Should HR be accountable for human capital analytics or should it be done in another part of the organization such as Finance, Operations or Marketing? Why?
In my opinion, HR and Finance should work together on the following metrics:
- Leadership (succession planning, average time for readiness for new leaders to be formed/trained)
- Engagement (data that can be extracted from employee’s surveys)
- Percentage of headcount turnover/ attrition
- Internal promotion, transfers and demotions
- Workforce cost, compensation, benefits and perks
- Layers and spans (How hierarchical is the company?)
- Compa-ratio (How competitive are salaries?)
- Diversity and mix (location and origin of employees)
- Learning and Development (Note: hard to provide data if there are no means to keep track of scores of exams in order to evaluate how much was learned by each employee)
- Safety and employee health (through regular medical checks)
Advocate for partnership between Finance and HR in workforce planning (300-500 words):
Finance and HR have to walk hand in hand for workforce planning to be successful. Every HR dept. must know what they are earning in terms of Net Profit divided per what is spent on workforce. This is critical for HR to build its case when planning to hire, when building a talent pipeline, for succession planning or when investing in Training and Development, but this is a calculation that is done by finance and not by HR. Let’s understand the underlying reasons.
Workforce planning is based on three fundamental axes: the capacity (the number and cost of the workforce), the mix (such as the employees’ origin and location) and the capability (the skills and experience of the workforce). HR and Finance are both clearly involved in workforce, but a partnership between the two departments is not always evident. This is probably due to their lack of similarity. HR is more people oriented, Finance is more numbers oriented. HR is less confident with numbers, less cost control oriented than Finance. On the other hand, Finance is much less interested in growing a healthy and effective corporate culture, unlike HR.
The main issue for HR is that they are not actively involved with planning and forecasting, like Finance is. In my view, this is simply a cultural problem. Most companies do not view the HR department as an influencer and a business partner and this is mainly because HR does not convey that image. The underlying reason for this resides in the fact that generally, the company’s strategy is defined independently from HR, it is then translated into a budget and simply transmitted to HR for execution. HR is not consulted when decision making happens. They are left with the execution plan without firstly being involved with the initial planning and forecasting.
How can we influence Finance to engage with HR at an early stage? We need to use the same language, partner with FP&A, we need to marry both workforce measures and financial measures in order to be successful business leaders. Finance must see HR as a Business partner and not only as a payroll administrator.
This shift needs to happen gradually and will only take place if HR is able to speak the Finance jargon. It is time for Business leaders to realize that Financial Capital is raised by Human Capital.
Thank you, Rebeca Gelencser