Data Analytics May Be the Answer to Bringing HR and Finance Together

A short-term mindset and entrenched cultural habits are the biggest barriers to collaboration between HR and finance teams according to a new study from Oracle. FEI Daily spoke with Donald Anderson, director of organization and talent development, Oracle, and Tom Davenport, Babson professor and analytics expert, about how the relationship can overcome those barriers through the use of data analytics.

FEI Daily: How does collaboration between HR and finance help the organization?

Donald Anderson: Business leaders are looking for HR and finance to partner together to provide insights that help them make better business decisions. When operational, people and talent, and financial lenses are all integrated, business leaders have a cohesive 360-degree view of their organization and can make more effective choices.

Tom Davenport: And in particular, people are an important source of both cost and value within any organization. It’s particularly important for HR and Finance to communicate and collaborate on the cost and value of the workforce, and how that resource compares to others.

FEI Daily: Can you give some examples of a “short-term mindset”?

Anderson: We all fall prey to the “tyranny of the urgent” – the position that becomes unexpectedly vacant, the operational data that needs to be presented next week, the customer that needs an answer right now. Many HR and finance leaders don’t have the luxury of stepping back to question what workforce needs look like a year or two from now. What skills will we need in 2021 and how will we acquire or train to reach that goal? We’re so focused on today’s needs that we don’t have time to set ourselves up for future needs.

Davenport: In Finance, a short-term orientation might mean reporting and explaining what happened to financial performance in the last (or the next) quarter. In HR, it might mean dealing with a layoff or a big hiring push. As Donald suggests, these short-term issues often squeeze out a longer-term focus.

FEI Daily: What are the cultural differences between HR and finance teams? 

Anderson: I would say that it is highly dependent on the organization, but broadly speaking it’s a matter of area of focus. HR focuses on the health of the organization by focusing on people and talent, and finance focuses on the health of the organization by focusing on economics. There can be a great deal of synergy between those two perspectives, but those different lenses can be a source of conflict as well.

Davenport: I agree with Donald. Finance is about financial performance—revenues and profits, spending, stock price, etc. HR focuses on getting the right people into jobs, ensuring that they are satisfied and performing well, and dealing with any problems related to the workforce. It’s not surprising that these different emphases would result in different cultures between the two functions. They are increasingly collaborative, but overcoming these cultural differences isn’t easy.

FEI Daily: How are companies overcoming those differences?

Anderson: In our study we found that 83 percent of respondents were investing in more collaboration between HR and finance in the next year, and well over 90 percent were targeting integrated data sets to support that collaboration. HR and finance organizations are finding opportunistic touchpoints where they can come together to address a specific business issue.

Davenport: I think the one area in which the two functions can meet on common ground is the use of data and analytics. Both HR and Finance increasingly want to make decisions and take actions on the basis of real evidence. And they both need each others’ data to understand the implications of people-related decisions across the organization.

FEI Daily: How do emerging technologies – like AI- help with collaboration?

Davenport: AI can help HR organizations become more efficient and effective, which most Finance people would appreciate. If HR is hiring the best people using internal and external data, or preventing loss of the best people through attrition, they will accomplish their mission at lower cost than without AI tools. HR could even become a resource for Finance as that function adopts AI in the future. They are both enterprise service functions, so tools like machine learning and chatbots might be valuable to both of them in similar ways.