Finance and HR: It’s time to collaborate

hr-and-finance

HR and finance are used to operating in silos, but marrying the two functions can bring major benefits to businesses. Kavitha Sivasubramaniam looks at how and why a collaborative approach could be the start of a happy, lifelong partnership.

Traditionally, and still today, HR and finance functions operate apart and in different ways within an organisation. One will look at past trends and their impact on the business (HR), while the other will look at forecasts and the future to predict the path of the business (finance). Even the systems they use will differ.

However, this raises the question of whether or not this long-established approach is really helping organisations fulfil their true potential and allowing them to be agile enough to adapt to the rapid developments employers are seeing from technology.

One thing is certain: there clearly needs to be change, as was evident when speakers at a recent Oracle HR event in London described the division between HR, finance, and other departments within organisations as a hindrance to many businesses.

Starting from a bad place

One of the dangers of operating in a silo is that a department will predominantly interact with its own team, rather than with others within the organisation. This can prevent it from sharing information, which could be advantageous to other departments and even to the business as a whole.

Unfortunately, this is a common problem, according to Peter Spence, associate technical director at the Association of International Certified Professional Accountants.

“The way that most firms are structured are along silo lines, so you are starting from a bad place,” he told delegates.

Jeremy Cox, principal analyst in Ovum’s customer engagement practice, pointed out that cultural barriers within an organisation are often reflected in the different HR and finance systems a business has in place.

He said: “There does appear to be this chasm between the two. Finance works with hard metrics, it views people as a cost and is instrumental in delivering the bottom line.”

He pointed out that in many cases the only time you may see finance and HR in collaborative mode is with the budgets for reward programmes.

But with both HR and finance leaders playing an ever-increasing role in the strategic direction and transformation of organisations, partly due to technology freeing them up from the day-to-day functions of their respective fields, there has never been a better time for the two disciplines to work in a more joined-up way.

Who dares wins?

The popular aphorism “people are your greatest asset” remains true for most businesses. Even as talk emerges of artificial intelligence (AI) replacing doctors, lawyers and other professionals, inevitably, those professions will adapt their roles and purpose. People will still have a valuable role to play. It is why finance and HR need to work more closely with the people “asset” as their focus.

Cox added that workforce engagement should be a joint key performance indicator for finance and HR teams because of the financial impact of employees being disengaged. It goes to the heart of an organisation.

He said: “Finance and HR must collaborate to build momentum. When creating a strategic workforce plan, you need good, common data that you can look at and trust. This will facilitate a better conversation.”

Equally, David D’Souza, the CIPD’s head of London, told delegates that given the rate of technological change and automation, HR and finance had a role to play in the long-term direction of an organisation and what it means for its people.

Better joined-up systems that create better people data within an organisation can bring major benefits, according to Andrea Eccles, director of the City HR Association: “Scientific, evidence-based data can be useful to boards for effective decision making. You can only get this from deep dives on analytics.”

Yet, while the commentary from the event, and elsewhere, points towards the theoretical benefits of dovetailing HR and finance systems for the greater good of the business, has anyone actually done and, if so, reaped the benefits?

In short, the answer is yes, and technology is fuelling this new era of collaboration.

A new era in the cloud

Research from Oracle and MIT Technology Review, Finance and HR: The Cloud’s New Power Partnership, highlights the importance of collaboration between finance and HR teams, specifically when deploying a unified cloud system to share data.

Based on a global survey of 700 C-level executives and finance, HR, and IT managers, the study found that by sharing a finance and HR cloud system, integrating enterprise resource planning and human capital management systems made it easier track and forecast employee costs.

Employees’ ability to adapt to change was a key benefit of cloud-enabled collaboration. Almost half (46%) said they had seen their ability to reshape or resize the organisation improve significantly.

The productivity benefits were also visible. Nearly one-third of respondents (31%) said they spend less time doing manual work within their department as a result of moving to the cloud and that the automation of processes has freed up time to work toward larger strategic priorities.

Other findings from the study showed that:

  • 35% of respondents plan to create a shared finance and HR function within a year;
  • 42% say they are motivated by improvements in productivity and performance;
  • 41% of C-level executives say the cloud enables them to reapportion their time to focus on revenue generation; and
  • 46% of respondents from finance and HR say that their collaboration with each other has significantly improved.

As finance and HR increasingly lead strategic organisational transformation, the company gets a return on investment from both financial savings and also the new insights and visibility into the business HR and finance gain with the cloud, according to Dee Houchen, senior director of ERP Solutions at Oracle.

“People are at the heart of any company’s success and this is why we are seeing finance and HR executives lead cloud transformation initiatives,” she said.

Indeed, the power of the cloud in enabling collaboration between the finance and HR systems was a theme echoed throughout the event in London, and Cox added: “Aspects of cloud technology make it easier to integrate systems.”

The Oracle/MIT survey also highlighted additional trends for the future: 43% of businesses plan to bring IT people into HR and finance departments to help employees take advantage of new technologies.

Andy Campbell, HCM strategy director at Oracle, added: “The learnings from the move of finance and HR to the cloud will ultimately spread across the organisation as, together, they conceptualise the shape of the next disruption.”

Stepping out of the dark

The research also revealed that collaboration extends to other teams as well. More than half (52%) of C-level respondents said the relationship between IT, as well as between HR and finance, is even better than expected. This factor was identified as vital by the event’s speakers.

D’Souza added: “This isn’t just about HR and finance. IT is a key enabler, it has a role to play too. Marketing and product teams need to be involved as well.”

So the benefits of collaboration and, in turn, teamwork, are abundantly clear. The reality is that when systems talk to each other, people tend to follow suit.

By stepping out of the dark and centralising data so that information can be easily shared across the organisation, departments can work together for the greater good of the business.

Kavitha Sivasubramaniam

About Kavitha Sivasubramaniam

Kavitha Sivasubramaniam is a freelance writer and editor.
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