People are typically both a company’s greatest asset and greatest expense. And on the surface, that makes sense. If people are the most valuable part of the business, why wouldn’t a company invest as much as 70% of its budget in headcount-related expenses?
But while there’s an undeniable link between people and expenses, there’s often a disconnect between the two departments that care most about those things – HR and Finance.
Unfortunately, that disconnect gets in the way of strategic workforce planning. Instead, leverage the strengths of your HR and Finance teams to elevate both functions to a more strategic position in the organization.
Instead of distributing and approving dozens of spreadsheets, you can use a people operations platform to streamline the entire planning process.
Find a better way to plan your headcount here
There’s a Data Gap Between HR and Finance
The traditional disconnect between HR and Finance comes down to the fact that the two functions speak entirely different languages. Where HR talks about the business in terms of people and org charts, Finance relates everything to annual plans and Find a better way to plan your headcount here.
Unfortunately, this problem isn’t unique to HR and Finance. There are plenty of departments across an organization that speak different languages and find a way to create common ground.
The difference for HR and Finance is that the two are on very different data cycles.
HR is always deep in the processes of recruiting, interviewing, negotiating, and onboarding – especially at fast-growing companies. Alternatively, Finance is often stuck in monthly and quarterly close cycles with little time to work with HR to change workforce plans on the fly.
At best, you end up fighting through a reconciliation process to come up with a rough headcount plan. But there’s so much more that goes into workforce planning than just accurately forecasting your headcount as your company grows.
Bridging the gap between HR and Finance is therefore critical to achieving the common goal between these two teams: a workforce plan that unlocks new levels of employee performance and profitability.
Finance and HR Need a Common Operating Picture
The best way to bridge the gap between HR and Finance is to make sure the two teams are working with a common operating picture.
Don’t worry – your HR department doesn’t have to master financial modeling in Excel, nor does Finance have to start mapping out org charts (actually, no one should have to go through the pain of dragging those boxes around for that matter). Rather, it means creating a connected ecosystem of tools and data between the two teams so each works with the same understanding of the business.
Luckily, both HR and finance have best-of-breed software available to streamline their aspects of workforce planning.
The HR team can take advantage of their people operations platform to centralize data, streamline workforce planning, and better collaborate with department heads. And Finance can move away from static spreadsheets with forecasting software like Mosaic that pulls in all of your HR data to show how headcount changes impact budgets to help automate reporting and analysis.
Clearly, having real-time visibility into both the human and financial side of workforce planning elevates the roles of each department. Instead of wasting time trying to figure out why the headcount numbers are slightly off between departments, you can collaborate to answer strategic questions, such as:
- How can we refine the headcount plan to make sure we have the right ratio of managers to staff?
- Does the company have the right mix of people at a department level? Or, are there certain departments outpacing the growth of others that shouldn’t be?
- Have our headcount forecasts been accurate? And if not, what are the patterns in our misses that we can avoid moving forward?
- Is there a skills gap on the horizon that we can avoid with a more ambitious hiring plan?
- How can we build a stronger workplace culture to strengthen employee engagement and increase retention without breaking budget plans?
These are questions best answered when HR and Finance are working in tandem. Once you’ve created the common operating picture that enables this level of collaboration, you’ll start seeing the long-term benefits for your organization.
When your people and compensation data live in one place (that’s automatically updated), your HR and Finance leaders can collaborate quickly and effectively.
3 Benefits of a Tighter Relationship Between HR and Finance
Bridging the data gap and creating a common operating picture allows HR and Finance to go from basic headcount reporting to true strategic workforce planning. And that shift comes with benefits that go beyond simply eliminating the headaches of using traditional spreadsheets.
When HR and Finance work together consistently on strategic workforce planning, you can unlock the following three benefits for your organization.
1. Further Elevate the Role of HR as a Strategic Business Partner
HR departments provide strategic value to businesses, but this responsibility proves difficult when People teams are manually updating spreadsheets. Instead of wrangling data, your People team needs to analyze metrics to drive real results.
Joe Taranto, HR Generalist and Project Manager at Rémy Cointreau, estimates that he used to spend four to five hours a week manually updating the company’s org chart. Translated into dollars, that’s $15K a year in productivity losses. What’s more, that wasted time also prevented him from sharing key insights in a timely manner.
After investing in a people operations platform, Taranto and team had more time to collaborate with other key stakeholders. He says, “[Our people operations platform] allows us to be a better partner to the business by enabling us to work with greater efficiency and deliver quicker and more streamlined insights.”
With up-to-date people data in their back pocket, HR teams are better equipped to collaborate and strategize with the Finance department. This partnership is especially important when it comes to headcount planning. Specifically, HR teams can provide both qualitative and quantitative data when it comes to making decisions, and this context is invaluable to the financial side of the headcount model.
Consider if the following questions were added to budgeting discussions:
- Who are the managers for our new hires?
- How do we ensure we’re hiring the right mix of seniority levels to meet company goals?
- What does our succession plan look like as employees move into new roles?
Bringing this kind of context to strategic meetings aligns HR with company goals and budgets, therefore increasing trust in HR as a strategic partner.
When all leaders have clear insight into your org chart and headcount planning, teams can quickly visualize changes that aligns with your company’s strategy.
2. Demonstrate the Tangible ROI of Workforce Investments
One of the hardest parts of workforce planning is walking the fine line between making investments that keep you competitive as an employer and defending the tangible return on investment (ROI) of talent development expenses.
People teams often focus on company culture and employee experience; as a result, they may ask for additional budget for benefits, talent development, and compensation structures. But without a collaborative relationship with Finance, HR teams are often left on their own to fight for more budget and translate their plans into financial terms.
A strong partnership therefore makes it easier to align on the value of workforce investments. People teams can work directly with Finance to identify the ROI of different initiatives and find creative ways to match non-payroll investments with overarching budgets. In this case, Finance acts less like a gatekeeper and more like a partner that understands the deep value of HR initiatives.
3. Improve the Bottom Line
A collaborative relationship between HR and Finance leads to more informed, data-driven decisions in workforce planning. And that, in turn, leads to smarter spending around payroll, talent development, and workplace culture.
Traditionally, Finance may have acted alone in mapping out the impact of compensation plans, bonus structures, and employee incentives on the company’s profitability. But these expenses don’t tell the full story. Collaborating with HR ensures Finance gains insight into attrition and turnover rates that also impact the bottom line.
Ultimately, collaboration between the two teams leads to deeper insights into your people data. This helps Finance forecast budgets more accurately and optimize costs, and it helps HR negotiate better benefits and create a better workplace experience. The result for both is increased employee satisfaction, which boosts productivity, morale, and profitability.
When your People and Finance teams are equipped with qualitative and quantitative data, they can make better decisions for your employees.
Unlock the Strategic Value of HR and Finance Collaboration
The days of fractured relationships between HR and Finance should be long gone. The two departments complement each other too well for there to be any disconnect in the workforce planning process.
In short, HR functions bring a broader perspective to workforce planning and act as a consistent champion for employees. Finance has the unique ability to frame that perspective in a way that ties initiatives to tangible ROI and business performance. It’s a perfect match that can deliver significant value to the business. Leaders: Now is the time to find ways to unlock this partnership’s potential.
Joe Garafalo is the Co-Founder and COO at Mosaic. Joe began his career in the Big 4 with KPMG. After completing his master’s degree at St. John’s University, he went on to hold multiple leadership positions in finance at Palantir, Axoni, and Barkbox. Joe co-founded Mosaic in 2019 as an answer to the complexity and inefficiency of existing finance tools. As the first Strategic Finance Platform, Mosaic is designed to ingest data from all business systems to help teams plan, analyze, report, and forecast with better accuracy and speed.
Effective headcount planning can drive faster growth and promote a better employee experience. To ease its complexity, make sure your People and Finance teams are working hand in hand. Read our guide, How to Confidently Approach Your Headcount Planning, to learn best practices.
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