Keeping Operational Aspects in Sync: How HR and Finance Work Together
The following was quoted over 10 years ago in an online article from the Society for Human Resource Management. If it was a true statement in 2005, it’s an even truer statement in 2017.
“The days of simply maintaining personnel files and advising on hiring, firing and compensation are long gone for HR professionals. Today they fulfill a variety of roles that require knowledge and competencies in areas that were foreign to them in the past.”
Over the past 60 years, a number of social, economic and political changes have contributed to the growing need for a full-time/dedicated HR professional to manage a number of duties. Whether you are an SPHR or a PHR, received your Masters in HR, or are simply wearing an HR hat, you should pat yourself on the back because your world is complicated. Today’s HR professional must:
- Communicate the company vision
- Implement successful recruitment and retention efforts
- Ensure effective training programs are in place and up-to-date within various departments
- Develop communication programs that engage a multi-generational & economically diverse workforce
…and those are not even the financial aspects of a strategic HR program.
The Partnership between HR and Finance
HR crosses paths with finance when it comes to decisions on compensation packages, benefit offerings, implementation of new technology programs, and even the costs and risks associated in evaluating compliance fines and engaging legal support to avoid said fines. Today’s finance team and the HR leader must work together to execute on a variety of offensive and defensive strategies to ensure all financial and operational aspects of the organization are in sync.
Multiyear Benefit Planning
When it comes to benefit planning, many employers have found strong partnerships in actuaries. These independent third parties can provide:
- A 5-year projection on healthcare cost(s)
- The ability to better predict the success of self-funding
- Greater knowledge in assessing impact of Mergers and Acquisitions
- Detailed assessment of risk at various stop-loss levels
- Certified IBNR report for 10Q
- Analysis data to better determine if a captive arrangement is a viable alternative to a self-funded or fully insured model
- Benchmark data
Obviously, actuaries are not a solution for every employer. Long-term planning can be obtained through proactive claim management, wellness programs and defined contribution. Even an employee communication program educating employees about consumerism can go a long way in managing future cost.
Abraham Lincoln once said, “The best way to predict your future is to create it." Nobody can predict the future, but we can plan for it. In today’s age of big data and technology, businesses have access to a number of tools that can help manage employer and employee benefit spend. Failure to proactively explore new ideas can result in skyrocketing cost, last-minute decisions, disgruntled employees and high turnover. Various group sizes have access to different resources and the industry evolves quickly, so the key is to plan ahead. At your next executive team meeting, add “2018 HR and benefit strategy” to the agenda. The discussion can be quite simple:
- Ask each manager/executive to identify the top 1-2 priorities over the next 2-3 years
- Clearly identify the hierarchy of team leads when it comes to benefits and HR, which is typically the CFO and HR
After identifying the key priorities and stakeholders, the recommendation is to engage a benefit facilitator. Some facilitators may be fee based while others may waive the fee in lieu of a commission from the insurance company. A properly trained facilitator will streamline the evaluation process by:
- Clearly identifying the key areas impacting HR, operations and finance
- Analyzing the successes and failures of current strategies
- Providing a report prioritizing next steps, timelines, and steps to implementation for any immediate and future needs
Article provided by OneDigital