How HCM platforms can help HR become the CFO’s best friend

HCM platforms are playing an increasingly significant role in helping HR leaders develop a better working relationship with CFOs

HCM platforms are playing an increasingly significant role in helping HR leaders develop a better working relationship with CFOs through connecting people strategy with business outcomes, according to Oracle.

Workforce modelling is one area in particular that is being impacted by technology, with significant advances in HCM platforms, said Andrew Lafontaine, general manager HCM applications, Oracle ANZ.

“CHROs can now use HCM platforms to model what an organisation might look like in 6 months, 12 months, or 2 years’ time,” he said.

“They can factor in variables such as a change in market conditions, the need to reduce costs, disruption through new products from competitors, mergers and acquisitions, or stopping a line of business – whatever the business driver is.

“If organisations need to drive a material change in the workforce, then these HCM platforms are able to model these and detail the skill-sets and capabilities they need moving forward.”

These capabilities also present CFOs with a range of new opportunities to better understand HR, according to Lafontaine, who said modelling the cost base of an organisation is chief among these.

“From a CFO’s perspective, most organisations – especially in financial services – need to understand their cost to income ratio,” he said.

HCM platforms can assist organisations in modelling scenarios such as reducing cost to income ratios by 2 per cent by taking $10 million of their people cost base – and how to do this, for example.

“So this allows the CHRO to have some commercial conversations about very commercial outcomes with the CFO and CEO around workforce modelling,” he explained.

For organisations looking to grow or expand into different and new areas, Lafontaine said HCM platforms could also assist in this process through strategic workforce planning.

“So you can take a model, and then we can examine what skills are needed for it, and understand what it will cost an organisation,” he said.

“This is a very different conversation that most CHROs have been able to have in the past with the CEO and the CFO”

“Then we can start to build financial modelling around this and get a better picture of what it looks like, how it might impact the organisation, and how to get there.”

Organisations can further improve this process through integrating their ERP and HCM platforms, Lafontaine added.

“When you do this you can achieve significantly more and realise better efficiencies,” he said.

“So if people are undertaking learning and development, for example, all the costs attributed to HR can feed straight into the ERP system.

“So the systems can report and record in a seamless way, with the HCM platform pushing the data straight though the ERP system,” he said.

Lafontaine said one of the concerns he had around HR functions and workforce modelling is that their approach can be too narrow from a talent perspective.

The application of such systems was much wider than typical HR measures around people and talent, he said.

“Workforce modelling is about the financial component of business changes and how much certain changes might cost the organisation,” he said.

Lafontaine explained that with this kind of capability and reporting, CHROs can genuinely sit at the C-suite table and be a major contributor to commercial conversations and outcomes that the CEO and CFO are trying to drive – rather than just talking about the people agenda.

“This allows CHROs to have commercial conversations, and not just people conversations, about the impact of financial models on the organisations through strategic workforce modelling,” he said.

“This is a very different conversation that most CHROs have been able to have in the past with the CEO and the CFO.

“These platforms can provide full visibility of the workforce in every aspect, along with the analytics and insights which can help position HR more strategically.”

Image source: iStock