The primary responsibility of the human resource department in an organization is hiring, orienting, and retaining the talent for a longer period, while the core duty of the financial department is managing the inflow and outflow of the cash. Generally, some of us believe that there is no connection between HRD and the finance department, but that is the lacking point of the growing organization. HR and finance collaboration is critical to the company because finance helps allocate funds to achieve organizational goals and maintain a balance between the costs and revenue of the business. At the same time, HR recruits a workforce to support those goals. That is why keeping the collaboration between the human resource department and the finance department is essential.
Why Is the Personnel Department Essential For An Organization?
- The human resource department helps businesses by putting their extraordinary efforts into HCM (Human Capital Management) and making strategic decisions to control the workforce within the working premises.
- HR managers majorly focus on the salary and wages calculation, compensation management, reward management, etc., which are essential strategies to retain the staff for a longer period.
- Another focal point of personnel managers is safety and risk management. While working with hazardous chemicals and dangerous types of machinery, when any accidents happen with the workers, then his/her family gets the amount of his/her insurance.
- Additionally, they need to view the training and development of the new employees and advance training of the existing employees.
- The primary job of the HR department is to hire the best one from the large talent pool; moreover, it is their duty to conduct a smooth onboarding process of the newly joined employee.
- Last but not least, an HR manager needs to prepare a handbook of statutory compliance for the employees and must take care that each individual follows the same.
Why Is the Finance Department Essential For An Organization?
- First and foremost, the finance department helps businesses to control the outflow of funds, which ultimately increases the profitability of the business.
- The finance and accounting department approves and rejects the yearly budget plan of each department according to its budget.
- The financial manager is liable for the payment of tax each year.
- The funding department also needs to take care of the company’s investments and the returns from the same and etc.
Thus, we can say that the HRD and finance departments of an organization are equally crucial for the business, and collaboration between these two is necessary while preparing the business plan.
Some Tips To Encourage Collaboration between HR and Finance Department
Traditionally, the HR and finance department of an organization works as in opposition to each other. The finance department claimed that HR is an unnecessary department in the company, which just increases the wastage of funds by hiring and firing employees, on the same hand, HR managers claimed that the finance department is obsessed with counting and saving a single penny which is worthless. Previously the healthy relationship between these two departments was just a dream of the owner of the business. But now it is essential to improve the collaboration between both the departments to enhance employees’ morale and boost customer satisfaction. The below listed are some tips to strengthen the relationship between both the departments;
Clarifies The Role And Responsibility
As we all know, a company needs department-wise managers, so both the managers must be transparent with their role and responsibility and both must support each other in the working premises. Moreover, both need to be clear about their departmental goals; both the common goal and the departmental goals must be in harmony so that they can focus on a single goal which is the growth of the business.
Encourage Two-way Communication
Communication is one of the crucial factors which gear ups the business. Conflicts in the working premises are natural but its solution is essential that is why both the departments need to communicate with each other. For example, the HR department needs to inform the finance manager about the budget of the recruitment campaign. Finance department must prepare the outline for the same and directly send the document to the HRD for review. Moreover, if HRD sent any employee on a business tour then also at the time of encashment they need to first discuss the same with each other. That is why encouraging communication between both the departments will lead the business to achieving the goals.
Transparency – From Top To Bottom
Not just for the two departments, but transparency is essential for each department to achieve the common goals. As we discussed earlier, that both departments are working as opposition previously; here trust factor is the one-stop solution to influence the relationship between HR and the finance department. Let us continue the above illustration; While planning the recruitment campaign, if the personnel manager does not prepare an effective budget, then it may affect the yearly financial budget. That is why transparency protocol must be the rule between both departments.
Let me start with an example; it is a primary duty of the personnel department to prepare the fund outflow outline of the whole year, including recruitment cost, salary expenses, approximate traveling cost of the marketing department’s employees, and many more. After preparing it, they need to present the document to the financial team and wait until they approve it. In case if they partially reject the same, HR needs to ask for the same rather than making immature sense in the working premises. Because it is obvious that each department has its own budget and financial manager needs to approve them also moreover they have their own criteria to approve and reject. And at the same time, the funding department is also liable to answer their question. That is why understanding between both wheels of business is essential.
Encourage Use Of Technological Tools
The personnel department and the finance department work with fully automated tools that simplify their job and simplifies their workload. The financial department uses highly configurable fintech, while the personnel department uses hr management software to organize their primary operations. Previously, when both the departments needed to discuss something, they were arranging a meeting for the same, but now with the help of automated systems, they can virtually connect with each other. Technological tools eliminate the drawbacks of geographical coverage and connect everyone with each other.
Use Financial Analytics In HR Operation
While preparing the yearly outline for hiring and salary expanse, the personnel manager needs to use financial analytics of the previous year, which is priorly done by the financial department. It gives you an insight into the growth of the business after recruiting new talents, and accordingly, an HR manager prepares a current budget for the same.
The personnel department is one that recruits and retains the talent, which helps the company to grow, while the finance and accounting department controls the outflow of funds by preparing a budget. Both departments are equally vital for enlarging the business like never before. So, it is necessary to put more money into developing a healthy relationship between the finance and HR department of an organization.