For many firms, the HR and finance departments are separate entities. HR managers are responsible for hiring, training, and motivating a company's personnel. Finance experts concentrate on resource allocation by examining the expenses vs. revenue incurred by departmental procedures throughout the firm. While the divide between HR and finance has served to consolidate roles, the necessity for established HR and finance connections grows as workforces shift. This post will look at the HR and finance departments and how they might work together to benefit a firm through a cloud-based platform.
Labour, payroll and wage administration were typically the responsibilities of finance officers. An economist coined the term "human resource" in the late 1800s. However, as time passed, the focus of HR shifted. Traditional onboarding financial estimates had to make place for tailored training packages. Despite their long history, finance and human resources have struggled to collaborate on organisational goals during the last few decades.
To understand the importance of collaboration between HR and finance operations, take a look at these insightful statistics from the industry.
Hiring & Recruitment Statistics
51% of job seekers prefer to find job openings through online job postings. While many job searchers use their network of friends and colleagues to discover employment, more than half prefer to find jobs through major online job boards that list openings from various organisations.
On job search websites, 53% of people seek company information and reviews. Websites like Glassdoor, PayScale, and LinkedIn provide information about what it's like to work for a specific company. Job searchers research prospective employers in the same way they do when making a significant purchase.
Diversity, Equity & Inclusion Statistics
According to LinkedIn's Workforce Diversity Report 2020, the worldwide workforce is 55.3% male and 44.7% female. Women have made significant achievements in the workplace, yet they continue to be underrepresented compared to men.
More gender diversity might increase GDP by $12 trillion (GDP). According to one estimate, closing the gender gap could increase global GDP by $12 trillion, and businesses that improve their gender diversity could benefit from that growth. That's why companies must make policies to reduce the gender pay gap.
Benefits of Collaboration Between HR And Finance
Many HR elements influence salary amounts, such as job seniority, job type, wages for similar positions, salaries for distinct functions, and the job market. While HR professionals may use calculators and tools to calculate wage levels, it is equally essential for HR to involve the finance department in these decisions.
Compensation changes have an impact on the company's overall budget. Individual compensation increases may cause a department's account to incur a net loss, necessitating money from other sources to make up the difference. Similarly, a bonus structure that isn't aligned with a system of checks and balances can have repercussions throughout an organisation.
Improved bottom line by leveraging data
With so much emphasis on recruiting, hiring, and onboarding, HR might miss technological expenditures. Because of these costs, teamwork between finance and human resources can favour an organisation's bottom line. Technical integration between the two departments enables them to convey data more fluidly while reducing unnecessary costs associated with various system interactions.
For example, HR data, such as staff headcount, located within a single system, is instantly available for other workflows such as benefits administration and time monitoring. This automation reduces the need for several HR systems, hence lowering expenses.
Enhanced Employee Retention
Finding a replacement recruit costs the average firm 50-60% of the compensation of an existing employee. For instance, if Johan earns Rs. 6,00,000 per year and decides to leave, the organisation will pay about $3,00,000 to replace him. That's a lot of money for a company to keep spending. The good news is that teamwork between HR and finance can assist in reducing this expense by effectively assessing the financial impact of an employee leaving the company.
While finance departments prioritise new hiring and team growth objectives, HR can prioritise employee retention activities. Many HR professionals use HR platforms to track why employees depart a company. This information can be compared to financial estimates to make decisions that promote staff retention.
Improved HR and Finance Operations
Human resource specialists must have a strong awareness of the financial side of running a corporation. Budgeting and profit management (billing, write-offs, etc.) are important topics, as are reading and interpreting financial accounts. Many organisational leaders claim that the HR department does not comprehend the business, how it makes money, or how to have an effective discussion and communication about the company's financial profile. Understanding and utilising these concepts is vital to building a good HR and finance relationship.
HR-specific measures to understand finance include cost-to-hire, compensation, benefits, and labour legislation. Understanding workforce planning would also be beneficial. It is not only about headcount but also about how essential human capital investments (e.g., training and development, incentives and recognition programmes) deliver concrete bottom-line results. That way, the HR department can allocate or revoke resources from the activities based on their effectiveness.
The active collaboration between the HR and finance departments ensures the cost of hiring, training and retaining employees stays under check and reduces over time. The collaboration would also help team members better understand their operations. For example, the HR head can make informed decisions about recruiting, training, talent recognition etc., based on the insights they receive on the platform.
Teamnest's HR and payroll management platform allows companies to achieve collaboration and synergy between the HR and finance operation through effective management of recruitment, payroll, attendance, leaves, expenses and compliances in one place. With Teamnest's cloud-based platform, companies can effectively manage and automate processes like deduction of provident funds, ESIC, profession tax, bank files, tax computation sheets and many other crucial finance processes.
What are you waiting for? Contact our TeamNest expert TODAY @ +91 913-786-6322 or email at firstname.lastname@example.org to transform your HR and payroll operations, reduce operational costs and ensure business success through synergy between your HR and finance operations.