Finance Leaders: HR Metrics to Keep an Eye on

January 23, 2017 Gary Bryson

Businesses are constantly evolving and, as a result, finance leaders are taking on new roles that put them close to their company’s HR department. At times, a company’s business strategy and people strategy can be out of sync, and finance owners need to recognize the key to growth is aligning the goals of HR and finance.

The New Roles of Finance Owners
EY shares six new roles for today’s finance owner, they are:

  • Ensure business decisions are grounded in sound financial criteria
  • Provide insight and analysis to support the CEO and other senior managers
  • Lead key initiatives in finance that support overall strategic goals
  • Fund, enable, and execute strategy set by the CEO
  • Develop and define the overall strategy of their organization
  • Represent the organizations progress on strategic goals to external shareholders

Ultimately, finance leaders are responsible for company resources by managing the allocation of money across the company and being accountable when fiscal matters go wrong. Therefore, finance leaders today need to be more in tune with their companies’ HR departments.

Why? HR is considered responsible for ensuring that a company remains compliant with local, state, and federal labor laws. But while HR is responsible for compliance, mis-categorized employees, incorrect paychecks, or a multitude of other mistakes can result in a hefty fine from the government. This fine inevitably falls on the shoulders of finance owners.

Also, employee disengagement impacts a company’s bottom line. Gallup estimates that employee disengagement costs the U.S. economy around $450 billion to $550 billion annually! They also found that around 70% of employees aren’t working to their full potential. If the U.S. economy is losing so much money, imagine how much your company could be losing too. HR is responsible for training employees on matters such as company culture, procedures, and policies, which means managing engagement falls the company’s people strategy. There has never been a successful company that wanted to exhibit a culture of disengagement. HR needs to actively promote their company’s culture of an engaged workforce, thus preventing the loss of resources from a disengaged workforce.

Bridging the Gap Between Finance and HR
Communicating with HR departments can be a challenge for finance owners. If finance is the yang of a company, then HR is the yin. The two stand as opposites in their approach to company goals, the languages they speak, and their interactions with data. For finance, using data and implementing tangible goals is commonplace. For HR, the use of data and metrics is still new territory.

Fortunately, with advancements in technology and new methods of analysis, HR is beginning to use data to quantify their companies’ people strategy. This data is the link between HR and finance. Here are some HR metrics that finance departments should keep an eye on:

Cost of HR functions: How much did the last training meeting cost? Does the HR solution you currently employ cost more than its worth? Noting the cost of HR functions can also help finance leaders see what their HR department’s ROI is.

Workforce costs: How much does each employee cost you in benefits? What is the average cost of a new hire? Having the information about how much your workforce costs can help with predictability and visibility and this can only be received through HR data.

Employee turnover or retention rates: It costs additional money to hire and terminate new employees. There is time and resources that need to go into training. Paying COBRA benefits plan, and a host of other costs can pile up when a company’s turnover rate is high.

Employee engagement: This data can be received through surveys to discover employee satisfaction and checking metrics that specifically relate to employee productivity. Ask questions like, did an employee finish their tasks in a timely manner or how often do they meet project deadlines?

Cost of benefits: Competitive benefits don’t come cheap. Actively checking to see if employees are using all the benefits provided may reveal if there are certain benefits that are going unused and are draining company resources.

How Much Involvement Should Finance Have?
These are just a few examples of HR metrics that finance owners should keep an eye on. However, each company is unique and may need their own approach to aligning HR and finances. Just how much involvement a finance owner takes in HR matters is something for you to decide. Implementing the right technology and processes can go a long way to making those interactions as smooth as possible.

Wise finance owners recognize the benefits of building a working relationship between finance and HR departments, such as being able to protect company resources from a poorly executed people strategy. In turn, finance can devote saved resources to building company growth by accomplishing goals set by the CEO. HR benefits because it has the proper guidance about issues that need to be resolved in the workforce. They can protect company resources by resolving employee concerns and by keeping the company compliant.


About the Author

Gary Bryson

Gary is the Director of Finance for Zuman. He has over two decades of experience in finance from working in a variety of positions such as financial consultant and Sr. Director of Finance Operations. Gary holds a BS in accounting from San Jose State University.

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