“Recruiting and retaining top talent requires HR and finance to work together to develop appealing compensation and benefit packages, as well as outline strategic company goals for the future.” —CFO.com
Businesses have been rapidly evolving in recent years, due to many economic situations that have occurred over the past decade. Because of this, various functions within companies have changed their dynamic and their focus, one example being Human Resources, another — Finance.
While finance leadership and HR departments in the past may not have always been known for having synergies or common goals, in today’s business world, their relationship is much more dynamic. With the onset of new legislature and mandates, finance leaders and managers are aligning themselves with HR more than ever. It’s beyond necessary for the two to collaborate on many aspects of business from health care benefits and compensation to strategic goals, and even, employee engagement.
CFO.com recently released an e-book, The CFO’s Guide to New Developments in Human Capital, which captures many of the recent developments in HR affecting the finance function and its leadership.
Below are some of the hot topics that we found compelling and wanted to share with you.
Take the long-term approach
With the passing of the Affordable Care Act (ACA) in 2010, and all of the subsequent provisions to come thereafter, businesses have been re-crafting their processes in order to stay inline with the new health care mandates and compress any potential burden on the business and employees. Finance leaders know that this will not happen over night. As they coach HR departments to think long-term, and have more of a five-year-plan approach, finance leaders and managers are also starting to think outside of the box. It’s important to consider the new developments and apply them from various angles or on a scenario-by-scenario basis. For example, the e-book discussed a company that brought in an in-house nursing system because they calculated that move to be more cost-effective than paying for emergency-room benefit costs for their employees. Overall, tweaking the way benefits are handled to ensure the best results for the company’s bottom line is essential. And, having a tight relationship with HR will also generate buy-in from other senior leadership, such as a Director of IT or CIO, for other initiatives.
The small stuff adds up
We all know that finance leaders and mangers are fixated on determining ROI, managing hard costs and considering strategic initiatives at all times. But often, they fail to see the impact of small things within the organization, or soft costs — deeming it being not as quantifiable. Big data captured from the IT function can help clear up this picture. The CFO.com e-book points out, “It’s now cost effective to mine massive data sets to build a mountain out of pebbles.” Therefore, investing in human capital development on a smaller level, such as employee engagement, job satisfaction and other efforts, can add up to be monumental over time. Research shows that the happier employees are the harder they work; affecting the company’s bottom line and turnover rate for the better. Implementing such programs to increase employee effectiveness can garner positive results if finance leaders and managers are willing to be patient in seeing the ROI in the long run.
Top Talent is the End-All Be-All
“Finance and its HR Partners have become adept at recruiting accountants and technical professionals who have learned how to apply new regulations quickly to financial statements and manage short-term variation in their careers. However, very few professionals have been taught the skills that will help them succeed in a more judgment-based role.” The CFO.com e-book reveals that many finance leaders and managers are not impressed with the extent of their finance employees’ skillsets when asked privately. Further, the skills that their employees are most advanced in, unfortunately, make no direct impact on the value of the business. Therefore, there exists a definitive disconnect between the level of talent desired by finance leaders and managers and what is currently employed. The CFO.com e-books goes on, “There is simply a shortage of finance talent available in the market.” Finance leaders and managers should try and consider redesigning the hiring strategies currently in place so that they can recruit the top talent they so desire. Having the right professionals with the right skills in place, and investing in retaining that talent, is most important for the success of any company.
Overall, finance leadership having a close grasp on recent human capital developments through a tight relationship with the HR function truly leads to a better bottom line.
What are some other ways that the Finance function can manage human capital developments and its relationship with HR? Comment below and let us know!