From people to numbers: How HR and Finance can build influence together

At first glance, HR and Finance may seem like they are on opposing sides. Matthew Needham, an accountant and former CFO, outlines how HR and Finance teams can work together to gain positive influence in their organisations.

Finance loves numbers, spreadsheets and cost control, while HR champions people, culture and engagement. Finance focuses on efficiency and managing costs but sometimes pushes actions that affect people.

HR, on the other hand, advocates for training, wellness and culture, which often affect costs in the short term but deliver long-term value.

With different agendas, they seemingly have nothing in common. Yet if Finance and HR work together, magic can happen, leading to better processes, decisions and outcomes.

Why HR And Finance Clash

Let’s be honest. Finance and HR both have image problems, and neither have flattering nicknames. Part of the problem is language. Finance talks about return on investment (ROI) and margins, and HR talks about engagement and culture.

The other part of the problem is focus. Finance is timetabledriven and prioritises transactional accuracy, compliance, paying bills and collecting invoices due. HR is project-driven and prioritises hiring, training and employee relations. With Finance and HR occupied with operational activities, little time remains to provide strategic advice.

Many Finance and HR leaders I speak with complain that their voices aren’t heard and often fight for inclusion in important meetings. However, if leaders lack the capacity for strategic thinking, they will struggle to provide strategic advice.

Four Areas Where Hr And Finance Can Align

1. UNDERSTANDING THE ORGANISATION

When attention focuses on operational matters, there is little time to provide strategic advice and understand the bigger picture. In my experience, Finance is often more focused on the full-time equivalent (FTE) than the talent behind it. HR may champion wellness programmes by quantifying their ROI. Collaboration between Finance and HR begins with a shared understanding of the interrelationship between activities, cost and value.

Particularly, HR and Finance leaders must ask each other the following.

• What drives value in our organisation?

• How do our people and financial strategies align with what drives value in our organisation?

It will be invaluable to involve both teams in these conversations and run joint training sessions. In these sessions, HR will learn about financial metrics, and Finance will learn how employee engagement increases productivity.

A good rule when selecting data to report on is that if a metric doesn’t lead to action … it’s not a KPI; it’s a data point.

2. TALKING A COMMON LANGUAGE

How many people work here? Leaders often ask this seemingly simple question. But the answer can vary wildly, depending on who you ask.

• HR counts positions filled and unfilled.

• Payroll counts how many people are on the payroll.

• Finance counts how many people are paid (both employees and contractors).

• Facilities count the desks occupied.

While everyone’s answer may be correct, none are helpful without aligning with the question asked. And nothing destroys a leader’s credibility faster than different answers from different teams. Agreeing on definitions is critical. However, both teams must also ensure they are answering the right questions.

Instead of focusing on raw numbers, focus first on understanding the question and why it’s being asked. Then, seek to clarify the following.

• What’s the impact of our workforce on performance?

• How does headcount affect service levels, customer satisfaction or revenue growth?

3. INSIGHTS THAT MATTER

Over the past decade, trends in finance professional journals have seen many references to ‘data-driven insights’. Finance loves data, and HR has plenty, but both often struggle to turn it into actionable insights. However, more data doesn’t always lead to better decisions.

Teams want to be helpful and ‘add value’, but they provide reports with so many key performance indicators (KPIs) and measures that it’s impossible to see the wood for the trees and make decisions. Just because you can, it doesn’t mean you should.

However, the key is to focus on what matters. A good rule when selecting data to report on is that if a metric doesn’t lead to action because the data is getting better or worse, it’s not a KPI; it’s a data point.

Take employee turnover. HR tracks it; Finance worries about the cost of replacement, how and when they will start, but together, HR and Finance can provide important insights.

• Why are people leaving?

• What’s the financial impact of high employee turnover?

• How much could be saved by reducing employee turnover?

Suddenly, wellbeing, engagement and training programmes don’t seem so expensive or nice when aligned with financial metrics and placed in the proper context.

4. IMPROVE END-TO-END PROCESSES

Strategic thinking is necessary to provide strategic advice. However, this requires time and space in the calendar. Because no one will give you additional resources, you will have to create capacity by being more efficient.

A good place to start is endto-end processes that cross over between Finance and HR and make them more efficient. Take, for example, the resource forecasting process. HR will want to know future resourcing requirements for workforce planning and recruitment, and Finance will want to know the expected costs and the start date (when the cost will most likely occur).

While everyone’s answer may be correct, none are helpful without aligning with the question asked.

The problem is that many budget managers budget for new hires in the first month of the financial year. However, that is when they expect to start recruiting, not when they expect them to start. Many HR and Finance processes have been developed with the needs of HR or Finance in mind, not the user. This often means senior people are dragged into administrative processes to complete documentation or answer queries.

Over the years, many legacy spreadsheets for forecasting or people tracking have become cumbersome and outdated. With the original creator long gone, these spreadsheets contain large amounts of redundant data, are cumbersome to operate, and are slow to run. Finance typically has significant capability in using spreadsheets, so working together to improve them creates a win-win situation.

Breaking Down Silos

Both HR and Finance are often seen as operational functions. However, they must change this perception and move beyond these operational roles to be more influential.

For Finance, this means focusing less on compliance and more on strategy, which means connecting the numbers to the people and processes behind them. For HR, this means quantifying the impact of its initiatives, not just the costs. This includes the impact on employee engagement and training programmes.

One way to do this is by creating shared dashboards in reporting that combine useful financial and HR metrics, for example:

• revenue per employee alongside engagement scores

• training investment measured against productivity

• employee retention measured against the cost to hire.

By focusing on providing insights, HR and Finance can help initiate better strategic conversations and decisions.

How Hr Can Increase Influence

For HR to gain more influence within an organisation, it must first understand it. Then, HR initiatives can be connected to senior leadership and organisational priorities. This means understanding how the organisation creates value for its customers and what affects that value and then translating HR insights into the language of value creation.

Unfortunately, it’s not as simple as reading the annual report or strategy documents but taking a structured approach to understanding what the organisation does, where income comes from and how it meets stakeholder needs.

Collaboration between Finance and HR begins with a shared understanding of the interrelationship between activities, cost and value.

Whether HR promotes improving employee engagement, training to increase productivity, or reward initiatives, the key is to connect them to financial goals.

Finance can help with understanding, but it is often criticised for not always understanding the organisation. I advise leaders without a finance background to ask questions, to gain an understanding of what drives organisational performance.

HR can become more strategic and influential by creating metrics that align with organisational priorities. This will lead to clarity and confidence in financial conversations and elevate HR from advisors to trusted partners to senior leaders.

The Opportunity

HR and Finance aren’t opposites but are two sides of the same coin. Together, they can unlock important insights, streamline processes and create cultures where people and organisations thrive.

But it starts with a willingness to collaborate. Aligning priorities, asking better questions and connecting actions to outcomes will improve influence and drive better organisational performance. The tools exist for HR professionals. The silos don’t have to. The question is: Will you use them and lead your organisation to better results?

Matthew Needham, an accountant and former CFO, consults and speaks on improving organisational performance. He helps leaders without a finance background confidently engage in financial discussions, enabling better decisions that drive improved performance. For more information, visit matthewneedham.co