HR & Finance: A pivotal role or a tense one
Transcript of HR & Finance: A pivotal role or a tense one
HR & Finance: A pivotal role or a
tense one
Tom Raftery Director
4th December 2014
Balance Sheet
Is this Your HR & Finance
Relationship?
Difficulty of Balance
Asset Liability
Or Both
How they differ
HR Finance • Don’t understand the
financials
• Don’t speak the language of Finance
• Problems measuring return on their programme ROI
• More comfortable with relationships than numbers
• Bottom lined focused
• See HR as defenders of the workforce
• People are a cost not an investment
• Risk averse
• More comfortable with numbers than people
They have a lot in common
Towers Watson 2013
Survey* • ROI is a serious consideration for both functions
• Both agree people play a critical role in driving performance
but some difference on how to maximise this role
• Both have similar views on their top risks in their reward
programme, but highlight inadequacies in:
• Leadership development
• Retention programmes
• Investment in talent
• Top priorities for next 3 years is aligning and differentiating
reward to performance while supporting productivity and
cost management goals
*Driving Performance Through Enhanced HR\Finance Collaboration Towers Watson Survey 2013
Towers Watson 2013
Survey*
*Driving Performance Through Enhanced HR\Finance Collaboration Towers Watson Survey 2013
Towers Watson 2013
Survey*
*Driving Performance Through Enhanced HR\Finance Collaboration Towers Watson Survey 2013
Towers Watson 2013
Survey* • Senior management see the convergence of business,
financial and human capital
• Growth depends on:
• a competitive costs structure
• an appropriately sized and skilled workforce
“The interdependencies and complexities between
financial, risk and human capital are just too great for
virtually any business today”
Driving Performance Through Enhanced HR\Finance Collaboration Towers Watson Survey 2013
Sears
Employee\Customer\Profit
Chain Model
Attitude about the job
Attitude about the company
Customer impression
Employee behaviour
Service / helpfulness
Merchandise / value
Customer recommendations
Customer retention
Return on assets Operating margin Revenue growth
A COMPELLING PLACE TO WORK
Employee retention
A COMPELLING PLACE TO SHOP
A COMPELLING PLACE TO INVEST
5 UNIT INCREASE IN EMPLOYEE ATTITUDE
1.3 UNIT INCREASE IN CUSTOMER IMPRESSION
0.5% INCREASE IN REVENUE GROWTH
DRIVES DRIVES
Key finding : a 5 % rise in staff attitude created a 1.3 % increase in customer satisfaction – a boost of 0.5 % in sales growth and an identifiable increase in profitability.
Engagement & ROI
low engagement OI 32.7% lower: highly engaged employees OI growth 19.2
grow profits 3x faster than competitors
Highly engaged employees are 87% less likely to leave
What has Finance Learned
from HR
• In past Finance have made tough decisions that have
impacted employee morale
• By working closer with HR they:
• are looking beyond the short term numbers and incorporating
the human element in long term strategic plans
• seeing beyond ROI as not everything can be quantified, can
see how investment in human capital can positively impact the
business
What has HR Learned from
Finance
• In past HR seen as a cost centre whose function is to
provide support and compliance
• HR is getting to the top table and what they have learnt
is:
• they have a business perspective and they understand the
drivers of business performance
• use people data to make informed decisions as they use
people and performance metrics and link this to the business
Finance & HR Like a Rom
Com
• They were bickering adversaries in the beginning but
potential to be much more when they work together
• Act 1: The opening conflict
• Finance manages budgets HR spends them without bringing in
any revenue
• HR tries to nurture talent while Finance often say no to new
schemes
• Act 2: we have a lot in common:
• HR & Finance do not drive revenue they support it
• They make most of the company assets but don’t deal with
customers
• they both manage important assets that are interconnected
Finance & HR Like a Rom
Com
• Act 3: Getting together
• Finance often needs help with managing their talent
• Increasing access to ‘big data’ means that both sides can work
on tracking costs and investment in people
• HR professionals understand the commercial drivers more and
are working with Finance on solutions
• The CIPD & CIMA are working together on Valuing Your Talent
Initiative:
“By working together, we hope to show that accurate and relevant reporting on an organisation’s people, as well as
on its financials, provides real insight into the true health of
the business, on which sound investment decisions can be
made” Charles Tilly CIMA
Finance & HR in the
Region
• Still traditionally adversaries
• Companies have a stronger focus on controlling costs
than investing in people
• The HR community is still not totally comfortable with
the commercial\financial aspects of the business
• Are not always at the top table and involved in the
business strategy
• Finance is still dominant
• Finance is still very short term
• Finance people don’t like intangibles
What HR should do:
What HR should do: Know
Business & Financials
What HR should do: Fit for
Purpose
What HR should do:
What HR should do: Zoom
In & Out
What HR should do:
Courage & Challenge
What Finance should do:
See beyond the Numbers
What Finance should do:
People Are an Investment
What Finance should do:
People Can Add the Most
Value
What Finance should do:
Motivation Drives Growth
What Finance should do:
Think Long Term
Finally Remember
Companies pay people just enough
so they won’t leave but employees
will work just enough so they are not
terminated
P.O.Box: 334552, Dubai-UAE Phone: 00971 4 3306223 | Mob: 00971 50 4875119 E-mail: [email protected]
Questions?