With current businesses doing what they can to downsize and do more with less, there is an added focus on the HR and Finance sections and their ability to manage a business’ workforce. It should come as no surprise that there is a clear correlation between a business’ performance and the amount of collaboration between those two departments. The biggest business expense is labor and to have a successful business your employees have to be performing well and feeling engaged in the organization, so the finance and human resources aspects go hand in hand. Unfortunately, even though both sections ultimately want the business to run smoothly with a well-oiled workforce, there is often a gap between the two which prevents good collaboration. Less than half of businesses have an aligned HR and Finance strategy: this article will explore why this is happening and provide some solutions.
The overlap
The clearest overlap comes in planning for the workforce. Human resources typically see the planning aspect as their responsibility, but the cost management of the workforce is under Finance’s purview. The two departments need to work closer together to bridge the gap: Finance needs to understand what the work to be accomplished is and how much that will cost so they can make some accurate projections, and HR needs to take that financial information to search for the right employees to do the work.
If this is an area that a business is struggling with, there are many questions to reflect on that can help plan for any eventualities. What’s the best way to design the business so that it can meet its strategy goals? Are the current employees doing the right work for their position? What skills does the workforce need currently and what might they need in the future? If the company’s goals are met/not met, how will that affect the employee costs?
HR and Finance need to work together to answer these questions, and not just by scheduling regular meetings to discuss strategy. The company needs a complete change in how it’s structured for the two to collaborate and plan to avoid having all departments work in silos with ad hoc integration.
The main issue: cultural gap
The main problem preventing the two departments from working seamlessly together is the cultural difference. Finance considers the workforce to be an asset and is focused on forward planning while HR views them as value or skills and looks back at reporting on previous quarters. A possible solution to this gap is to instate a regular working relationship between HR and the financial planning and analytical functions of the company, and HR should also develop its own planning and organizational analysis that will allow both sections to collaborate on even footing. HR typically does not perform analytical functions and forecasting so this is the perfect place to start.
The danger of silos
The current problems exist because the two departments work in silos, using different data gathering methods and following a different set of guidelines. This means that both sides either don’t understand or don’t trust the data from the other party and contributes to the silo effect. Without an approach that works for both parties, they will continue to be inefficient. A priority in a company restructuring is making sure that both sections have data integration so they can speak the same language when planning for the future.
How to better collaborate
Unfortunately, it’s not enough to update technology and data integration practices. At the end of the day, the biggest hurdle as previously mentioned is the mentality of the employees in Finance and HR. Both sides need to be educated and willing to work together, and that’s the role of management to achieve. The company needs to show HR why it must be forward-leaning and manage risks by forecasting future ups and downs of the company. Companies should identify a Finance and HR champion to promote the integration and educate both sections on the benefits. By sharing information and working together, these departments can improve the business’ performance significantly. All that’s needed is for HR and Finance to take the first step together.
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- Overcoming Barriers To HR And Finance Partnership - February 7, 2023
