The Importance of a Strong Relationship Between HR and Finance
A strong relationship between HR and finance departments is key to business success. Often times, the core values of each department can be seen as drastically different, making it difficult to find common ground. HR departments often live by the motto, “People are our greatest asset.” Finance departments, on the other hand, operate under the old adage, “Cash is king.”
The nature of each department’s work has also been a source potential conflict between the two. In the past, HR departments have found it difficult to measure their programs’ return on investment, and therefore found themselves struggling to communicate effectively with the CFO. Finance managers tasked with improving the bottom line have traditionally viewed HR as the defenders of the workforce, blocking personnel decisions that could potentially lead to lawsuits or poor morale, even though those decisions may be good for that business.
The Changing Landscape
Given these core differences, the relationship can often appear to be in conflict, but in the end, both HR and finance are working towards the same goal of a healthy and successful company. When these two departments are able to come together, their cooperation leads to positive business outcomes. According to a global survey of CFOs and CHROs, a strong relationship between the two departments leads to improvements in employee productivity and engagement, and higher corporate earnings. However, in order to create a positive working relationship based on collaboration, finance and HR must have an appreciation for the goals – and the work – of each other’s department.
What Has Finance Learned From HR?
In the past, CFOs and members of the finance team didn’t generate many fans among the workforce. They made the tough decisions that often had a negative impact on employee morale. However, through developing a closer relationship with HR, the best CFOs have learned:
- The human element of business. CFOs were typically viewed as naysayers, especially among HR teams. They were, and still are, tasked with making tough decisions to keep their organization moving forward. Working together, HR managers, CFOs and other key finance decision makers have looked beyond short term numbers when weighing options, and have begun to incorporate the human element of business into their long-term strategic plans.
- Seeing beyond ROI. Not all success in business can be easily quantified. It can be difficult to determine precisely how a program or benefit designed to improve employee morale will impact profitability in the long run. However, good CFOs are now able to see how investments in human capital can positively impact the business in ways that are not always immediately quantifiable.
What Has HR Learned From Finance?
In the past, HR departments have been viewed as a cost center whose function is to provide support and compliance. However, the best performing companies have begun to include their HR managers in strategic planning efforts. The best HR teams have used this seat at the table to forge solid relationships with the finance department, and from those relationships they have learned:
- The Business Perspective. CFOs want to know only one thing: How will the results of this decision affect business performance? Solid HR managers have learned how to quantify and qualify strategic personnel investments.
- How To Use People Data. Effective HR managers have learned how to influence decisions relating to performance metrics and business goals. They’ve developed best practices for tracking, collecting, and reporting their “people data.”
A Partnership for Long-Term Business Success
Successful cooperation and collaboration between CFOs and CHROs has been achieved when members of both teams took the time to learn from and understand each other. Finance leaders learned valuable lessons about the human side of business, and HR leaders have learned how their work and decisions impact the goals and the success of the organization. Together, solid finance and HR teams have developed strong partnerships that have driven the most successful businesses.