How HR can sell the value of people to the Head of Finance
Helen Monk, people manager at Crunch Accounting explains why HR Managers and Finance Directors will both benefit from closer co-operation.
People are undoubtedly the most vital asset to any organisation. They also incur one of the biggest costs impacting the bottom line. With this in mind, collaboration with the Finance Director is imperative – whether you’re looking to promote the business benefits of launching new HR initiatives and improving employee engagement, driving consistency within team performance, or reducing absence and staff attrition.
Finance Directors in SMEs who have worked in larger corporate environments with an established HR function can immediately appreciate the value of people. They’ll also understand how HR can alleviate risks and help businesses to embrace change during periods of cultural change and planned growth. A 2014 survey by professional services group EY found the relationship between HR and Finance is getting increasingly closer, and 80% of HR and Finance leaders believe that they work better together.
As with HR, Finance is a trusted support function that understands the importance of making people management activities more structured and professional, with measurable results in the form of KPIs or metrics to show a positive return on investment.
It’s imperative to promote the value of people to the financial figurehead of the business. Whether it’s showing the long term benefits of launching a new HR information system to improve efficiency, or demonstrating a commitment to spending less on hidden or ‘empty’ costs. This includes recruitment agency fees, introducing standard fees and payment terms, and reducing ‘treadmill’ hiring and training. In doing so, funds can be reassigned into more proactive areas.
Being aware of the local employment market and competitor activity as organisations aspire to be ‘Employers of Choice’ helps to keep fingers on the pulse of the latest developments in employee engagement, performance and talent management.
Many businesses have a three-year strategic plan to achieve business goals. The ‘Objectives and Key Results’ model epitomised by companies with cutting edge HR practices sets targets that all levels of the business can identify with. Finance and HR then work closely on the people priorities that help the business achieve its goals. When it’s identified that, for the business to grow, a review of salaries and benefits needs to be undertaken, HR can provide meaningful insights into attrition trends and costs of recruitment and training. This highlights the ‘cost per hire’ and is powerful data to support any bold decisions being taken. Hiring people below or at the lower end of salary scales may seem to be prudent in the short term, but making these scales visible and having a plan to work towards any anomalies is a key aspect of addressing skills shortages, attracting and retaining employees, and improving engagement.
Having business measures that are tangible as part of our objectives and key results is crucial. Businesses can define their goals by asking themselves how much investment is needed, how many more clients are desired, and how many additional employees are needed to achieve this. As holder of the company purse strings, the Finance leader appreciates that recruiting and training the right people is fundamental to a seamless launch of new products and services.
Working together, Finance and HR functions can manage recognition activities and incentive programmes to drive positive improvements in engagement and service levels. This enables them to understand their business and have commercial acumen to share with colleagues, as well as understand their needs, be visible, and proactively address issues before they fester.
Investing in hiring the right people, training them well, and keeping them engaged can be shown in a positive ‘net promoter’ customer satisfaction score from feedback given. This feedback encourages potential new business, especially as the impact of feedback using social media channels is so powerful due to its reach.
Finance leaders should also be involved in any HR-related decisions that incur cost or resource, such as purchasing a new HR information system. This ensures they play an integral role in reviewing features and benefits, testing options and establishing whether a system is fit for purpose. Failure to do this can result in a new system not being used effectively and reverting back to manual processes.
Working with the Finance leader on annual budgets for payroll, recruitment, learning and development, and health and wellbeing can also highlight hot spots. So if a department has spent little on external training in the last two years, what feedback have we had from leavers, are they moving on due to availability of development opportunities elsewhere? Can a monthly yoga class help encourage mindfulness and boost productivity or alleviate symptoms of stress? These additional costs may be challenged as being optional ‘nice to haves’ but they help set businesses apart from their competitors, especially when attracting potential employees.
Building and maintaining a positive relationship with the Finance leader and tracking the impact of how people can add tangible value to the business are pivotal to formulating solid growth plans.