Part 2 in the 3-part “Finance and HR Collaboration” series
The expectations for finance and HR have changed. Rather than focus exclusively on operational tasks, our responsibilities now include the role of business partner, change agent, and steward. In the first post in this series, I joined my colleague Richard McLean, CFO of SAP’s APJ region, for a look at how HR and finance are working together to be better partners to the business. In this blog, I’ll focus on how collaboration can enable HR and finance to be more effective agents of change.
The nature of change
More than 2,500 years ago, Heraclitus of Ephesus philosophized about life being in a constant state of flux. That assertion is as true today as it was then. But today, the rate of change is accelerating, especially for businesses that want to be competitive in the growing digital economy. As such, today’s business environment requires ongoing innovation and adaptation to change. When HR and finance have more of a strategic outlook and collaborative mindset, they can help manage that change more effectively.
A top-of-mind question with all decisions involving HR is, “What is the best return on investment for the assets that we have?” We in HR work side by side with our counterparts in finance to make decisions about where to make investments to establish the culture and the company we want to create. Whether we’re focusing on a specific country to support growth plans, upskill in a certain area, or hire more of a certain skill profile, these are strategic decisions that enable our competitive advantage, and that is when finance and HR need to collaborate the most.
My colleague Richard agrees. “If we want to create a diverse and inclusive culture, we need to develop programs and initiatives that enable us to be that kind of organization,” he explains. “Once we’ve made that decision, then we can decide how to make investments to support and foster that vision. For example, people don’t want to go work in a place where everything’s manual and the systems are outdated. Those entering the job market have a technology bias from their education and experience. That’s one place where having an integrated digital enterprise is really important – when it comes to winning the battle to attract the best talent.”
Richard credits close collaboration with HR as instrumental in helping to drive finance transformation at SAP. “Transformation is certainly enabled by technology, but the secret to sustained success is changing the mindset and skillset of the people in the organization. Our HR business partners have been critical in helping us do that.”
Achieving broader business benefits
As part of our go-to-market planning for 2018, Richard and I took part in business review meetings with representatives from our market units, our regional president, and our COO. Each of the market units presented their investment requests and go-to-market plans, including their needs relative to staffing and compensation. The market units drove these requests, as opposed to HR asking finance for budget approval. The process was more collaborative, so we could think about these decisions from a strategic perspective, not a tactical one.
As part of the collaborative decision-making process, managers can share reports on the equitability of compensation decisions. For instance, we can assess gender-pay parity by pulling reports to see the potential outcome of compensation planning decisions. Are women being paid more or less than men who are doing the same job at the same level of seniority?
In the past, we might have missed the impact of compensation decisions, looking at it from the perspective of traditional HR and finance roles. Now, we can see the broader implications and work to meet financial and people-related needs as one initiative – and that’s the beauty of this partnership. We can realize multiple positive impacts when we look at the broader benefits to the business.
In our next blog, we’ll examine how finance and HR can work together as stewards for the company.