Why HR and Finance need to be talking

December 9, 2021 | 4 minute read
Andie Kaelin
Human Capital Management Advisory Practice Director
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Businesses experienced significant volatility as the pandemic hit in 2020. Leaders across the board leaned heavily on their HR and finance teams for guidance, and in many cases, the collaboration between HR and finance became mission-critical to survival.

The next chapter of the story is about how HR and finance teams can continue to collaborate to help their company recover and meet the needs of the business at a moment's notice.

HR has more in common with its finance colleagues than it realizes, a fact that Oracle identifies in its recent whitepaper where they state that as many as 43 touchpoints occur. Think about it: every time an employee gets paid, bills hours to a client, travels for work, is assigned a new mobile plan, or buys a new laptop, the transactions span across HR and finance. Your people are a critical resource—along with your ideas, processes, technologies, and data. Many important HR objectives are tied to finance—for example, revenue targets, budgets, employee costs, and employee performance. When HR and finance talk, they share goals between departments. Typically, Fair Labor Standards Act (FLSA) compliance requires a partnership and internal pay policy compliance. If the two teams work well together and communicate often, the employee will have a better experience as questions arise.

If HR is not grounded in the company’s financials, it is working blindly. Before its Oracle Cloud HCM implementation, one Alithya client had employment contracts with no associated value metrics, and another had no handle on benefits spending. Another client had never been able to post payroll to GL sooner than 3-4 weeks after month-end.

HR and Finance have notoriously had a hard time getting along—so where do you start?

The first step toward building a relationship can be designating a small group of key stakeholders from both HR and finance to have regular bi-weekly or monthly meetings to communicate departmental changes and needs. If both departments better understand what happens with the other, they will be equipped to offer timely assistance and relevant data to one another. 

Top three scenarios in which it’s critical for HR and finance to collaborate

Still don’t know where to start? These are the three top scenarios in which HR and finance need to collaborate, according to the 2021 MIT Technology Review:

1. A new business plan must consider the staff to support it. Whether the bright idea is a shift in market direction, adoption of new technology, or a commitment to sustainable manufacturing, a strategic initiative must factor in workforce planning or how you will determine future staffing needs. There are many questions: Does the company need to hire or retrain staff with specialized skills? Are those roles better suited to full-time employment or outsourcing? What will that cost? What are the compensation trends for those new hires?

2. Big structural changes require new approaches to workforce planning. For example, when transportation company YRC Worldwide moved to the cloud, it streamlined information systems and enhanced what the company could achieve, says CIO Jason Ringgenberg. But that meant change—and new required skill sets. Streamlined IT systems enable IT to create an environment of analytics consistency that allows for faster and better decision-making, giving them time to focus on more strategic projects. Companies need to elevate HR data and link it to business strategy.

3. When to adjust employees: The uncertainty about the business landscape caused many organizations to lay off staff. As a business reorganizes and reimagines its future self, it must consider when those people can return to work and which roles. “This is where the alignment of HR and finance is critical. And as we have seen with this disruption, timely execution of these plans is also critical,” says Nancy Estell Zoder, vice president for product strategy at Oracle. “We realized that taking into consideration not just what the workforce looks like, but what the workforce needs to look like and when—that has a direct impact on the bottom line.”

Payroll: The Glue that Holds HR and Finance Together

According to the American Payroll Association, some prime examples of the payroll team being the glue between HR and finance are balancing a financially-centric or employee-centric year-end close or favoring tight controls and fiscal compliance over the employee experience.

Financial statements are dependent on the payroll numbers and SOX compliance or any specific reporting requirements.

Let’s take, for example, the 2020 change to the W-4 Form. It was certainly not the first thing on the mind of the finance department, and HR may not know the impact it has on employees. Payroll needs to educate both departments about the impact on employees, the potential increase in workload caused by these changes, software updates to systems, employee self-service programs, and more.

It’s also important for HR, finance, and payroll to work together on benefits and compensation program changes such as PTO programs, standard benefits program changes, merit increases, special pay programs, bonuses, and many more. Establishing a regular meeting cadence with finance and payroll can help the organization move through changes without missing a beat.

Separate HR and financial management systems are a solid example of unnecessary business silos. But the intersection points are important because each HR objective is tied to finance, including revenue targets, budgets, employee costs, and employee performance. Data needs to be consistent, accessible, and accurate.

This is where Alithya and Oracle Cloud HCM can help—by unifying this siloed information and increasing touchpoints between HR and finance. Contact Alithya today to help your organization improve employee engagement, connect HR with finance, standardize processes, and provide complete views of your organization for enhanced decision-making capabilities.

Connect your finance with your HR

Nearly three out of every four businesses believe cloud migration will enable greater cross-team collaboration. As an HR and finance leader, you shouldn’t have to struggle to share information from disparate systems to move your organization forward. A unified solution for finance and HR provides insights into how change impacts budgets, forecasts, talent, resources allocation, and more.

Learn how Oracle can help with our unified HR and finance solution at https://www.oracle.com/human-capital-management/hcm-and-erp/.

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Andie Kaelin

Human Capital Management Advisory Practice Director

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