Partnering with Finance to Drive Greater Business Impact with People Analytics
The decisions we make today shape the strategic capabilities of tomorrow. To secure investment and buy-in from senior executives, it's crucial to demonstrate the tangible financial benefits of people analytics. Our Insight222 People Analytics Trends 2023 report highlights that Leading Companies are already leveraging people analytics to drive financial outcomes.
The Power of HR-Finance Collaboration
To effectively scale and advance people analytics, partnering with finance is essential. This collaboration translates HR data into actionable business insights, aligning them with financial objectives. Our report showed that, organisations that excel in people analytics are those that integrate these efforts seamlessly.
As HR and people analytics leaders, we can improve processes and practices, contributing significantly to our organisations' bottom lines. Partnering with finance allows us to use financial data to validate and support our initiatives, making a compelling case for investment in people analytics tools and resources.
However, despite the benefits, our research found that only 24% of 271 companies surveyed had established strong relationships between their people analytics and finance teams.
Building Strong HR-Finance Partnerships
Craig Starbuck, Head of People Analytics at Roku, emphasises the importance of this partnership, on the Digital HR Leaders podcast:
"Finance is crucial to our work, from workforce planning and headcount metrics to financial forecasts and capacity utilisation. Integrating these efforts creates a cohesive strategy aligning HR with financial projections."
Synchronising objectives, exchanging data, and hosting collaborative workshops enable HR and finance teams to understand how workforce factors impact business goals. This mutual understanding enriches strategic decision-making throughout the organisation.
Key Characteristics of Leading People Analytics Organisations
Our Insight222 People Analytics Trends research also identified 8 key characteristics of leading companies: two of which are focus on business priorities and rigorous measurement.
Leading Companoes recognise the profound impact of dedicating a significant share of their people analytics efforts towards high-priority business topics. They engage in a rigorous process of obtaining insights from a broad spectrum of business executives across the organisation to pinpoint the most pressing issues. With that, however, means translating insights into financial and operational terms that resonate meaningfully with business leaders - by demonstrating the return on investment.
The Role of Storytelling in People Analytics
During his conversation on the Digital HR Leaders podcast with David Green, Craig Starbuck shared a pivotal moment in his early people analytics career that really emphasised the importance of a people analytics-finance partnership.
Initially, his presentations on employee engagement metrics didn't resonate with the C-suite, unlike the information he shared relating to brokerage analytics. He could see from the body language in the room that the C-suite wasn't connecting with what was being presented.
"People were checking their phones and they weren't as engaged, and I could tell they didn't take this as seriously as the brokerage analytics that we were just discussing."
The turning point came when he started creating relationships with his finance colleagues, bringing them into the discussions and really working together he was able to begin linking HR metrics with financial data, showing that a 1% increase in engagement led to specific business outcomes. This approach significantly changed the reception of his insights by the C-suite.
Strategies for Effective HR-Finance Collaboration
To foster a successful HR-finance partnership, our People Analytics Trends 2023 report recommends three key tactics that can be employed to better partner with finance:
Involve Finance Colleagues Early
Engage finance teams from the start of analytical projects to ensure robust, financially aligned outcomes.
Involving finance colleagues early in analytical projects ensures their input is considered from the beginning, leading to more robust and financially aligned outcomes. Early involvement allows finance teams to provide valuable insights on cost implications, budgeting constraints, and potential financial impacts. It fosters a sense of ownership and commitment from the finance team, creating a stronger partnership.
Share Statistical Models
Transparently share methodologies and assumptions to build trust and ensure alignment with financial objectives.
By understanding the methodology and assumptions behind the models, finance teams can provide valuable input, support the analytical work, and ensure the models align with financial objectives. This level of transparency helps maximise the value of people analytics initiatives and builds trust and credibility between the HR and finance teams.
Adopt the Language of Finance
Present HR data in financial terms to make it relatable and valuable to business leaders.
Adopting the language of finance when presenting people analytics insights ensures that HR data is communicated in terms familiar to business leaders. This involves framing findings in the context of financial metrics and business outcomes, making it easier for executives to understand and value the insights. By translating HR metrics into financial terms, people analytics professionals can demonstrate the direct impact of their work on the organisation's financial performance, thereby gaining greater support and investment in their initiatives.
Enhancing Business Performance Through Collaboration
By implementing these strategies, HR and people analytics leaders can demonstrate the value of their work and gain the support of business leaders. Craig Starbuck's experience shows that aligning people analytics with financial metrics is crucial for driving organisational performance.
Strong HR-finance collaboration allows organisations to leverage people analytics for data-driven decisions that positively impact both employees and the bottom line. Instead of operating in silos, fostering integration between HR and finance can unlock significant value.
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