Human resource leaders are no longer simply managing the traditional "hire, fire, retire" trifecta. Now, HR's role is no longer simply handling PTO and pay. It is expanding to include tasks such as managing and shaping cultural change and creation, workforce training, succession planning and more. As baby boomers exit and millennials enter the workforce in droves, along with ever-changing technology requirements, HR leaders are required to be flexible, adaptive and foster a closer working relationship with CFOs and other C-suite leaders.
However, while significant gains are being made across companies to adapt to the fast-paced market, HR and finance continue to struggle to communicate with one another. Ultimately, this causes gaps in what and how initiatives are implemented and what is deemed most important by decision-makers. It also risks slowing what can actually be achieved.
Easing the tension between metric types
What prevents CFOs and other C-suite members from being on the same page as HR leaders when making company decisions? Why isn't easy for these leaders to communicate with one another? Simply put, they aren't speaking the same language. HR leaders have predominantly tracked human-centric metrics such as engagement and productivity, while CFOs and C-suite members are more concerned with quantifiable metrics such as financial figures.
But these dissimilar forms of measurement and analytics do not need to nor should they remain in silos. By working with the finance department, HR can strengthen its people operations with data and create a more holistic view of the company, while finance departments can benefit from the converse, i.e. enriching pure data with understanding of day-to-day operations. Through such efforts, HR and finance can begin to, at the very least, understand each department's perspective and create a more nuanced roadmap for the future.
Additionally, HR departments are increasingly adapting to this broader role by implementing software solutions such as HR business process as a service, also known as HR BPaaS. HR BPaaS is able to take over the everyday tasks of running a company, such as managing PTO and payroll, and ensuring compliance with state and federal regulations in order to focus more on long-term, strategic planning such as the work they do in partnership with finance leaders.
On the same page
HR and finance departments shouldn't understate the benefits of bridging the language gap.
A recent study from Ernst and Young measured how greater collaboration and communication between CFOs and HR leaders affect business performance. The results revealed how a closer relationship between finance and HR benefits the business across a variety of metrics, both human and financial, including productivity, employee engagement and earnings before income tax, among others. Specifically, of the companies where CFOs and HR leaders reported a closer working relationship over the past three years, 43 percent saw an increase in workforce productivity compared to 10 percent who didn't.
In pointing to factors that aided in the improvement in communication between CFOs and HR leaders, and thus performance as a whole, the study cited the use of HR analytics by CFOs to understand the workforce as well as playing a greater role in analyzing the data collected by HR, underlining the importance of translating how each department measures and interprets metrics.
As business across industries grows more data-driven, it is in all players' interest to provide HR and finance departments with the tools they need to draw conclusions, forecast trends, and steer their companies - and employees - toward success.
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