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Building a Better Relationship Between HR and Finance

, | Sep 7, 2022 3:04:47 PM | By

Traditionally, human resources (HR) and finance may seem at odds, but the two aren’t so different when it comes to their goals: getting the highest return on their assets.

So, why the disagreement?

They’re optimizing and measuring success in different ways.

To help companies get the most out of their HR and finance teams, Ashley Brounstein, Sr. Director of People, & Steve Poon, Director of Finance, at OpenComp, recently joined High Growth Matters to share what’s at the core of this division and how HR and finance leaders can co-develop a path forward characterized by collaboration, productivity, and — dare we say it — fun.

This blog is adapted from that conversation and covers:

  1. How HR & Finance perspectives differ despite sharing the same goals
  2. The most common areas for disagreement between them
  3. Steps HR can take to bridge the gap

Subscribe to the show on your favorite podcast player, such as Apple Podcasts or Spotify. Don’t miss the full episode: Building a Better Relationship Between HR and Finance.

Same goals, different perspectives

The end goal may be the same, but when success looks too different for finance compared to HR, tension is natural.

  • Finance: Success is measured by output, so finance teams focus on optimizing hard skills.
  • HR: Success is measured by employee engagement, so HR teams focus on optimizing soft skills.

For example, HR tracks employee engagement, which isn’t easy to quantify. Finance — which is accustomed to easily trackable metrics — might be prone to misunderstand HR’s efforts without digging deeper.

But many departments approach success goals differently without inter-departamental strife — so why so much tension?

One possible answer may be that those in finance feel they have to answer for HR, since employees are seen as a cost center for the business. As Ashley points out, “The largest area of spend in an organization is compensation and its people.”

Still, she says, no matter how costly or complicated employees may be, compensation is a necessary investment.

“Businesses don’t create value; people do,” Ashley says.

Most common areas of disagreement

For Ashley, most interdepartmental tension centers on people policies.

Finance generally relies on policy and reinforcement, whereas HR may lean into empathy for the employee. If a top performer decides to take a 12-week leave of absence to take care of an ill family member when a policy dictates two weeks, a finance professional will likely point out the policy violation, while HR might not see the problem.

This is the reason Ashley advocates against a handbook for her employees. It’s often used by companies to keep employees under strict restrictions, leaving no room for leniency when an employee has a unique situation.

“I would rather give guidelines and guardrails than have it be black and white,” Ashley says.

Steve echoes Ashley’s sentiment, adding that finance does, however, want to build a predictable model to feed their budget.

“Having that predictability buys us credibility in terms of our ability to do our job both as forecasters or planners, but also as operators,” he continues.

Another area of disagreement, Steve points to is ownership. It can sometimes be difficult to know who really owns the success because the two departments are so intertwined.

In some organizations, Ashley says she’s even seen the two departments so intermingled it’s difficult to know which is which, especially when Finance and HR simultaneously handle payroll, 401K, and headcount planning.

What happens when HR and finance aren’t aligned

While getting alignment can be complicated and takes work, it’s better than the alternative. Misalignment between the two teams can lead to myriad issues:

  • Loss of credibility
  • Employee firing
  • Unsustainable business performance

“If you don't have a team that's engaged and motivated to be here and excited about who they're working with, business outcomes and business performance are going to suffer, ” Ashley explains.


Next steps for HR

For HR professionals looking to improve their relationship with finance, Steve and Ashley share some suggestions:

1. Build business acumen

Educate yourself on how the business works, including specific departmental terms to facilitate communication. This education should be a prerequisite for any professional looking to performer well.

HR professionals with a firm understanding of how their business functions have an easier time explaining their decisions through thoughtful, data-driven responses, both to finance and the business as a whole. This is especially the case with compensation, since it's such a large expense.

“When you are going to your partner asking for something, be succinct, be intentional,” Ashley explains. “If I write Steve five paragraphs on why I need budget for something, he's not going to read it. I need to be really intentional and thoughtful on how I craft my business case for him — and make sure I'm bringing data, because they are so data-driven.”

2. Communication

Keep your finance person informed, even if Finance is usually at the tail end of the information flow.

“Keeping your finance person informed — and informed well — will always pay dividends in the end,” Steve says.

Ashley agrees.

“Meet with your finance partner often to make sure that you're sharing your team updates and your board goals,” she says. Plan for commonality: what goals can you work on together? How can you invite them to sit in on a team meeting?”

And always remember: HR and finance professionals are partners, not competitors.

Both departments share a common goal to move the business forward. Through education and communication, the two can better align — creating a more sustainable, scalable, and empathic model that benefits both parties.

Get OpenComp's compensation data for free.

To hear this episode, and many more like it, you can subscribe to The High Growth Matters Podcast on our website, Apple Podcasts, Spotify, or just search for The High Growth Matters Podcast in your favorite podcast player.