Companies with effective Finance and HR collaboration see an increase in top-line revenue, an increase of 10% or more in operational cash flow, and an increase in employee performance and engagement. Further, reports find that CHROs and CFOs of high-performing companies dedicate 50% more time to one another than those at companies that do not perform strongly.
A strong Finance and HR partnership is essential to a business’ success in any year, but it’s especially important for 2021 as companies overcome the obstacles they faced over the last 10 months. Closer collaboration between HR and Finance teams, grounded in a shared understanding of workforce metrics and financial data, can help close the information gap.
Consider these key areas to focus on for strengthening the partnership between HR and Finance leaders:
Working Together to Build Stronger Teams:
Aligning workforce strategies with financial planning can create efficient teams that better help the company achieve revenue and profit goals.
Human capital costs an average of nearly 70% of operating expenses within an organization. HR and Finance should have a shared understanding of workplace cost and performance, and how to maximize the dollars invested in order to build stronger teams.
Action Items:
Consider what performance metrics yield the most impactful financial results. Then, evaluate each team’s performance and identify talent gaps or areas for opportunity.
Look inward to consider how certain teams can be restructured or which lateral moves could help maximize the current workforce’s efforts.
After identifying gaps, consider strategies to competitively gain human capital. For instance:
- Take advantage of the employer–driven jobs market and hiring skilled professionals that have been laid off by competitors due to the COVID-19 pandemic.
- Invest in technology to improve productivity.
- Create proper training to upskill promising employees.
Defining Metrics & Creating Common Goals:
The cause of much HR/Finance tension is not “speaking the same language” when it comes to outlining goals. HR focuses on people and how to best engage and support employees, while Finance focuses on productivity measures and impacts on bottom-line revenue.
When there is a shared understanding between HR and Finance on overarching goals, each team can strategically create a roadmap that compliments the other. While at first, goals may seem to be in opposition, it may be because they are spoken about in different ways.
Action items:
To better visualize the alignment, HR leaders should outline each goal or action, and the path to how it will either help the company increase profits or save money. Finance leaders should outline decisions and goals impacting people, and the path to how it will result in a stronger workforce. For instance, financial leaders can identify key metrics pertinent to driving revenue, and work with HR to identify how staff can be further developed and trained on the necessary skills that drive these specific performance metrics.
Take time to translate. For most companies, people are the biggest expense. While discussing hiring plans or employee engagement efforts, HR leaders should work backwards and lead the conversation with the ROI rather than the financial investment.
Breaking Down Silos:
Leaders with strong technical expertise at times may have difficulty building rapport with colleagues outside of their immediate team. However, approachable leadership is a crucial component to a strong company culture. While this may not come naturally for financial leaders, in collaboration with HR, they can develop the following key leadership qualities to help build approachability:
- Relationship-oriented: Effective leaders cultivate strong working relationships with their staff in order to best know how to support them. This means getting to know employees across the organization on a more personal level in order to understand who they are, what they are managing personally, and what drives them.
- Celebrate achievements: Celebrating wins across the organization and expressing gratitude helps build trust, which in turns builds approachability. Body language also plays a key factor. When someone comes with a question, in-person or virtually, are you flustered and busy, or welcoming?
- Transparency: This both applies to financial transparency, as well as transparent leadership. Increased financial transparency can help employees better understand how their work impacts the bottom line. This not only drives employee engagement but can lead to improved cross-departmental collaboration and valuable innovation. Further, being a transparent leader and sharing vulnerably with staff helps decrease trust gaps and drive approachability.
An effective HR and Finance partnership is vital to improving performance and managing risk, especially as companies look ahead to a year of transition and uncertainty. CFOs and CHROs will be making many high-stake decisions in the coming months that could greatly impact the future of the business, and an open line of communication is crucial.
If you are adding to your Finance or HR teams, we can help. Let’s get connected.
