Collaborative workforces power modern companies. Gone are the days of siloed departments that perform purely administrative functions. The COVID-19 pandemic and Great Resignation made it clear that if companies want to succeed in today’s business world, they must align their business strategies with the demands of the modern workforce and an increasingly talent-driven job market.
According to a survey conducted by GoodTime, companies fell short of their hiring goals by 50 percent last year. It goes to show just how much priorities have changed for modern professionals. People want more flexible working arrangements, supportive work environments, and cultures that serve them (rather than burn them out). When companies don’t provide this, top talent leaves in favor of an employer that does.
While alarming, it’s clear that the way forward is for companies to place retention and employee wellbeing at the top of their agendas. To achieve this, two teams, in particular, can collaborate more intentionally: HR and Finance.
It might seem an unlikely pairing. After all, aren’t HR professionals more people-focused while finance professionals are all about numbers? When investment in people equals smart business, these departments must join forces. And that is where the Great Alliance between HR and Finance comes into play.
At PayFit, we’ve had the privilege of seeing what happens when finance and HR teams come together, not just over payroll and HR data but also in developing a strong, people-centric strategy. Here’s what happens when HR and Finance teams work together and where they can collaborate more effectively.
The case for the Great HR-Finance team alliance
The war on talent, increasing labour costs, and an uncertain business landscape are all strong drivers for Finance and HR to work more collaboratively.
Unemployment rates are low, and demand is sky-high for top-tier talent, driving up labour costs. Companies are struggling to recruit the skilled talent they need. Achieving a positive return on their investment is even more challenging. More profoundly, people want more from the companies hiring them, supportive work cultures, and flexibility.
When HR and Finance team up, they can share data to make better, more informed decisions. As a result, everything improves, from benefits and compensation packages to recruitment programs. Retention increases, attrition rates decline, and bottom lines rise for a better overall ROI.
Both teams can also respond to crises more swiftly and proactively (think the COVID pandemic or the influx of cyberattacks businesses now face). In fact, the pandemic is an excellent example of an event that pushed finance and HR teams to shift priorities and unite to address fresh challenges such as the move to remote work.
Where HR and Finance can team up to develop a people-centric strategy
Now, let’s take a look at three areas where HR and finance teams can achieve closer collaboration: compensation, data, and confidentiality.
1. A compensation package to win the talent war
Talent is driving today’s job market like never before. People want to work for modern-minded companies that value their mental health and wellbeing. Your finance and HR teams can achieve big results by teaming up to improve compensation strategy.
Businesses can win big here by developing compelling and fair compensation packages that stand out in today’s crowded market. Whether it’s bolstering existing packages with more progressive benefits or benchmarking salaries against competitors, there are many ways in which HR and finance teams can collaborate to attract and retain top talent.
2. Where there’s data, there are insights
Making informed, data-based decisions is a game-changer for every business. In fact, a survey by Deloitte revealed roughly half of senior executives see better decision-making as a key benefit of collecting and analysing data.
For finance and HR teams looking to collaborate more effectively, data is an excellent place to start. From employee engagement and wellbeing to performance and absenteeism, there are many meaningful metrics people teams can track. Add in payroll numbers, salary progressions, and pay gaps, and you’ve got data that impacts HR and finance equally.
In other words, there are lots of people insights that can be translated into financial ones. Recruitment expenses are one great example. Recruitment is a cost. But, it’s also an investment in the right people who can drive further growth. The same can be said for incentives like benefits. They cost a certain amount to provide but can offer high returns in the form of better retention and job satisfaction rates. When HR and finance teams analyse these expenses together, they can determine the ROI they’re getting from each new hire.
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3. Confidentiality and security matters
We live at a time when information security has never been more relevant or important. As our lives become more digitized, people want to know their personal data is protected and handled with care.
It’s also in businesses’ best interest to invest in data security. According to Gartner, 88 percent of Directors view cybersecurity as a significant business risk. Even the smallest data breach is enough to tarnish a reputation, while a large one can disrupt growth or even put a company out of business. The Kronos data breach is one example that resulted in multiple lawsuits and a breach of the Fair Labor Standards Act from a failure to make payroll.
Since finance and HR teams both deal with sensitive data (like payroll), they have a duty of care to ensure this information is stored safely and securely. Together, finance and HR can put systems in place to ensure team members only see what they need to see.
All of this feeds directly back into developing a people-centric strategy. Aligning your teams on security and compliance increases trust across your organisation because it shows people you’re putting their needs first.
Develop a people-centric strategy: Two teams are stronger than one
Overarching all of these opportunities for collaboration is one big one: the chance to help shape a robust and people-centric business strategy.
Cross-departmental strategy and planning can be significant catalysts for change. And as we’ve explored, there are quite a few areas where finance and HR share similar interests.
HR and finance teams can develop shared objectives that serve their teams and the organisation by aligning on recruitment investments, compensation strategy, and compliance. It’s a win-win for everyone involved.
This is a guest post by Rachel Greenway, content writer at PayFit, the smart, simple, and seamless solution for growing teams looking to automate their payroll.
From Rachel Greenway
Rachel is a content writer for PayFit. As a Canadian expat living in London, she's becoming more British by the day. When she's not working, you'll find her drinking (copious) amounts of tea, reading, or taking long walks out in nature.