Publicatie in CEO today van mei 2010 over de visie op HR reporting
The HR Director of a large financial services company once told Launch! Human Capital Management how her HR department was making the transition to becoming a true business partner. Her biggest challenge was to balance the delivery of basic reporting (operational information like headcount totals) and requests for strategic information associated with its new business partner role. This article analyses the two main categories of HR reporting and matches these with the strengths of Finance and HR.
Launch!’s consulting practice often comes across clients struggling to find a good organisational model for HR reporting. Some of their clients even consider transferring some of the HR reporting tasks to the finance department. This, in fact, can be the logical step.
Two types of information
Requests for information are driven by the nature of the underlying HR processes. Operational processes focus on excellent delivery of standard HR functions like personnel recruitment
and retention, salaries and benefits and absence and illness. These tasks are highly repetitive and produce a high volume of standardised data.
Strategic HR processes focus on themes like talent management, diversity and reward policies. They are less standardised than operational processes and produce less standardised information. The nature of the required reporting is illustrated in the diagram below.
Operational HR reporting supplies the business with high frequency, solid information, like monthly reports on headcount per department/business unit, percentage of absenteeism, average salaries and direct and indirect labour costs.
Many people rely on operational HR data so it must be highly regulated, clear and standardised. In general there are no international (legal) standards for operational HR reporting. Definitions used are therefore frequently open to interpretation and discussion.
Interpretation and discussion is much reduced, if the operational HR reporting has a more financial background and therefore more regulated by law (eg tax rules and labour agreements).
Strategic HR reporting is about delivering information on strategic processes, new themes and ad hoc questions. It requires flexibility and a good view of the company playing field. This requires highly qualified staff specialising in HR policy, legislation and regulation, and developing topics. HR-related topics such as “Women at the top”, “HR shared service centres’, “National regulation on costs of employment” (determining the optimal mix between temporary and regular employment contracts), require a different style of reporting Does the Finance Department Have a Role HR reporting? Launch! HCM HR information pyramid than the more standard key performance indicators. In such cases, it is more important to look at definitions creatively and find alternative ways of obtaining the necessary information, which is often not recorded in the underlying operational processes.
Usually there is little repetition in requests for strategic HR reporting and
each requires time to investigate and produce.
Exploring the worlds of finance and HR
Generally speaking, the world of finance is highly regulated, relatively static as a discipline and defined by external monitoring and a large common framework. The chief financial officer determines - guided by international accounting standards and legislation, as well as by internal standards of reporting - how the requirements of reliability and reconciliation of data can be met. The strength of finance is to turn facts into figures and it is capable of supplying accurate, meaningful and repetitive
The world of HR is less regulated. It does not use internationally respected
standards but instead works with generally accepted guidelines with more room for interpretation. Compared to finance, HR is a dynamic and processdriven world. Differences will become
bigger in the near future because HR is moving towards becoming a business partner and is under pressure to deliver strategic and ad hoc information to support this new role.
Mutual understanding between HR and finance is not always easy because of their different backgrounds and preoccupations.
How can financial discipline aid HR reporting?
The worlds of HR and finance are obviously different, and there is nothing wrong with that. These differences even serve a purpose if they are used to complement each other. Looking at the respective natures and functions of HR and finance, a discussion about where the responsibility for various elements of HR reporting could most beneficially lie is therefore justified. Perhaps a shift in operational HR reporting tasks from HR to finance is in the best interest of the company? On the one hand, it will secure reliable, repetitive standard operational reporting and, on the other, give HR the opportunity to focus on its business partner role. The challenge for businesses is to decide whether their existing HR reporting tasks are appropriately allocated for today and for the future.
Launch! is a specialist HR ICT
consultancy. Its 55 experienced professionals (each with at least 15 years of relevant experience) deliver HR ICT business successes in the areas of HR transformation, SAP HR, HR reporting, HR business consultancy and learning. Launch! has a broad client portfolio which ranges from international organisations to central government.