If there is one thing that HR and finance both need to do this year, it is to put their company in a position to thrive no matter what happens in the marketplace or the broader economy.
Both HR and finance need to do their part to help their organizations thrive. The fact that both need to do so with little hope of additional staffing or budget is just one of the things the two functions have in common.
Although company revenues are expected to increase 6.5% this year, both finance and HR face staff reductions averaging 3% for finance and 1.89% for HR. At the same time, operating budgets for finance and HR are falling by an average of 0.79% for HR and 1.2% for finance, according to new research from The Hackett Group.
Despite these pressures, HR and finance still need to deliver what their organizations need. And dare we say it? There may be situations where HR and finance can support each other in the process.
If there is one thing that HR and finance both need to do this year, it is to put their company in a position to thrive no matter what happens in the marketplace or the broader economy. For HR, its most important priority is to improve the organization’s overall talent management capability. In doing so, HR puts the company in a position to quickly and more easily react to changes in the business environment by adding, subtracting, shifting, or changing the workforce. It also means anticipating future staffing requirements by keeping talent management aligned with the business strategy.
CFOs and finance are also focused on adding this kind of value by providing the financial information and insight necessary to run the business well in all circumstances, while also keeping the cost structure under control. However, for the first time, the Hackett research found that improving analytical capabilities edged out cost reduction as CFO’s top priority, indicating that adding this level of value requires a delicate balance and strategic trade offs.
Both finance and HR must look for ways to reach out to other departments, including each other’s. A key challenge for HR this year is improving executive development so that those leaders can adjust and create value no matter what happens in the business or how volatile its environment.
CFOs meanwhile need to develop their own employees so that they have the insight, flexibility and analytical skills necessary to thrive and add value in a rapidly evolving business environment. This, in turn, creates a perfect opening for CFOs to work with HR to attract and retain important finance talent and to help those individuals develop professionally. The Hackett research notes that four of the top 11 issues for finance in 2013 are related to talent.
In this business environment, data is everything. Both finance and HR are focused on improving the quality of their data analysis and reporting capabilities so that they can make strategic decisions and develop plans that are backed up by quantifiable data. Since data analytics is often a core strength of the CFO and finance as a whole, HR can reach out to finance as each strives to meet its goals in data analysis, just as finance would reach out to HR when dealing with talent and development challenges.
For HR, the pressure is on for these professionals to do a better job in measurement when it comes to strategic workforce planning while also maintaining a balance between cost, quality and effectiveness. These measurements include everything from employee engagement levels to errors in HR transactions.