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: tom@itsallaboutpeople.ae

Questions?