Bridging the gap between Finance and HR

Posted by Crunchr on 4/26/18 5:32 PM

Crunchr’s workforce analytics brings professionals on the same page

HR and Finance are not born to be soulmates. Finance views labor from a cost perspective, HR comes from an engagement and performance perspective. Intelligent professionals on both sides of the divide understand perfectly that performance does not come without cost and that the reverse should also be true. But different points of view stand in the way of mutual understanding and easy cooperation.

A company’s workforce accounts for around 70% of the annual company cost base. Quality and output of personnel is the decisive factor in a company’s performance. Yet both personnel cost and output are notoriously difficult to assess an equally hard to control.

The cost of performance

With fixed assets like buildings and machines you know what you pay and what you get. But the real cost of your workforce is hard to assess. Wages and formal training programs are easy. But what about the cost of making the workplace attractive, promoting team spirit, improving quality of management, coaching and mentoring and brand and image building.

Each of these factors is essential in attracting and retaining the necessary talent, but you can only guess what an investment delivers in terms of extra performance and long term value creation for the company. HR and Finance may easily differ on the expected returns.

What are we talking about? 

A language gap deepens contradictions. HR and Finance are often looking at a different reality. They use different data from different sources and with different definitions. More often the quality of (workforce) data is poor, resulting in a wonky perception of reality. As HR and Finance usually don’t have insight in each other’s data and reporting, mutual understanding can easily get lost in translation.

Let’s illustrate this with an example. An internet company with 10.000 employees wanted to improve its HR dashboard. But like most companies finance data tend to be leading in management. HR discovered it had to find a connection with the finance universe by defining shared data definitions (‘what is a FTE?’), data relations (‘how exactly does salary pay out translate into wage cost’) and data hierarchy in their IT systems.

Getting on the same page

Our workforce analytics solution Crunchr provides an intuitive platform to bring all relevant data together. With a shared set of clean and consistent data, HR and Finance professionals look at the same reality. They can relate financial and organisational data, analyse it and arrive at shared conclusions. Crunchr sets 3 steps to achieve this.

Step 1: a complete and clean dataset

All relevant HR and Finance data is checked on completeness and consistency, using machine learning skills to detect data that do not fit logical patterns. The process brings to light the mixing up of part-time and full-time positions, mistaken vice-presidents at low wages or employees on the payroll that have eluded any performance rating. Fixing these inconsistencies an omissions in data or definitions results in a vast improvement of data quality.

A screenshot of Crunchr's dashboard about employee details

Step 2: insight in structure, performance and costs

An extensive set of filters helps to slice and dice the data into specific insights, providing answers to pertinent questions, like: How consistent are our internal pay ratio’s? What is the age distribution in our workforce? How many talented women do we have on the fourth level below the board? How solid is our succession pipeline in division X or cost center Y? In which functions do we pay over the relative salary position, and where do we remain below the relative salary position (RSP).

A screenshot of Crunchr's dashboard about rewards

Step 3: getting to grips with dynamics

From an insight in the organisation as it currently is, HR and Finance professionals can switch to the expected or envisioned situation to be. How big is our staff turnover and the outflow of pensioners? How many software engineers and online strategists should we recruit over the next three years, to realise our strategic targets? How many management talents can we develop internally? And what are the most cost efficient investments to do that?

A screenshot of Crunchr's dashboard about waterfall chart

Partners in value creation

Using a workforce analytics tool, loaded with unambiguous data and uniform reporting, Finance and HR can bridge the gap in perception. They might not become soulmates, but they can work as solid partners in optimising personnel performance at a cost that fits within the business concept of the company.

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