Bridging the Gap between HR and Finance

PayStream Advisors has just released a report called “Driving Critical HR Business Processes: A CFO’s Guide to Human Resource Management Solutions.”[1]

Wait a second, does that say CFO?

Photo by Alan Cleaver, Flikr

The report starts with the following statement:

“For some time now, PayStream Advisors has witnessed the growing trend towards increasing the CFO’s role as it relates to human resource management (HRM) and payroll. Human resources (HR) plays a critical role in organizational growth, performance, and profitability, and CFOs are becoming advocates for making HR a field driven as much by analytics as by finance.

With the marriage of cloud computing and big data, we at NetSuite TribeHR have seen two clear trends emerging in the world of HR automation technology:

  1. The definition of Core HRIS is expanding well beyond payroll and employee data management.
  2. Richer business metrics and the potential of predictive analytics have garnered executive interest in the (now measurable) strategic potential of HR.

As surprising as the title of PayStream’s report may be, it makes sense that these two trends would result in the more active involvement of CFOs in the move toward integrated HRM solutions. The evolution of these platforms means access to more and better data on which to base business decisions. Integration of HRM data, payroll information and other core HRIS data with existing business information systems provides unprecedented access to comprehensive business analytics. In turn, as the report states, these analytics “provide a powerful platform for collaboration between finance and HR.”

Finance and HR have not always been the best of friends. While HR advocates for people as a company’s greatest asset, in most organizations, people are also the single biggest expense (averaging close to 70% of operating costs[2]). It’s HR’s job to grow and nurture this asset, while CFOs focus on managing and allocating resources as efficiently as possible in support of company strategy. Without measurable people data, this has often put finance and HR at odds with each other.

Not so in recent years. Of the 550 finance and HR leaders surveyed by Ernst and Young for their report, High Performing CFO: The CFO & HR Partnering for performance, 80% said their relationship has become more collaborative over the past three years.[3] A Towers Watson study also found that both groups see more collaboration in their futures and the Chartered Institute of Management Accountants has linked collaboration between finance and HR to improved business performance.

A major contributor to increased collaboration is enhanced HR automation. Rather than seeing payroll as the logical place to cut costs, with integrated HRIS and HRM solutions, CFOs can now work with HR to assess the effectiveness of HR processes and identify ways to improve them. Everything from cost-per-hire to employee retention rates can be measured, monitored and improved. With robust analytics, HR can finally provide the objective data needed to demonstrate its strategic impact on business performance and can collaborate with CFOs to optimize the use of existing resources.

There is little doubt that the drive for HR technology adoption has reached the point of sustained momentum, as large corporations now consider the integration of core HRIS, payroll, and HRM data with existing business information systems a competitive necessity.

While small and medium enterprises (SMEs) still lag in the adoption of HR automation, the availability of affordable solutions for every budget is beginning to turn that ship as well. While SaaS has proven to be an enabler of HR automation, it’s not the only reason for the sea change. The PayStream report referenced earlier identifies the following five drivers of HRM and payroll automation:

  1. Cloud-based technology: Many SMEs (and an increasing number of larger companies) are opting for cloud-based HRM applications rather than migrating outdated legacy HR systems and applications over to cloud infrastructure.
  2. Dependable data and analytics: While “big data” is the trending catch phrase, what matters most is good data. The custom reporting tools built into today’s HRM and payroll solutions deliver real-time data that enables financial executives to make actionable decisions and drive better business performance.
  3. Reduced overhead: By automating an outdated manual process, HR can realize its full potential in supporting profitable business growth. Aside from streamlining operational tasks that reduce cost and labor efficiencies, role-based access to HRM solutions deliver the right information to the right people.
  4. Compliance and risk management:  HRM solutions allow companies to track and audit compliance requirements, thus reducing risk and managing costs. The automation and integration of HR data, along with employee self-service visibility, significantly reduces risk and impacts compliance and payroll accuracy metrics.
  5. Employee self-service: Self-service tools allow talent to initiate routine tasks such as updating personal information, accessing timecards, requesting leave, and viewing schedules. This streamlines basic HR processes and allows HR associates to focus on organizational and operational benefits.

Just as there are good business reasons for HR and finance to collaborate, there are equally compelling business reasons for moving forward with a unified financial and HR platform. The most import of those reasons? The integrated financial and HR data these solutions provide gives CFOs and the executive team visibility into, and control over, the company’s performance— while providing the data HR needs to effectively measure and develop the company’s greatest asset.

 

Let HR technology enhance your world of work with NetSuite TribeHR

This article originally appeared in HR Strategy and Planning Excellence Essentials, August 2014 as HR and Finance: Bridging the Gap. http://www.hr.com/en/topleaders/interactive_content/hr-strategy-and-planning-excellence-essentials-aug_hzdypzwj.html


[2] 2006 SHRM survey of over 700 companies including a significant number of Fortune 500™ companies

Link to original post

Leave a Reply