Finance and human resources (HR) have often been viewed as diametrically opposed corporate forces. The number crunchers in finance, the caricature goes, begrudgingly dole out dollars while eyeing the bottom line; HR, meanwhile, is filled with chatty extroverts who revel in recruiting talent—and spending the organization’s money in the process.
The truth, of course, is that profitability and human capital are intertwined: People are usually a company’s largest cost, yes, but also its biggest asset. And ultimately, both finance and HR are focused on driving better performance and business results. Organizations seeking agility must find a way to reconcile finance’s cost-focused approach to headcount planning with HR’s more holistic view of the employee journey. In doing so, they can achieve a more strategic approach that focuses on the cost of salaries, benefits, and turnover with a lens that examines skills gaps and ways to improve company culture, so strong contributors remain with the company well into the future.
No business can afford to keep its finance and HR functions siloed. Finance must move beyond viewing headcount merely as a cost center and explore ways in which salary, benefits, and other motivational HR levers can be pulled to meet operational needs and boost profitability. HR, meanwhile, must take a disciplined look at the cost and advantages of hiring new workers and implementing benefits programs, as well as current and future workforce gaps that threaten to limit a company’s success.
By joining together to plan, measure, and optimize talent, finance, and HR can elevate workforce planning from a static exercise that attempts to guess future needs to an active process that’s able to adjust to constantly changing operational realities.
Today, decision-makers in finance and HR largely recognize this overlap in duties, and they see the need for a more modern approach. But many remain embroiled in an outdated struggle for control. In fact, one often-cited study from a few years back showed that 55% of finance executives believe that strategic workforce planning should be their responsibility, while 76% of HR leaders said it should belong to them. And when it comes to workforce costs, 88% of finance leaders said they should exert control, while 55% of HR executives believed it’s their domain.
Finance and HR: Together in Companywide Planning
To bridge the gap, finance must extend its techniques and analytics to HR, so leaders across both functions can work together to execute successful companywide planning. Traditional workforce planning tools, however, aren’t making it easy. Relying on spreadsheets makes it difficult to glean a deep understanding of your workforce mix, assess your organizational capabilities in light of future initiatives, or align your workforce to your business goals. And yet now more than ever, all these capabilities are vital.
A truly successful finance-HR alliance requires a collaborative approach that leverages modern, cloud-based solutions and technology for companywide planning. An active planning model folds in financial, workforce,sales, and marketing data to create a unified data set that helps everyone better understand the nuanced relationships and patterns between each function. When each person in the organization works from this shared source of truth, it’s far easier to achieve what talent management expert Josh Bersin famously called “resilient HR”: a group of professionals who pool together across the HR, finance, IT, facilities, and legal departments to share expertise and relentlessly pursue goals.
The good news is that, in the wake of the pandemic, many companies now acknowledge the necessity of embracing this new paradigm to survive and thrive in a permanently disrupted business environment. Most finance and HR leaders say they will implement forecasting, planning models, and predictive analytics technologies to help their enterprise identify future revenue trends.
Let’s take a closer look at two fundamental shifts that take place when finance planning and workforce planning come together by tapping into a common source of intelligent data:
Shift 1: Agility Increases
While business leaders have long been compelled to anticipate and respond to change, 2020 made earlier examples of disruption seem almost quaint. The sudden, unprecedented impact of a pandemic forced organizations in every industry to turn on a dime, pivoting entire business models within days.
During periods of instability, modern workforce planning serves as a lifeline by giving finance and HR leaders the ability to create shared, granular forecasts across short time horizons. This level of collaboration and detail helps decision-makers understand a major event’s precise business impact and, therefore, manage it more effectively. When conditions may be confusing, up-to-the-minute data serves as a flashlight that helps executives confidently take one step forward at a time—becoming more agile in the process.
As businesses seek to restore and exceed pre-pandemic revenues, this level of planning will remain critical to ensure leaders have a crystal-clear view of the health of their organizations.
Shift 2: Finance and HR Priorities Align Around Corporate Strategies
Even before the pandemic struck, agile organizations that took a holistic view of workforce planning were four times more likely to undertake reskilling in coming years.
Finance and HR can plan collaboratively. They can work together not only to identify the skills their workforce will need to remain competitive but also to properly forecast the business implications of training and hiring to meet those skilling needs.
By melding finance and workforce planning into a singular strategic force, companies can align their personnel to corporate goals, offer training to empower their workforces, and evolve into flexible, fluid organizations ready to harness opportunities and drive growth—no matter what the future may hold.
