Why Your Business Should Combine HR and Financial Data
HR and finance aren’t natural bedfellows. They exist on different operational plains, with little to no interaction or cooperation required for them to function.
But is this the best approach? And does such an arrangement allow for optimal collaboration, innovation and business advancement?
On paper, HR and finance appear functionally incompatible; one deals with people, the other with numbers. But there’s more to their relationship than that, and some would argue that the success of one contributes much to the fortunes of the other.
The amalgamation of HR and finance is part of a broader trend of businesses unifying standalone functions to streamline operations and improve productivity. Sharing data and assets across departments is now considered good practice, particularly when implemented via a modern ERP solution.
For this reason, we’re here to make the case that your business should combine its HR and financial data.
The Dangers of Operating in Silos
Finance, HR, marketing, telesales – familiar business functions, typically siloed into standalone departments within an organisation. For decades, this method of segmentation has been the go-to practice for businesses in all sectors, with each team defined by its processes, personnel and associated software.
But is this linear structure the best, most efficient way of doing things? Or does it limit collaboration and cooperation, two of the main drivers of business growth?
Previously, we’ve considered how organisations large and small are turning to the ‘agile’ method of working to deliver better solutions faster. And how a company is structured plays a big part in adopting this streamlined practice, with a cross-departmental, collaborative approach lending itself well to boosting business agility.
So, while a rigid silo structure may work for some businesses, it has its downsides, which include:
- Limited collaboration and cooperation
- Convoluted processes and risk of interdepartmental bureaucracy
- Lack of transparency between teams
- No singular vision for the business – a diluted focus
- Disjointed working methods creating unnecessary crossover and inefficiencies
- Lack of ownership
- Complex and expensive software requirements
Bringing things back to HR and finance, then; combining these functions could prove fruitful. Even from a technical standpoint, unifying HR and financial data and resources can be of huge benefit, with the gains of one contributing much to the success of the other.
Understand that People Bring Value
“People are your greatest asset” – this popular adage may have been bandied around for decades, but it remains as true as ever. History tells us that businesses which recognise the value of their personnel enjoy the greatest success, with a motivated workforce driving prosperity and growth.
But as positive as that might may be, how does it relate to a union between finance and HR? And what does it mean for a business’ long-term health and effectiveness?
Both directly and indirectly, HR and finance influence one another. Only through effective HR (hiring the right personnel, maintaining engagement and offering perks and rewards) will people work at their best, bringing genuine fiscal value to the business. And the same is true in reverse – with financial performance holding sway over HR decision-making and best practice.
So, in recognising people as an asset and not simply an essential resource, the link between HR and finance becomes clear. Beyond their functional duty, staff have a key role to play in driving growth and maintaining the overall health of the organisation.
Therefore, sharing data between HR and finance is critical in getting the most from this unlikely partnership. Both employee engagement and financial performance should be shared across these two business functions, acting as clear KPIs that the company is on the right track in terms of its financing, people management and aspirations for growth.
Cloud-Based ERP Software Has Bridged the Gap Between HR and Finance
We’ve talked at length about the merits of unifying HR and finance, but how realistic is it day to day? Well, thanks to enterprise resource planning and the cloud, combining data and assets from both functions is now a feasible practice – and one that offers a wealth of operational benefit.
As part of a study exploring how the cloud can enhance and facilitate greater collaboration between finance and HR, the MIT Technology Review found that businesses who combine these functions within the cloud find it easier to forecast costs, manage personnel and plan for the future.
By sharing data across HR and finance teams via a cloud-enabled ERP system, businesses can benefit from improved productivity, simpler performance tracking and enhanced automated processing. Such systems also boost engagement, freeing personnel from time-consuming manual processes and allowing them to refocus their attention on value-add tasks.
Financial savings, organisational health and new insights into how individual business functions correlate with one another – these are among the benefits of investing in ERP technology to unify HR and finance data and processes. With people placed squarely at the heart of an organisation, it’s imperative that their influence is considered in all areas of the business – and ERP technology can facilitate this.
Cloud-based technology is fuelling a new era of inter-departmental collaboration. And given their pivotal role in shaping a business’ structure, hierarchy, and health, it makes sense to prioritise HR and finance as the two primary functions to unify and combine.
Find out more about cloud-based ERP software, how it compares to the on-premises version, and its advantages and disadvantages in our expert guide.
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