Our friends at Personio have shared this article full of tips to help HR and finance teams collaborate with greater efficacy.
In life, collaboration is important. In business, though, it’s essential. That’s why, when it comes to the topic of organizational success, the collaboration between departments like HR and finance is being viewed with increasing importance.
This reflects the strategic role that HR can, and should, play. While both HR and finance are often considered purely administrative functions, they can in fact add serious value to companies and encourage growth.
So, let’s talk about the key ways that these teams can collaborate better than ever.
Why does HR & finance collaboration matter?
The relationship between HR and finance is one with many overlaps. This matters for a whole host of reasons - planning, managing, and succeeding with an organization’s most important asset: its people.
We also can’t deny the sign of the times. In the world during and following the Covid-19 pandemic, businesses were and are challenged in previously-unthinkable ways. Both HR and finance teams have to make tough decisions, and they have to make them quickly and with confidence.
Moving forward, this puts more and more emphasis on the strategic role of not just great HR, but of finance, too. When they collaborate together, they can have a greater, and more effective, influence on long-term business success.
So, how do you do it? Here are four tips to get you started...
1. Keep data secure and accessible
There is little sense in relying on data when that same data is not secure. Data security is one of the most important topics, not only when it comes to legal compliance, but organizational success. Both HR and finance teams are better off when they know their data is housed securely, safely, and correctly in the eyes of the law.
This not only means meeting the target requirements of GDPR compliance, but ensuring that the right employees have the correct access rights within their organization. This ensures that employees only see what's relevant for them, while having a full overview of information.
Make sure that confidential matters remain confidential. And focus only on what people absolutely need to see to keep information streamlined and meaningful for all involved.
Lastly, once your data is secure and shared amongst the right people, it is essential to operate from that data. Both HR and finance teams rely heavily on data to power decision making, and having access to a shared pool of data is essential.
2. Plan together, not separately
Now that we’re all on the same page when it comes to data security, let’s talk about strategic planning and the role it can play. In general, cross-departmental planning can serve a crucial role in feeding your business moving forward.
For finance teams, it can be incredibly helpful to keep on top of certain HR planning processes. Consider things like cost-to-hire, compensation, company benefits, and even labor laws (especially useful with multiple office locations).
At the same time, finance teams also have their own objectives apart from HR. It’s important that both communicate with one another to make their plans clear.
This relates back to the HR concept of workforce planning more generally. When HR and finance are both aligned on headcount and future investments in human capital, then together they can create more meaningful and bottom-line-focused results.
3. Turn people data into finance insights
Once a plan like a people strategy is in place, it’s time to turn your attention toward transforming that data into insights. For this part to work, HR needs time to focus on these strategic insights, and then the motivation to share them company-wide.
After all, HR can only be strategic once it excels at operations. For this to work, you first need to operate from a single source of data (as we mentioned prior). Take key data points and turn them into reports that make sense for everyone.
Here’s a handy example. When you have a proper HR software in place, you can grab hold of key people insights that quickly become finance insights.This can include payroll accounting or salary progressions, both examples of things that can have a direct impact on a finance team.
Or, think about hiring. Recruitment is both an investment and an expense, which is why it matters to both HR and finance. Understand how it operates, the cost-per-hire, and how long these things generally take (and the plans involved).
Slippage in any of these metrics can cost money and time that would otherwise be spent on more strategic matters. So, once you have these insights, it’s important that you take them into account, consider them, and act accordingly.
4. Make resilience a priority
For HR and finance teams, resilience matters. At Personio, we define resilience as “the ways companies are designed to react to crises of various kinds…[it] is a form of constant adaptation, building agile teams, and processes, that not only respond to difficult situations but become stronger as a result.”
Think of a situation like Covid-19. Not only the pandemic itself, but the time during and following the pandemic where strategic decisions are simply table stakes. To do this correctly, it requires a much deeper level of collaboration, with an emphasis on flexibility.
That not only comes into play when HR has a more strategic role at the table of corporate leadership, but when they are more involved with finance teams and how they work. When both work together with executive leadership, decisions can be made quickly, proactively, and in the best interest of the business long-term.
In short, everybody wins because businesses become more resilient!
Collaboration is always key
It’s not simply that HR and finance should better understand one another. When they work together, they can play a key role in driving operational success leading to better performance. This means that they both have a role to play in leading organizations.
This includes overall strategic vision, planning, understanding one another, and asking questions and deriving insights when the time calls for it. When you achieve each, collaboration is all the more effective.
Ultimately, though, the first step is to get started. Given the tips above, hopefully both your departments have the chance to operate from similar datasets, plan as a single unit, create reports off one another, and work on business resilience together. Best of luck!