Part 3 of the 3-part “Finance and HR Collaboration” series
Keeping pace with a growing digital economy is requires finance and HR to take on expanded and more influential roles in the organization, shifting from operational tasks to a more strategic focus – the theme of this blog series. Together with my colleague Renata Janini Dohmen, senior vice president of HR for SAP Asia Pacific Japan, I’ve explored how HR and finance can collaborate to be better partners to the business and more effective agents of change. In this blog, we examine how collaboration can enable HR and finance to be more effective stewards for the company.
Realizing the best return on the company’s assets
As steward, both finance and HR must make decisions to get the best return on the company’s investments. Finance is the steward of the company’s financial capital, and HR, of the company’s human capital. To be effective in this role, finance and HR must work together to help the company optimize both its capital and its people.
At SAP, we look at people as one of our major assets – and we have to optimize our assets. It’s therefore very important that finance works collaboratively with HR to support the long-term needs of the business.
Adds Renata, “HR and finance must pursue strategies and approach workforce decisions based on their impact on the sustainability of the business in the future. These decisions touch all categories of the employee lifecycle – sourcing and attracting the best people, enabling them, developing them, and retaining them for the long term.”
SAP has processes aligned for the approval of new hires, pay rises, and promotions. For these processes to function as intended, and for finance and HR to collaborate effectively, it’s important that the data around those lifecycle decisions is transparent, trusted, and presents a unified view of the business.
As with a lot of companies, we work in different countries with different labor laws, or ways of behaving in terms of the corporate world. Thus, people come to us for guidance on how to do business right. Finance and HR are called on to support compliance with business rules and the laws of governing bodies.
Adhering to these rules starts with understanding the compliance landscape, setting policies, and delegating authority and responsibility within the business. It requires an understanding of where your risks lie and then making sure that you’re training, enabling, and communicating effectively to minimize those risks. It requires vigilance and a governance structure not just between HR and finance, but one that also includes legal as well as governance, risk, and compliance teams. All of these functions need to collaborate effectively.
Getting on the same page
In the past four or five years at SAP, both finance and HR have taken big strides forward. It wasn’t that long ago that in a meeting between finance and HR, no one would have the same data. Now, by working from the same data source and having access to the same reports, we’re able to look at things consistently, and interpret and translate information the same way. We can quickly get to a conversation to make decisions rather than argue about whether the numbers are correct.
One of the reasons for this improvement has been the company’s use of our own solutions for human capital management, which have helped us be a lot more effective in how we manage our talent. Renata explains, “For example, within the scope of the employee lifecycle, one key component is compensation planning. We’ve been able to shorten the compensation-planning cycle for all of our business units around the world from nine weeks to three. Thousands of managers are using the same software for consistent compensation planning. They can look at their budgets and decide on merit increases, promotions, and bonuses. It’s absolutely incredible.”
Realizing the full power of technology: SAP runs SAP
Decisions involving finance and HR related to the full employee lifecycle have far-reaching implications for the success of the business. Through use of technology, finance and HR have gained flexibility and a new level of sophistication in planning. We have access to rich information that helps both of our teams to make the best use of the company’s resources.
I believe the ability to control our talent management efforts more effectively from a finance perspective is a real competitive advantage. SAP is a very big company with a lot of people. Managing the planning process can become very unwieldy. Having everyone on single tool gives us full transparency up and down the business, and that’s fantastic.
To learn more about SAP solutions for human capital management, please visit www.successfactors.com.