Why HR and Finance Must Collaborate

Of all your fellow executives, who do you spend the most productive time with? And the flipside to that – who do you spend the least productive time with?

If a global survey of 800 chief financial officers (CFOs) and senior finance executives is to be believed, the CFO spends the least amount of time collaborating and sharing knowledge with their HR counterpart, the CHRO. While this news is hardly surprising, it’s unfortunate as this particular combination of minds and talents can perhaps have the most significant and positive impact on the future state of the organisation – both operationally and culturally.

The survey, conducted by The Economist Intelligence Unit, sought to uncover the way in which finance departments collaborate with other functions in order to manage costs, plan operations and steer company strategy. It found that senior finance executives currently spend the least amount of time with HR compared with all other functions – 7.7 hours vs. 10 hours a month with management and strategy, for example. Further, respondents were less likely to describe their collaboration with colleagues in HR as “effective” than any other function.

While automation takes over HR tasks, discussions on building HR strategy haven’t caught fire. Indeed, when CFO and HR team collaboration does occur, the topics focus on direct HR costs such as employee benefits and salary negotiations (57%) and employee training and development strategies (56%).

There are several key areas that deserve more attention.

Talent acquisition and retention

Shallow understanding of key HR functions despite their perceived closeness. Both functions manage costs, but beyond saving, they unlock growth. New faces or familiar ones? Finance and HR weigh training vs. retention. Hiring fit for strategy and future needs cuts turnover, saving money.

Risk management

Finance owns cost control, but HR can help boost it, especially with fraud detection. As “gatekeepers” of corporate culture, HR has a significant impact on what is deemed unacceptable behaviour. “This is directly linked to HR policies on penalties and dismissals for offending employees,” the report states.

Office space management

Finance and HR teaming up to save on office space is key in today’s flexible work environment. The report comments: “Although interaction with HR was not cited as vital to the management of real estate costs, this might reflect an overlooked opportunity at present.”

In terms of core skills, finance and HR have traditionally been deemed poles apart. On one side sits finance, focused on numeracy and quantitative metrics. On the other side sits HR, with its nuanced understanding of human behaviour. However, with the increasing HR focus on metrics and analytics, this gap is narrowing.

2020: Let’s ditch cost-cutting dance, HR & finance, and tango towards goals together.

For further tips on how HR can become a “friend of finance”, read our blog.

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