Many executives in the C-suite think HR should kowtow to the other departments and start speaking the language of numbers to get its points across to the CEO and Chief Financial Officer (CFO). However, is it just the Chief Human Resources Officer (CHRO) and his or her staff that must bend to the CFO’s will? The relationship between HR and finance should actually be a two-way street if a company hopes to get the best out of both departments.
Why finance should pay attention
It’s not enough for HR to do all of the work to get finance to pay attention during executive meetings. While The Society for Human Resource Management (SHRM) suggested the CHRO start speaking in numbers to quantify human capital for the CFO, finance must learn a thing or two from dealing with personnel and talent.
As the economy continues to improve, businesses will see that holding on to the best employees gets trickier. A company looking for top talent needs competitive salaries and attractive benefits if it wants to retain them and HR knows this better than the finance department.
According to the survey, 73 percent of the 323 executives polled said their companies failed to meet their goals because of a shortfall in talent. This just goes to show how vital finding good employees and workforce planning can be for any enterprise. Besides that, if the rest of the corner offices only pay heed to financial numbers and ignore HR’s requests and concerns for talent, the business as a whole could find itself with a bigger dilemma. A 2015 Visier-sponsored report from Harvard Business Review Analytic Services indicated other members of the C-suite cannot ignore HR.
Better alignment equals better planning
If finance doesn’t take HR issues under consideration, it could cause more problems down the road for their company. A PricewaterhouseCoopers (PwC) survey found 70 percent of CEOs regarded the inability to find people with the top skills they desired was one of the top three threats to their business. However, 44 percent of CEOs said they depended on their finance department to drive workforce planning, but they didn’t take talent availability into account when making their plans. This could mean HR also needs a place at the workforce planning table instead of solely leaving it to the finance department.
“For many organizations, workforce planning is a finance-driven process focused primarily on managing headcount within the cost budget,” John Schwarz, co-founder and CEO of Visier, said in a press release along with the report. “Consequently, the important decisions related to recruitment, retention, compensation and productivity are constrained by budgets that do not reflect the people reality. It is urgent that businesses invest to bridge this critical and potentially fatal gap with a workforce intelligence solution.”
While the finance department wants HR to use more numbers, human capital is not always easily quantified. These studies show how crucial it is for both finance and HR to come together and listen, no matter if the language is numbers or benefits jargon.
Finding the best employees and how much a company can afford to offer them is one of the most important tasks finance and HR must take on. As the pool of desirable talent shrinks, a company that wants to remain innovative and boast a good staff needs its finance and HR departments to combine their talents to find and keep great employees.