The pandemic has accelerated long-standing business trends and forced leaders to take a hard look at priorities. Here’s how the partnerships between finance and HR are playing out amid the coronavirus crisis.
Although the pandemic has been wreaking havoc on best-laid plans, it didn’t alter trends – instead, it accelerated them. And leaning into many of these pre-pandemic trends – slight breezes that turned into gale-force winds – is how many businesses are navigating our uncertain era.
“That's hard to see clearly when you're in the midst of a crisis that we're in,” says Max Caldwell, principal with The Hackett Group, in the Workday-sponsored webinar, ‘How Finance and HR Leaders Partner to Strengthen the Workforce in Times of Crisis’. “But I think the smart organisations and leaders are going to keep one eye on the present, one eye on the near future, and try to make balanced decisions with both in mind.”
From upskilling talent to investing with growth and opportunity in mind, here’s how trends identified earlier this year are playing out amid an unprecedented landscape.
Earlier this year, the ‘2020 CFO/CHRO Sentiment Study’ conducted by AchieveNEXT highlighted critical areas to bolster and strengthen finance and human resources partnerships. More than 600 finance and HR leaders from middle-market businesses and emerging enterprises across North America participated in the study.
Among the findings include 90% of finance and HR leaders ranking “customer relationships as important or very important to their enterprise growth and success each year”.
But for customer experience to be valued as a critical aspect of the business strategy, finance and HR leaders need to join forces.
“Today’s finance and HR leaders must correlate financial performance to their customer experience success, and communicate this alignment with consistency and clarity to a diverse group of connected – but at times, disparate – people,” the report says.
COVID-19 brought heightened awareness to that priority. During times of uncertainty, many companies first look at balancing labour costs with declining revenue.
In the webinar, Caldwell advises that companies be as “surgical as possible where reduction of capacity and headcount reductions are necessary. It means considering a variety of ways to manage costs, so not only potentially layoffs, but furloughs.”
This approach enables companies to sufficiently account for the value of employees in protecting and generating revenue.
Caldwell says: “As horrible as the crisis is, can we use it as a way to accelerate efforts, to enhance productivity, embrace new ways of working through everything from automation to flatter and more fluid, agile organisational designs...so that decisions we may make in the short term aren‘t going to backfire on us or inhibit growth as we come out of what may be a very difficult next few months.”
Even before the pandemic, companies turned to upskilling as a way to close the growing skills gap in their organisations. Although companies allocate dollars and time toward upskilling programmes, the AchieveNEXT study finds that “many finance and HR leaders lack confidence that their investments in training and development will result in maximum ROI for the time and dollars spent.”
Quantifying the value of upskilling is important for post-pandemic recovery, and that effort requires collaboration between finance and HR teams.
“From a human capital standpoint with help from finance, the holy grail is to make some of these intangibles more tangible and measurable,” Caldwell says in the webinar. “But there are certain intangibles that can be hard to quantify, but I think we all know instinctively and from our experience they are really critical to a high performing organisation.”
Another aspect to keep in mind: “It's important as [HR and finance leaders] are assessing their current workforce that it's not just a numbers game,” says Jeff Nourie, principal with the Hackett Group, in the webinar, “but they really are looking at the right skills and the right people that they need in order to move into that future state operating model.”
As a way to improve data-driven operational decision making, the AchieveNEXT study found that finance and HR were starting to move toward a business partnership model with other departments. About 60% of finance leaders expect to spend more time with operations and sales, and similarly, 80% of HR leaders expect to work more closely with operations, finance and sales.
“These shifts will require both finance and HR leaders to reposition themselves and their teams into true ‘Business Partners’ that specialise in working with people across the enterprise – in Sales, Marketing, Operations, IT – to make data-driven, financially focused operational decisions that improve outcomes in their areas of expertise,” the study says.
Business partnerships are explored further in a survey conducted by The Modern Finance Forum. The ‘Future of Business Partner Survey’ takes a deeper look at how finance leaders are partnering across the organisation, and includes insights on the scope of business partnerships, different styles of delivery, and the impact of data preparedness and organisational size on the success of the partnership.
“Although the vast majority of finance professionals remain mired in their traditional roles, around a quarter point the way forward to a new era of business partnering centred on top line growth, strategic alignment and encouraging process change and innovation,” says the survey.
The pandemic accelerated HR and finance partnership, making the collaboration necessary for ensuring that data and analytics from human capital management platforms are being effectively leveraged for navigating a path forward.
Caldwell, in the Workday webinar, says: “I think HR and finance could really add tremendous value, and where each brings complementary perspective is workforce analytics, the ability to harvest or glean insight from the immense amounts of data.”
Read more about the 2020 outlook for finance and HR leaders in the ‘2020 CFO/CHRO Sentiment Study’. Stay tuned for the ‘CFO-CHRO Sentiment Study 2020 Mid-Year Update’ coming soon.