HR has long been seen as a cost center as it’s responsible for the company’s largest expense—hiring. However, as companies acknowledge that people are their most valuable asset, HR has evolved into the strategic partner it should have always been. When done strategically, hiring becomes an advantage rather than a cost. Ideally, the people hired should be able to demonstrate a return on investment. Unfortunately, HR isn’t always set up to evaluate each employee’s return on investment. But, with the right data, they can collaborate with you and your finance team to accomplish this.
Finance teams have been under pressure to make larger and more substantial investments in employee growth and development. As a finance leader, you can partner with HR to find the insights and strategies that will help the organization achieve better results.
Your organization will see massive improvements in strategic workforce planning, competitive compensation packages, and risk management coordination when finance and HR work together to align people’s investments with business outcomes.
Connect Headcount Planning to FP&A
Connecting a company’s organizational design to financial planning and analysis (FP&A) entails aligning employment goals to company finances. Collaborate with HR by including FP&A into the headcount planning process—a strategy that guarantees your company fulfills short- and long-term objectives based on a budget that is represented. With headcount frequently being towards the top of the list of company expenses, FP&A should be deeply integrated with workforce planning.
In most cases, HR collaborates with business leaders to design a hiring strategy that aims to achieve company objectives in terms of headcount planning. They’ll work with executives to analyze the organization’s goals for the next six months to a year and evaluate what positions are required to achieve those objectives.
However, FP&A Trends discovered a major flaw in this strategy: data is frequently siloed and not deeply integrated into a company’s core financial model. If you and your finance team collaborate with HR on headcount planning, you can more accurately adjust headcount forecasts based on business needs and constraints.
For example, finance can partner with HR on a hiring model based on the top-line growth that’s been forecasted. Collaborate on scenarios such as envisioning what the company would need to look like in order to achieve a 30% revenue growth. Since sales is primarily responsible for prospecting and driving revenue growth, a 30% increase in sales headcount may also be required. And with a larger sales team in place, you could collaborate with HR to increase the marketing team by 20% and the R&D team by 10%.
A big part of building a growth path is bridging FP&A with headcount plans.
Transform Your Compensation Strategy into a Business Advantage
Finance and HR can work together to turn the company’s compensation strategy into a business asset by establishing a more equitable and competitive compensation package.
Companies put a high emphasis on attracting top talent and ensuring that they receive a fair benefits package. In addition, according to Paycor’s recent State of American Business report, 65% of employers plan to reassess benefits in 2021. Employers want to ensure employees have stable mental health and wellbeing while working hard.
With so much focus on generating fair compensation, collaborating with HR to turn your compensation strategy into a business benefit is key to ensuring equal pay, employee retention, long-term success, and strong company benefits.
In compensation planning, HR typically creates a strategy that accounts for base pay, benefits, pay bands, and merit increases that are aligned with company goals and employee needs.
As a finance leader, you can partner with HR to benchmark compensation against other companies. As a result, your company will have a more informed standard to work with, allowing you to create a more equitable and competitive compensation package. A more equitable and competitive compensation package is especially beneficial in attracting and retaining top talent.
Finance can help visualize the broader market by analyzing the fully loaded cost per employee. By doing so, you will be able to go as close to the competition as feasible, calculating expenses beyond base pay. Recruitment costs, signing incentives, relocation fees, and dependent benefit costs are all included in these costs. Keep in mind that tracking these wage-related costs will be critical, especially as you scale.
After you’ve worked to create fair compensation a priority, establish a contingency plan that focuses on the most essential people in your organization. When it comes to turning your compensation into a corporate asset, you should prioritize those who have the greatest impact on the company’s success.
Establish a People-First Contingency Plan
Finance and HR can collaborate to deliver a consistent employee experience and better respond to unexpected events.
HR, for example, took the lead in crisis management and business continuity during the pandemic. HR departments had to quickly support employees who wanted to work remotely. People Ops assisted organizations in developing new approaches to performance assessments and employee perks in order to meet the changing needs of employees.
According to “Human Resource Planning for the 21st Century,” HR teams are best positioned to help guide crisis management efforts because they understand the workforce’s needs. They are the glue that holds the organization together, bringing data about people into the conversation to guarantee that employees continue to contribute to the company’s success.
By looking at corporate budgets, your finance team may collaborate with People Ops. While HR considers all options based on current and future employees, finance teams balance operation efforts by incorporating financial related strategies. Both departments run budgets for different scenarios—looking at plans for budget cuts, relocations, business downturns, and other unexpected events.
Having HR in your corner when creating financial and budget plans will help you see the importance of putting people first.
Prioritize Finance and HR Alignment to Deliver a Higher Return on People Investments
By prioritizing collaboration on important People Ops goals, HR and finance will be able to create even stronger people strategies, manage resources more effectively, and ensure smoother planning processes.
A stronger finance-HR relationship allows both departments to clearly demonstrate their value to the company, allowing you to get a better return on your people investments.
