HR and Finance: Working and Learning Together
- HCM
- Article
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6 min. Read
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Last Updated: 02/03/2017

Table of Contents
Traditionally, HR and finance have worked in opposition with each other. Prevailing assumptions — finance sees HR as incurring unnecessary expenses, while HR sees finance as obsessed with counting every penny — have often prevented these two essential departments from working closely together. From a business owner or CEO's perspective, this is all the more puzzling when it's clear many services offered by each department can actually overlap.
Without a strong working relationship between HR and finance, businesses can often suffer in terms of efficiency, employee morale, and customer satisfaction. How can these two critical business operations work and learn together?
Understand the Roles and Objectives of Each Department
When misconceptions exist about the roles and objectives of HR and finance, miscommunication and resulting issues may arise. HR's primary goal is recruiting, orienting, and retaining a skilled workforce, including benefits administration and employee compensation. Finance is charged with overseeing the financial resources of the business, as well as calculating production and earnings data. The information each department gathers in the course of fulfilling their roles could benefit the other through collaboration.
Acknowledge Past and Current Issues
Where they exist, it’s likely no one can pinpoint precisely when and how functional silos arose between HR and Finance, but progress toward working together is only possible by first acknowledging that these barriers exist. With silos, certain problems invariably occur, such as:
- HR hires or terminates an employee and doesn't immediately inform finance.
- Finance plans and implements significant budget cuts without strategizing first with HR.
- Finance neglects to share data that might help HR create accurate spending projections for a new recruitment campaign.
In these and other situations, a new era of openness and cooperation can move the business forward in a desirable way.
Appoint Representatives to Meet on an Ongoing Basis
The first step toward building a better relationship can be designating an individual from both HR and finance to have regular meetings to communicate on departmental changes and needs. If both departments better understand what happens with the other on a daily basis, they may be better equipped to offer timely assistance and relevant data to one another.
Select a Collaborative Initiative
With some overlapping functions already in place, why not start a collaborative initiative centered on incentive programs? When they share financial and employee performance data, "HR and finance can create incentives that reward exemplary work while increasing morale, production and customer satisfaction," notes HR expert Cristine Sauter, "all of which have a huge effect on the bottom line and profit."
Another area of potential collaboration is recruiting. By sharing key performance measurement data, finance can assist HR in focusing on the precise staffing and development needs within the company. The same principle applies to matching up stated financial objectives (short- and long-term) with the qualities new hires need to help achieve these objectives.
Remarkable results can occur when this type of information is shared.
Add Financial Data and Analytics to Salary and Hiring Considerations
HR will be far better equipped to offer competitive salaries and benefits packages if it has access to up-to-the-minute financial data and analytics. For example, writes HCM professional Nancy Estell Zoder, if data indicates a need to hire more salespeople to increase new product sales, "HR decision makers who are privy to real-time financial reports can quickly determine how many sales professionals they can afford to hire, with what skills, and at what salary range."
Collaborative efforts between HR and finance can have a significant impact on the company's strategic objectives. The key is encouraging an atmosphere of openness and information-sharing to get the job done.
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