Interaction between human resources and finance teams is common in most organizations, regularly occurring as a part of payroll processing, benefits administration, and budgeting. However, optimizing the relationship between HR and finance — and leveraging it to optimize overall company performance — requires more than just regular interaction.
“A close working relationship between finance and HR teams is critical for business success and requires a commitment from both sides to pursue collaboration,” says Mark Edgar, Chief People Officer at Wajax. “If information is not being proactively shared between the two teams, companies will struggle to achieve the type of alignment needed to increase efficiency and support growth.”
Edgar has over 30 years of experience building solutions in the HR space, including initiatives that successfully supported transformational change, talent management, employee engagement, and organizational effectiveness. He is an innovative, people-centric, and strategic executive and community builder with global experience in developing and delivering impactful, business-focused people strategies in a variety of industries.
The type of working relationship Edgar encourages requires a special commitment from the teams, but one that can pay dividends when it comes to risk management, strategic planning, and overall business success. As he points out, it requires the teams to proactively communicate in ways that foster collaboration.
Fostering collaboration often starts by simply sharing information. While HR regularly shares information with finance, the exchange is generally limited to information related to financial operations, such as HR sharing employee data relevant to payroll or headcount data necessary for allocating quarterly or annual budgets.
The type of information needed to facilitate collaboration goes beyond the nuts and bolts of routine financial processes. Exchanges that lead to impactful collaboration are focused on strategic planning, risk management, and other overarching initiatives that can foster innovation.
“The employee experience provides an example of an area where collaboration can benefit both HR and finance,” Edgar says. “As HR is proactive in working with finance to budget for key items in that area, it gains insights finance can provide through cost analyses and market surveys on a range of topics including, for example, compensation trends. The collaboration can guide HR as it seeks to improve employee morale, satisfaction, and retention.”
While HR constantly works to ensure employees are engaged, finance should maintain the same pace to ensure financial activity supports company goals. By fostering collaboration, the efforts are aligned. Data sharing and transparency allow both sides to fine-tune their strategies and leverage the resources the other can provide.
“When communication between the two departments is limited, long-term misalignment can occur,” Edgar shares. “At that point, there is likely to be a disconnect with the budget, which can lead to key initiatives not being funded. It’s a breakdown that impacts team members and ultimately undermines HR’s goals and the business impact.”
When companies foster collaboration, they turn department goals into shared goals. This can play out in several ways in collaboration between HR and finance.
For example, the HR team’s goal of attracting and retaining top talent and the finance team’s goal of optimizing the ROI in human capital can be combined to create the shared goal of cost-effective talent acquisition and retention. By working together, HR can develop competitive compensation and benefits packages informed by the cost analysis and budget guidance finance provides. Similarly, finance can invest accordingly in employee development programs based on HR’s insights on staffing needs and employee expectations.
Workforce planning is another initiative that can benefit greatly from collaboration. While HR wants to confirm the company has the talent it requires to support ongoing growth, finance must accurately forecast labor costs to budget effectively. Collaboration can involve HR providing an analysis of the talent market to help finance develop a reasonable talent acquisition budget.
Building strong relationships is the foundation for fostering collaboration. The more HR and finance teams engage with each other, the easier it is to build trust. Without trust, transparency and willingness to support each other’s goals will rarely develop.
“Building strong relationships is key,” Edgar says. “As teams get to know and trust each other, they can map out ways of working together that ensure strong and fruitful collaboration. Strong relationships also help teams to agree on accountabilities when it comes to shared projects, which can be particularly helpful with collaborations related to the budget cycle.”
Collaboration among business departments can result in synergies that give companies a competitive advantage, but that type of collaboration does not typically occur naturally. It must be fostered by building strong relationships, encouraging transparency between teams, and focusing on shared goals.
The post Fostering Collaboration Between HR and Finance Teams appeared first on The American Reporter.
