Finance is an integral part of every business. It’s how we keep score. Finance permeates almost every area of a business, from operations, supply, and delivery, to sales and marketing. It’s a necessary part of making sure the business is remains viable and strategically aligned.
The only area of business that finance doesn’t penetrate, at least in many companies, is HR. Despite the fact that up to 80% of organizational costs are related to a business’ workforce, many companies continue to ignore the need for finance and HR to work together. A large reason for that negligence is due to the fact that informal structures in HR result in decision-makers treating it as a cost center, rather than an investment.
Businesses must realize the value of their workforce and individual employees. Evidence-based HR is the key to providing the transparency needed for that insight. Evidence-based HR means using real data to place a value on each role. It’s only in the last 10 years or so that the right data to model the workforce in this way has become obtainable. Today, payroll and HRMIS are pervasive and that data is readily available. Plant maintenance crews manage data on every nut, bolt, and screw in the area they are responsible for, literally. They know the lifespan, location, and ROI for every part of their plant. HR can have this kind of detail. HR has access to the same tools and evidence but they’re not using it with anything like the same degree of sophistication. HR knows who is in the workforce, they know how many days of annual leave they have outstanding, and they know what they’re paying them, but they don’t know the ROI on that, nor do they even know the ROI they should expect.
HR have the evidence and have access to the theories to manage workforces with a similar degree of sophistication. Moreover, HR technology is progressing in leaps and bounds, and while many simple transactional solutions are available, there are those ahead of the pack who are producing technology suites designed specifically for handling the complexity and sophistication of evidence-based HR strategy, like eeStrategy.
Using evidence-based HR to place a value on each role provides clarity to the business (especially finance), and furthermore, provides clarity to the employees in those roles. It allows employees to understand what success really looks like and how they can maximize their value to the company, and subsequently themselves. It’s a win-win. There are those who have already achieved this integration, are using current technology, and are realizing substantial, recurring, compounded value. The only real impediment to widespread evidence-based HR now is the unwillingness of finance and HR to integrate their models and data properly. This is the final piece of the puzzle.
Everything is available, there’s no more excuses and it is past time for finance and HR to start working closely together. Take the initiative; talk to us about joining HR and finance strategically.