The last 18 months has seen an increased awareness of the importance of the Finance team to the organisation. This can also be said of HR’s role during the same period, coordinating the operation and planning of the workforce during a period of significant disruption and change.
The long-held misconception that Finance and HR do not contribute to the bottom line has proved to be just that – a misconception. In fact, the business partnership between Finance and HR has proven to be critical in delivering Financial Workforce Planning, a process that was instrumental in the survival and recovery of many organisations.
The importance of people and Financial Workforce Planning
As we know, our people are typically an organisation’s biggest asset. Unsurprisingly, they are also its greatest expense, accounting on average for 70-80 percent of an employer’s spending.
When I was a financial controller, the only ‘people information’ provided in the monthly management report were employee cost (normally buried somewhere in the P&L) and full-time equivalent (FTE). I thought insight was breaking this down by department!
In a period of uncertainty and disruption, my lack of information and resulting insight would have probably ended in disaster. In today’s data driven world, a far more granular approach is required, especially where planning is concerned. We need to plan at an individual staff member level, or at least role, allowing a bottom-up driver-based approach. This is what I would describe as a Financial Workforce Plan. When compared with actuals, Finance is then able to provide insights into people data and trends. This insight is critical as organisations experience increasing pressure to maximise their return on their investment in people.
However, while there has always been an undeniable link between people and expense and a need for Financial Workforce Planning, there has often been a disconnect between the two departments that need to work closer together to deliver this — Finance and HR.
The Finance / HR relationship
There are two notable barriers in the Finance / HR relationship. The first is a cultural disconnect between the two departments. Finance traditionally sees people as an overhead, while HR typically views people through the lens of value and skills. HR has also tended to be more focused on the now, while Finance is either looking at the past or projecting to the future.
The second factor is data. It is common for the two departments to operate on separate solutions with different data – they are working in data silos. However, there is invariably an overlap between the two datasets which can, and should, be leveraged. Another data factor is that HR view themselves as the custodians of highly sensitive and personal information that should only be made available to a highly trusted partner. And, of course, there are GDPR implications to consider. Not surprisingly, it can be difficult to obtain detailed employee salary information from HR for the budgeting or planning cycle without a level of negotiation and compromise.
Clearly, in some cases, the collaboration required between the two functions is not taking place and needs to be improved. This is summed up by recent research, which found that
just 25% of financial decision makers see their relationship with HR as very collaborative, compared to 45% of HR decision makers who see the relationship more positively.
(“Partnership with finance: the holy grail for HR? | HRZone”)
For Financial Workforce Planning to be successful in an organisation, we need to overcome these barriers and improve the relationship between Finance and HR.
Overcoming the barriers
First, recognise that both Finance and HR are fighting a similar battle; they both want to elevate their functions to a more strategic position in the organisation. In this respect, they can help each other.
One area where Finance can help HR is around data analytics, as Finance departments tend to be in advance of HR when it comes to analytical capabilities and tools. Finance can also assist HR by instilling a future-oriented outlook when it comes to planning, thus addressing the cultural disconnect and narrowing the gap between the two departments.
However, the biggest issue to address is data. Without data integration, the Finance and HR relationship will fail. Nothing else will have a more material impact on the ability to deliver Financial Workforce Planning. And to achieve this, technology is a key enabler.
Read more articles sponsored by MHR: Achieving A Best-Practice Financial Consolidation
The role of CPM technology in Financial Workforce Planning
The integration of the workforce plan with the financial plan is one key step in delivering a best practice xP&A process, as defined by Gartner. This connected approach helps to break down the barriers that exist, as well as providing a single source of the truth and view that is accessible by both Finance and HR.
It makes sense to work within one solution rather than disconnected systems or complex spreadsheet models that can create inconsistency and introduce process inefficiencies. This is possible through cloud-based, Corporate Performance Management (CPM) planning solutions that are readily available at an affordable price.
CPM solutions are key
We have seen examples of the positive impact that the introduction of a CPM solution has had on the collaboration between Finance and HR, and how this has accelerated and strengthened as technologies and tools become more advanced and easier to implement. CPM solutions have provided big opportunities to improve the work these two departments have focused on within siloed models for years. With CPM technology that supports financial workforce planning, you can:
- increase the granularity and complexity of the model
- improve the efficiency of the planning process
- increase your ability to quickly model multiple scenarios
- improve the capability to analyse, report and provide insight
By leveraging these capabilities and “what if” scenario models, a more sophisticated driver-based plan can be developed with a range of outcomes. CPM technology platforms can play a huge role in effective financial workforce planning.
Ultimately, CPM solutions provide organisations with a single enterprise-wide platform from which planning, reporting, and analytics is performed by both Finance and HR. And, of course, these three processes have been critical during the recent period of disruption and uncertainty.
Time to move forward and implement Financial Workforce Planning
We are seeing the traditional roles of Finance and HR shifting as business partnering becomes more prevalent and collaboration and trust improve. Technology certainly helps to break down the barriers, but it is not the answer on its own. We need to continue to work at this partnership and strive to improve it.
EY has found that collaboration between Finance and HR drives profitability and effective and efficient Financial Workforce Planning is a key output of this relationship. For this reason alone, we need to overcome the barriers that currently exist between the two departments and develop a trusted business partnership that allows Financial Workforce Planning to prosper.
This article is sponsored by MHR
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