How To Break Down the Barriers Between HR & Finance: Your Guide to Better Departmental Collaboration
Barriers between your teams can be dealbreakers: they slow down business, increase costs, and decrease employee morale. Learn how to break down these barriers through collaboration and technology.
We’ve all been there before. Your team are isolated from other teams. People are not communicating effectively together and collaboration and creativity is stiffled from the barriers between departments.
These barriers take many forms, and all of them play a role in affecting your department and company effectiveness and performance.
What are the barriers between HR and Finance departments?
There are innumerable barriers that can naturally occur between the Finance and HR departments in your organisation. Here are the most critical ones that you need to be aware of.
1) A split in goals, objectives, and structures
HR and finance departments might share similarities, but they bring totally different skills to your organisations. What’s more, at their core, they each have what seems to be conflicting focuses and objectives.
Typical barriers between HR and finance teams in organisations often arise from differing priorities, communication gaps, and limited understanding of each others functions. HR may focus on people-centric objectives, while finance concentrates on financial goals. Misalignment in budgeting, conflicting performance metrics, and lack of collaboration can impede effective teamwork. Bridging these gaps through open communication, shared goals, technology and and cross-functional training, can and will foster better understanding, collaboration, and synergy between the two teams.
How to fix it
HR and Finance team members need to see that they share a lot of common ground. For example, hiring, payroll, benefits, and training – all of these carry financial weights that need to be considered; similarly, some seemingly “wasteful” expenditure, such as bonuses, Christmas parties, and training/education, carry a vast human capital consideration that cannot be captured by the double-entry system.
An educational and collaborative approach is vital to flattening the walls between your Finance and HR departments: Finance needs HR insights to better plan for a successful organisation in the future, and HR needs financial information to better inform their recruitment and retention strategies.
Regular strategy sessions and shared input on hiring/training/benefits initiatives could play a large role in fostering such a collaborative environment.
2) A short-term mindset
The short-focus of siloed departments plays into the above barrier but is its own critical blocker. One study by Oracle: "HR and Finance Say Short-Termism and Culture Clashes Are Biggest Barriers to Collaboration" found that the biggest barrier to collaboration between HR and finance is a short-term mindset, with 71% of respondents stating that their teams focus on quarters rather than future strategic direction.
This is a serious, very common, and at times underappreciated barrier to effective collaboration. Each department has its own KPIs and objectives that they need to address above and beyond all other objectives, even if that means less cooperation with other vital wings of the organisation. It also leads to less effective efforts in developing and delivering on long-term objectives, which leads to long-term stagnation in the organisation’s overall effectiveness and cost-efficiency.
How to fix it
The solution to short-term thinking is to involve both teams and leaders from HR and Finance to sit in on long-term strategy sessions, and boil down broad, high-level strategy objectives into specific, actionable objectives in HR and Finance terms that can be pursued and delivered together over the series of a few quarters.
This solution is deceptively simple: organisation leaders must create opportunities for HR and Finance team members to work together on certain tasks, for example, drawing together standardised pay, benefits, and workplace culture/events policies and plans in close consultation that will make the most of their differing specialisations.
3) Entrenched cultural habits
Cultural differences are another serious barrier to collaboration. In fact, research shows that 29% of employees cite culture clashes between departments as a significant blocker to collaboration. Typically, this reduces to perspectives: Finance considers the workforce to be an asset and is focused on forward planning while HR views them as value or skills and looks back at reporting on previous quarters.
How to fix it
The key, again, is collaborative sessions: organisation leaders and COOs should enact a regular working relationship between HR and the financial planning and analytical functions of the company, using skills training and education sessions from each to empower the other. For example, HR should also develop its own organisational analysis and long-term planning/forecasting that will allow them to work more closely with financial realities, while bringing in the investigative cost-benefits mastery of the finance team to offer up financially viable, effective solutions to ‘non-financial’ issues, such as hiring, events, retention, company culture, and so forth.
4) Isolation: Siloed Operations, Separate Systems, and Mismatched Skillsets
Siloes and mismatched skills are a prevalent outcome that need to be managed at the very heart of the departmental operations: this could be down to any number of factors, such as different software, different work objectives and tasks, different management tools, different data gathering methods, or even something as simple as a lack of trust in other teams’ expertise, data, or inputs.
In many cases, your HR and Finance teams will face barriers in working together simply because their systems, workflows, and processes are entirely different.
HR might work in spreadsheets and emails, and have a collection of documents they rely on for their primary work; Finance team members would have their own software, meetings, communication portals
Either team would consider the prospect of replacing their processes with the other team’s processes to be an affront to them, and a seriously burdensome one that comes with a great risk of losing long-term organisational knowledge, documentation, and practices.
How to fix it
A priority in a company restructuring is making sure that both sections have data integration so they can speak the same language when planning for the future
Fixing this gap can be relatively straightforward: create a unified or shared business space of standardised practices so that their work can happen more easily.
Flatten the operating environment by having a shared system or set of standardised practices that both teams both use independently in their own work. This will create a sense of familiarlity and approachabiltiy to otherwise completely different work.
At the most fundamental level this could be data structures and practices: how to they record and store information, documents, and so forth
For example, a unified portal that both HR and finance team members log in to work collaboratively and in one space on issues relating to hiring requests, approvals, timesheets, payroll, and other critical financial/operational factors.
The PPPT Approach
In general, if there are departmental barriers that need to be broken down, we highly recommend that you closely audit your organisation using the the Purpose, People, Process, Technology (PPPT) Approach.
During this process, you want to pin down the core identity of your organisation, its members, their workflows, and the tools you rely on to get that work completed. Only through close consultation with all the members of your organisation can you identify problem areas, bottlenecks, and mission-critical objectives that need to be prioritised in your efforts to introduce better systems, tools, and processes that help teams collaborate more effectively.
What are the broad aims of your organisation and its various departments? What are the lesser aims of the members of the smaller constituent groups? What are their priorities and reportable metrics they use to judge success? How do all these differing objectives align and interact?
Who are the people who make up your teams? How do they fulfill your organisation’s greatest objectives? How do these people interact, communicate, and collaborate in the course of their duties? Who are key stakeholders for the most vital functions and organs of your company?
How do you get the work you need to do done? What processes do you follow in generating revenues and communication with customers and stakeholders? What channels, resources, and platforms do you rely on? What team members are crucial members of or sources of input/approval for vital projects and products? What processes are inefficient, or take too long to complete?
Finally, what tools, platforms and technologies do you rely on to get the job done? Do team members share tools or use a unified platform? How interrelated or accessible are these systems? Is your data stored and accessible to the broader teams? What gaps and silos exist in your infrastructure?
Strategic Alignment and Planning
HR and Finance are more alike than they think, and your organisational processes should reflect this reality. At the most basic level, you should link these two departments closely, and have them both intimately involved in aligning expectations and planning goals.
Regular meetings and strategy sessions should become a calendar event, as well as consultation sessions where each department’s expertise is leveraged for the best possible solutions.
However, these collaborative sessions must be carefully planned and highly structured: set agendas, clear topics and time limits for discussions, and limit the number of meetings so that you do not degrade departmental productivity.
Better & More Frequent Communication
Information should flow freely and be accessible between your Finance and HR departments. This is non-negotiable.
This can be done in any number of ways: creating informal channels of communication between teams, create shared workspaces, standardise practices and data structures between teams, and more. The primary goal is making common and accessible communication as easy as possible.
Workflows that involve aspects from both HR and Finance should be standardised and brought under one unified process. For example, if the finances team needs to sign off on a vacancy for hiring, new benefit, or other such expense, this input should be structured to be part of a repeatable flow that is triggered for all similar events. Similarly, if Finance needs approval, interview scoring, testing, and HR checks on new team members, this should be worked into an automatically triggered, repeated workflow that both teams should feel natural working in.
Better Technologies, or Process Automation
Often, the biggest barriers of all come down to outmoded tools, siloed data, or too much busy work and administration. Much of the work that is done both in collaborative and solo efforts in HR and Finance departments is time-consuming, repetitive, and labour-intensive, which leads to collaborative burnout and hesitation to work together as it generates even more work to be done in a work week.
Having smart, automated systems that automate data entry, document generation, sign-off, request for approval, financial checks & allocations, and more, free up staff from the time-consuming manual work and tedium that gets in the way of truly effective collaboration.
Breaking down the barriers between your Finance and HR departments is a critical part of creating organisations that work quickly and with minimal cost or delay. After all, an organisation that is unified and which can collaborate on shared goals is much more likely to remain competitive, even in times of business distress.