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Why Your CFO and CHRO Need to Work Together
Chief Financial Officers (CFOs) tend to focus on budgets, forecasts and all things financial in the organization. In contrast, Chief Human Resource Officers (CHRO) focus on the people side of the business, and sometimes the numbers side can become an afterthought. But overlooking the financial side of human resources could be holding your organization back.
A strong HR focus can strengthen a company’s ability to find and retain top employees, cut down on training expenses, and deliver a higher level of employee value — ultimately leading to less HR expenses and higher performing employees. How can Finance and HR work together to deliver value to the organization?
Involve HR in the Financial Planning Process
Rather than working in silos, HR and Finance need to share information and goals. Finance holds the keys to the quantitative data that affect staffing decisions that will impact the bottom line. How much burden expense can the budget endure? How will a salary increase across the organization affect the annual budget? What is the impact of planned merit increases this year? How will our headcount planning affect the budget? All of these questions need to be looked at from both the HR and Finance perspective, not in independent silos.
Keep HR on Track with Quantitative Goals
Finance is very good at tracking KPIs across departments, and HR should be no exception. HR needs to communicate clear KPIs such as employee retention and employee satisfaction as well as conduct compensation analysis versus the rest of the industry. Finance can help provide the data to track these KPIs or provide the means for HR to become a self-service user of the data used to measure their goals. Many HR professionals lack best practices and systems for collecting, tracking and reporting on people data.
Incorporate HR Analytics
HR analytics correlates business data and people data, which can help establish important connections in the organization. The key aspect of HR analytics is to show the impact the HR department has on the organization as a whole. Establishing a cause-and-effect relationship between what HR does and business outcomes – and then creating strategies based on that information – is what HR analytics is all about. These outcomes are based in data, not just gut feelings about, which makes all the difference.
Create One Source of the Truth
When data has to be pulled from multiple sources and manually entered into Excel spreadsheets to create ad hoc reports, everyone gets frustrated. It’s hard to keep track of where the data is stored, how it should be presented, and which reports should be created. However, when Finance and HR work together to create actionable reporting from reliable data in one system, this gap can be bridged. For example, a report can be created to analyze current filled, open and planned positions along with compensation data. Using one tool to analyze and pull the data eliminates manual errors and data redundancy.