At first glance, there isn’t an immediate link between HR and Finance, but upon closer inspection, there are many benefits to forging a closer connection between the two.
HR considers people to be the greatest asset within a company, whereas a Finance Director would strongly disagree. Finance pays far closer attention to money flowing in and out of a business; employees are viewed as a liability rather than an asset on the balance sheet.
Working Towards a Common Goal
Ultimately, though, both departments are working towards a common goal. Both HR and Finance want the company to grow and prosper, so it is essential that they work together to create a positive working relationship. When both departments work together in a climate of mutual cooperation, productivity will improve, leading to greater profits.
The Role of HR and Finance
HR manages people within an organisation. It ensures compliance and is in charge of employee training, as well as hiring and firing. Finance is in charge of the money and it’s their job to make the decisions that affect every part of the business, including HR. For example, if profit projections are down, Finance might inform HR that overtime needs to be reined in. Some departments, such as Payroll, overlap the two areas.
Finance data can help HR make the right decisions, and vice versa. HR can adjust hiring schedules and monitor performance data to ensure the company is not spending more than it needs to on salaries and overtime. If the two departments don’t cooperate and consult on key decisions, it can cause problems.
Economic Trials and Tribulations
The current economic climate is healthy, but with Brexit ahead, businesses could be facing some turbulence over the next 2-3 years. Inflation has risen to 1.8% this year, and the Bank of England’s Monetary Policy Committee is likely to raise interest rates this year to bring it back under control.
The BoE interest rate is currently at 0.25%, so business borrowing is very cheap. Consequently, business confidence is rising. Research from Zurich SME Risk Index suggests that SMEs are planning to borrow around £40,000 in 2017. But borrowing is not the only way to boost cash flow – there are other ways, including monitoring macroeconomic data with a view to profiting from small market fluctuations.
There are no certainties with Brexit just around the corner and it’s essential that HR and Finance work together in harmony to mitigate any problems. It’s also important that businesses continue to look at more innovative ways to make money to help them grow.
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