Why Aren’t HR and Finance on the Same Page?

Systems and data are two barriers that are standing in the way of greater collaboration.
By: | May 24, 2019 • 2 min read

Should HR own strategic workforce planning? Or should finance own it? Well, the answer seems to depend upon whom you ask.

New research from OrgVue, a producer of workforce analysis and modeling software, finds that 55% of finance leaders believe it should be their responsibility, while 76% of HR leaders say it should be theirs. It also reveals a disconnect as to who should control workforce costs, with 88% of finance leaders saying it should be finance and 55% of those in HR indicating it should be them.

Yet despite these differing views, the more than 400 HR and finance decision-makers at U.S. and UK businesses surveyed appear to be on the same page in one respect: A majority in both groups admit that collaboration between the two functions is noticeably absent in their organizations today.

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The study, for example, finds that just 28% of HR and finance departments have shared reporting systems and processes.

Both functions agree there’s plenty of room for improvement when it comes to working together. Fewer than half (45%) of the HR leaders questioned believe their rapport with finance is productive, while just a quarter (25%) of those in finance feel their relationship with HR is collaborative.

That also matches what OrgVue President Russ Clarke has found. “ I would love to tell you that finance and HR are always aligned,” he says, “but oftentimes they’re not.”

Clarke believes that “transformation is the place where these groups need to come together.”

“Most companies are undergoing some form of transformation,” Clarke says. “So, the challenge [for these organizations] is creating an efficient and effective operating model. Finance has an interest in doing that. HR has an interest in doing that … .”

Together, he says, finance and HR need to be able to answer questions like: What work should we be doing? What work should we stop doing? What work should be done somewhere else?

Once those questions are answered, Clarke adds, the next step is determining how to structure the organization to execute that work, followed by identifying the people who fit in that structure and are doing the work that’s tied to the strategy.

Naturally, data analytics plays a key role in providing the insights that are needed to align the organization’s talent to the business strategy.

The most successful companies, Clarke says, no longer think of events like cost reduction as something that’s “undertaken every two years, and instead are building transparency and control between finance and HR to evaluate workforce management on a monthly, ongoing basis.”

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Other findings in the OrgVue research, Making People Count: 2019 Report on Workforce Analytics, includes:

∙ Only 44% of HR and finance decision-makers are able to confidently say that their workforce is aligned to their operating plan and investment strategy;

∙ A majority (67%) of HR and finance decision-makers believe it’s important that their top talent is focused on the most critical work, but only 45% can answer questions about whether they actually are; and

∙ 52% of U.S. companies are working on diversity reporting; yet only 27% are working on gender pay-gap reporting. (This compares to more than 60% for both diversity and gender pay-gap reporting in the UK.)

David Shadovitz is editor emeritus and former editor and co-publisher for HRE.