we're going to have a separate HR system from our financial system, with a completely different data model, he would revolt.”

Simply listing the costs associated with hiring and training can highlight how critical it is that human resources and finance departments work closely together to optimize the talent pipeline. A recent Glassdoor report on hiring found that the average U.S. employer spends roughly $4,000 and takes 24 days to hire a new worker. A different report from the Center for American Progress focused on the costs of turnover, which it noted can rise to 200 percent of an employee’s annual salary. That’s not a typo -- companies that need to fill and refill high-skilled and high-paying positions can wind up paying three times as much to get someone into a job as they will to keep them in that job. These positions, which tend to be executive-level, are far less numerous than front-line roles, but it can still cost between 10 percent and 30 percent of annual salary to replace someone earning $75,000 or less per year.

Shaving dollars and percentage points off of these human resource expenses can save an enterprise tremendous amount of money. For an enterprise looking to add 2,500 employees in a year, the difference between spending $4,000 per hire and spending $3,000 per hire is a net savings of $2.5 million. The difference between replacing 2,500 employees making $50,000 each per year, at a cost of 15% of their salaries rather than 25% of their salaries, is $12.5 million. It’s likely that many large enterprises, particularly those in high-skill industries like healthcare or technology, will spend more than $4,000 to hire someone, and will eat a sizable chunk of their salary, in excess of 15%, to address turnover as well.

So how can a CHRO work with a CFO to ensure these expenses are kept low? The answer, Mark Hurd says, lies in the cloud. Utilizing cloud applications, particularly those that operate within a fully-integrated suite, provides data-driven insights that can lower costs, improve hiring outcomes, and streamline the process of onboarding and training to reduce the financial hit of turnover. Oracle recognized the importance of cloud computing years ago and began developing its infrastructure to provide these services to enterprises worldwide early in Hurd’s tenure. Now, the company provides customers with complete suites of SaaS applications, offering more than a thousand applications . Some of these applications are bundled into suites that address critical organizational needs, such as enterprise resource planning (ERP) and HCM, two Oracle SaaS suites which integrate seamlessly with each other to allow CFOs and CHROs to share their data and formulate comprehensive strategies to address the costs of recruiting, retaining, and rewarding employees.

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