How to Build a Strong HR-Finance Partnership

Human capital costs account for nearly 70{bcdee29d8ece072d76c660bfa283f395bc73ff9272f7bb81f739f49cdd20ae0b} of a company’s operating expenses, according to a 2006 SHRM survey. This means that employees—and the spend associated with them—have a huge impact on the bottom line.

Who is best positioned to optimize those costs and help a company grow? HR and finance professionals, working in tandem, make the perfect pair. Imagine a company with an amazing culture, but no profit margins. And then imagine a company with outstanding profit margins, but unengaged employees. Neither would succeed in the long term. But if you’re able to strike a healthy balance between investing in people and focusing on business outcomes, well, that’s where a successful company can emerge.

Recognize the Opportunities

There are countless opportunities for HR and finance professionals to collaborate, since they have such complementary insights on strategy. HR professionals own the data on employee metrics, workforce engagement, and talent performance, while finance has a 360-degree view of operating costs, the budget, and revenue data.

The good news is that the majority of finance and HR leaders are currently collaborating. When HR and finance teams work together proactively (instead of when a payroll crisis occurs, for example), they can drive a forward-looking strategy and bring added value to their roles. It’s about identifying opportunities, proposing optimizations, and then clearly measuring progress.

If you’re not sure where to start or are looking for further areas to partner on, we can certainly advise you. And here are a few thought starters for you.

To start, I’d consider a few common challenges:

  • how to build an organizational structure that encourages productivity
  • how to identify and leverage high performers
  • how to quell attrition rates that are affecting the achievement of company goals

Many times I have worked with HR professionals and Finance experts, only to discover they all want the same things but are using different languages. To build a strong partnership you need to speak the same language. You can do this by identifying a common set of metrics to use. When you’re looking at the same information and then bringing two unique perspectives to the table, you can have a productive conversation.

If HR and finance teams are looking at different datasets in isolation, they are bound to come to different conclusions and insights about their data. Using a common dataset, HR and finance professionals can work together in a feedback loop. How? Identify a business objective, drill down into the data, propose a solution, and then monitor that same data to examine results. Look at items such as demographics, compensation, performance rankings, team sizes.

In many growing organizations, HR and finance fall under the same leadership. Of course, there’s an inherent conflict here for someone who is both tasked with managing the budget and thinking about value creation for their talent.

Finding the ROI

A HR-Finance partnership is good for the overall health of your company. Companies do clearly thrive when these teams work hand-in-hand. Today when roles are become increasingly strategic, partnering is a powerful method for ensuring that you can take your company and role to the next level of success either as an HR or finance professional.

Let The Cleveland Company help you succeed.

Be well,

John

 

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