In Zuma Blog
For an HR department to be truly effective, it must have an established and collaborative relationship with the company's finance department. This kind of partnership can do wonders for a business's bottom line, as these teams function best in tandem. Each side is able to bring a perspective and priority the other must consider. As a result, both departments' business decisions are powered by a strong knowledge base.
One of the major roadblocks many companies face, however, is that it can sometimes be difficult to get these departments on the same page. Though both have plenty of interests in common, there is often a knowledge gap that's difficult to surmount. Here are a few tips that will help HR departments speak the language of finance:
The most beneficial thing one department can do to get to know the needs of another is to ask questions. Many people are shy to ask too many questions, as they are concerned it will make them look ignorant or under prepared. However, being curious and acting on that feeling is one of the main factors driving successful professionals. You can't know everything - you can, however, get supplementary information from other knowledgeable individuals.
Make sure your HR department is comfortable asking questions about the company's goals, momentum and current situation. These kinds of inquiries will help your HR workers get a feel for the finance department's perspective, and make collaboration far easier and more effective.
One way HR departments can get on their finance department's level is to focus on their costs. According to the Society for Human Resource Management, keeping an eye on HR costs allows you to focus on the most productive plans of action and craft strong predictions for what will happen in the future. Moreover, thinking in terms of money lost or gained on a venture automatically puts your HR department closer to your finance team. This focus is a straightforward intersection of interests, so collaboration is likely to blossom naturally when both sides consider HR in terms of cost.
One area many HR departments fail to follow through on is benefits. This is the other side of the cost coin - if the company is putting money into something, there needs to be a clear return on investment. This is where a strong HR company can really shine. When you track HR costs and have a data-driven analysis of how those costs benefit the company, it's far easier to see what works and what doesn't. When it comes time to evaluate the money put toward HR efforts, those backed with proven success are far more likely to appeal to CEOs and CFOs.
By objectively highlighting benefits, both HR and finance are more likely to succeed, and the rest of the company is sure to follow.
Finally, the most important way for HR to begin speaking the language of finance is to actively put in the effort to do so. Too many companies function with unspoken divides between departments. However, cross-departmental collaboration strengthens the company and improves productivity overall. The first step toward any such collaboration is to actively seek it out. As HR departments stand to take on more interesting work and make a bigger impact on the business when they team up with finance, it makes sense that they should drive movement toward such a partnership. Consider scheduling regular meetings between representatives from both sides so there is an established relationship and a clear way to communicate between departments. Over time, HR and finance will be on the same page and drive the company forward.
Imagine for a moment that you could clearly show that investing an additional #1 million in training would reduce voluntary turnover by 10 percent, save #1.5 million and increase productivity by 5 percent. This means the organization could increase revenue, production or customers served by 5 percent, with only minimal increases in workforce cost. For a company with #1 billion in annual revenue, this would be worth up to #50 million in ROI to the organization as increased revenue, improved profit margins and reduced costs. Those numbers are a language that even the most skeptical finance professional could understand.