Value of HCM for Finance


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Today’s CFO knows that human capital is an organization’s most valuable asset, but in practice most organizations rarely link their investments in people to their overall financial performance. A primary reason for this gap is that business processes and applications for supporting the workforce are disconnected from the company’s financials and often function only within a line of business; as a consequence, it is hard for the CFO and other top management to understand the impacts of investments in human capital on the top and bottom lines. Companies typically have separate applications for managing talent, human resources, compensation, expenses and spending, and they use individual spreadsheets and business intelligence tools to analyze them and monitor performance. CFOs are strategically positioned to enable and lead the necessary collaboration between human resources and finance groups as they develop a unified approach that will make visible the impacts of efforts to improve employee productivity on financial results. What’s required is an integrated approach that tracks not just the financial consequences of workforce planning, hiring, work activity, goals achieved and management results but provides a complete picture of performance across people and business processes. Finance can show HR how to move beyond outdated siloed ERP and HRM systems to implement enterprise systems that support how people are engaged and retained and also reflect and reinforce the financial objectives of the organization. The business case for investment in such unified systems must make financial sense, which means showing the bottom-line contributions of increased productivity and the most efficient ways to align people to the goals and objectives of the organization.

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Value of HCM for Finance

  1. 1. Ventana Research The Business Value of Human Capital Management for Finance 81% The secret is a unified approach: cited integration 69% of compensation management with payroll 69% and accounting 51% as a top priority. of organizations indicated it’s important to align the workforce to business goals and financial results. Source: Next Generation Workforce Management Benchmark Research Industry Fact: Projected compensation of US employees in 2013 46% But said finance organizations do not work closely with HR to improve processes. Source: Total Compensation Management Benchmark Research Source: Total Compensation Management Hard to adjust: 61% of finance organizations that have integrated headcount and compensation plans are not able to adjust to meet business needs. Source: Integrated Business Planning Benchmark Research $8,527.2 trillion It’s often an organization’s largest expense. Source: Bureau of Economic Analysis 75% Brittle integrations: of finance organizations agree there are better alternatives to spreadsheets for their crossfunctional business processes. Source: Spreadsheets in Today’s Enterprise Benchmark Research The reason is cite lack of integration between finance and HR impedes progress. 69% Source: Total Compensation Management Benchmark Research