HR, finance departments need to get on the same wavelength
If HR pros don’t collaborate well with their organization’s finance department, they won’t be able to gain the insight needed to be truly effective.
While HR departments are investing more heavily in predictive analytics to determine the effectiveness of their talent acquisition strategies, if they don’t collaborate well with their organization’s finance department, they won’t be able to gain the insight needed to be truly effective, according to the Oracle study, “HR Moves Boldly Into Advanced Analytics with Collaboration with Finance.”
Why? Finance departments were the first to adopt analytics solutions, mainly because they are the most “numerically oriented” function within an organization, according to the study. On the other hand, HR departments were late to start investing in such capabilities, likely due to a lack of accurate data, a heavier reliance on human decisions and low buy-in from the rest of the organization that the HR department really needed to invest in such capabilities.
Related: Growing importance of HR driving job growth and salary increases
But things have changed and more HR departments are now investing in advanced solutions, according to an Oracle survey of 1,510 HR, finance and business professionals. However, to truly be effective, HR departments not only have to hire more professionals with analytical talent, but they also really need to collaborate more with their finance departments, the study asserts.
“In many companies, personnel costs are the highest expense, and hiring/retention plans are often based heavily on financial forecasts,” the authors write. “For these reasons and others, it’s important for HR and finance to collaborate in their use of data and analytics.”
Collaboration can be challenging though, according to Oracle’s survey. Barriers include cultural habits–HR and finance traditionally have not worked together, and mismatched skill sets that impede effective collaboration. But the biggest barrier was that both functions acknowledge they have a “short-term mindset,” focusing on quarters rather than future strategic direction.
The good news is that more and more HR and finance departments within organizations are finding ways to overcome such barriers and are working together. In Oracle’s survey, more than (57 percent) of organizations plan to achieve more holistic, enterprise-wide insight through collaboration and 52 percent of HR and finance professionals believe it will help them become more strategic partners.
Indeed, a good number of departments within organizations are already working together. When asked to specifically describe how they are using analytics for joint HR and finance objectives currently, “forecasting headcount and budget needs” and “gaining a complete picture of business priorities” were ranked most highly in the survey. Other relatively highly ranked choices included “handling workforce management” and “predictive modeling of changes.”
For the upcoming year, the top objective for collaboration was to “improve business performance,” ahead of “enhance organizational agility” and “become strategic partners to the business.”
“Both agility and strategic partnership are worthy but somewhat abstract benefits that may be difficult to measure,” the authors write. “Business performance is easily measured, but is the result of a variety of factors beyond HR–finance collaboration on analytics. As a result, it may be difficult to know if these objectives are realized.”
The study recommends several best practices for effective collaboration, including keeping it simple by working in “bite-sized chunks.”
“Create small teams that agree to answer a specific question,” the authors write. “The team should consider what data will answer that question, the source of that data, how it should be interpreted, and what action plans would achieve the best results.”
The survey also asked how both departments plan to leverage AI to help drive business results and key findings include:
- While a quarter (25 percent) of survey respondents are primarily using AI to identify at-risk talent and model their talent pipeline (22 percent), they are rarely using AI to forecast performance (18 percent) or find top talent (15 percent).
- Over the next year, 71 percent of survey respondents plan to use AI to predict high performing candidates in recruitment and source best-fit candidates with resume analysis (70 percent).
- Other AI priorities for survey respondents include modeling their talent pipeline (58 percent), flagging at-risk employees through attrition modeling (52 percent) and supporting employee interactions with chatbots (38 percent).
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