Why HR and Finance Need to be Talking
When the global pandemic hit in 2020, businesses were sent reeling. Leaders across the board leaned heavily on their HR and finance teams for guidance. In many cases, collaboration between HR and finance became mission-critical to the survival of the company.
In 2021, the next chapter of the story is about how HR and finance teams can continue to collaborate to help their company recover and meet the needs of the business at a moment's notice.
HR has more in common with their finance colleagues than they think. In fact, Oracle identifies 43 touchpoints between HR and Finance in its recent whitepaper. Think about it: every time an employee gets paid, bills hours to a client, travels for work, is assigned a new mobile plan, or buys a new laptop, the transactions span across HR and finance. Your people are a critical resource—along with your ideas, processes, technologies, and data. Many important HR objectives are tied to finance—for example, revenue targets, budgets, employee costs, and employee performance. When HR and Finance talk, they share goals between departments. Typically, Fair Labor Standards Act (FLSA) compliance requires a partnership as does internal pay policy compliance. If the two teams are working well together and communicating often, the employee will have a much better experience as questions arise.
If HR is not grounded in the company’s financials, it is working blindly. Before its Oracle HCM Cloud implementation, one Alithya client had employee contracts with no associated value metrics, and another had no handle on benefits spending. Another client had never been able to post payroll to GL sooner than 3-4 weeks after month-end.
HR and Finance have notoriously had a hard time getting along—so where do you start?
The first step toward building a relationship can be designating a small group of key stakeholders from both HR and finance to have regular meetings to communicate on departmental changes and needs. If both departments better understand what happens with the other, they will be equipped to offer timely assistance and relevant data to one another. It’s important for these meetings to have a regular cadence, such as bi-weekly or monthly.
Top Three Scenarios in Which it’s Critical for HR and Finance to Collaborate
Still don’t know where to start? These are the three top scenarios in which it’s important for HR and finance to collaborate, according to the 2021 MIT Technology Review:
- A New Business Plan must consider the staff to support it. Whether the bright idea is a shift in market direction, adoption of a new technology, or a commitment to sustainable manufacturing, a strategic initiative must factor in workforce planning, or how you will determine future staffing needs. There are many questions to answer: Does the company need to hire or retrain staff with specialized skills? Are those roles better suited to full-time employment or outsourcing? What will that cost? What are the compensation trends for those new hires?
- Big Structural Changes require new approaches to workforce planning. When transportation company YRC Worldwide moved to the cloud, for example, it streamlined information systems and enhanced what the company could achieve, says CIO Jason Ringgenberg. But that meant change—and new required skill sets.
- When to Adjust Employees The uncertainty about the business landscape caused a lot of organizations to lay off staff. As a business reorganizes and reimagines its future self, it must consider when those people can return to work and in which roles. “This is where the alignment of HR and finance is critical. And as we have seen with this disruption, timely execution of these plans is also critical,” says Nancy Estell Zoder, vice president for product strategy at Oracle. “We realized that taking into consideration not just what the workforce looks like, but what the workforce needs to look like and when—that has a direct impact on the bottom line.”
Payroll: The Glue that Holds HR and Finance Together
According to the American Payroll Association, some prime examples where the payroll team can be the glue between HR and finance are in balancing a financially-centric or employee-centric year-end close, or in favoring tight controls and fiscal compliance over the employee experience.
Financial statements are dependent on the payroll numbers, as well as SOX compliance or any specific reporting requirements.
Let’s take, for example, the 2020 change to the W-4 Form. It was certainly not the first thing on the mind of the finance department, and HR may not have knowledge of the impact it has on employees. Payroll needs to educate both departments as to the impact on the employees, the potential increase in workload caused by these changes, software updates to systems, employee self-service programs, and more.
It’s also important for HR, finance, and payroll to work together on benefits and compensation program changes such as PTO programs, standard benefits program changes, merit increases, special pay programs, bonuses, and many more. Establishing a regular meeting cadence with finance and payroll can help the organization to move through changes without missing a beat.
Separate financial and HR management systems are a solid example of unnecessary business silos. But the intersection points are important because each HR objective is tied to finance—for example, revenue targets, budgets, employee costs, and employee performance. Data needs to be consistent, accessible, and accurate. This is where Alithya and Oracle HCM Cloud can help—by unifying this siloed information and increasing touchpoints between HR and finance.
For comments, questions, or suggestions for future topics, please reach out to us at firstname.lastname@example.org. Visit our blog regularly for new posts about Cloud updates and other Oracle Cloud Services such as Planning and Budgeting, Financial Consolidation, Account Reconciliation, and Enterprise Data Management. Follow Alithya on social media for the latest information about EPM, ERP, and Analytics solutions to meet your business needs.