The belief that the finance department is solely concerned with money or costs and the HR department with people affects the relationship between these departments. Based on this outdated belief, the HR department focuses on human capital and regards it as the most important asset. The finance department, on the other hand, focuses on profitability and views the HR department as a cost unit.
The HR and finance departments work towards one ultimate goal of achieving a higher level of performance and profitability. In the current business context, HR managers often perform some duties that were traditionally thought to be financial duties. The same applies to chief financial officers. For instance, HR managers must consider the cost and benefits of recruiting new employees. They must also consider the impact of their HR policies on the profitability of the organization. Such considerations require data analysis and financial projections.
Finance officers or managers must go beyond considering employees as costs to determine ways through which they can improve profitability through human capital. For instance, finance managers estimate the impact of salary increments, bonuses, and other motivational programs on the company’s profitability.
A strong relationship between the two departments has a positive impact on the overall performance of an organization. Given the overlap in responsibilities, open communication across departments is important to ensure that the overall goals and objectives are achieved. Businesses must ensure that there is a free flow of information across departments, especially performance data.
The current business context is highly competitive and dynamic. Organizations can no longer hold on to ineffective traditions and outdated perspectives. Managerial teams must shift from internal problems to the high competition in the global business environment, which is a threat to many companies’ survival. In addition, the roles and responsibilities of human resource managers and finance officers are changing. Professionals must be willing to accept the change to remain competitive and relevant