How HR and Finance can join forces for better results

The relationship between HR and Finance has strategic value as workforce planning and financial forecasting are deeply connected. Strategic workforce planning is a key part of aligning HR and Finance objectives. Learn more about how it drives enterprise growth in our guide. For example:

• Recruitment and budgeting: Hiring decisions influence salary costs, benefits, and training budgets.
• Retention and forecasting: High turnover can lead to unexpected expenses and disrupt financial plans.
• Resource allocation: Misalignment can result in overstaffing or underinvestment in critical roles.

When HR and Finance operate in isolation, risks multiply. Overspending on recruitment, poor resource allocation, and inaccurate forecasts can undermine organisational performance. Collaboration ensures that talent strategies align with financial realities, creating a foundation for agility and growth. In operational roles, being short on staff and resources can have an impact on production, customer experience, and employee satisfaction. A fragmented relationship between your HR and finance teams can lead to dissatisfied employees and customers, which impacts more than your bottom line. Discover practical tips for optimising schedules with our Shift Pattern Mastery guide.

Recruitment and workforce planning have a direct financial impact, which makes collaboration between HR and Finance important. Rising employment costs and longer hiring cycles put pressure on budgets and operational efficiency.

“We're seeing 1 in 4 employers planning redundancies, rising employment costs from National Insurance and Living Wage increases, average cost per hire reaching £3,798.84 in 2023, and time to fill averaging 38.40 days. Added to this, 67% of HR leaders feel their processes aren't equipped for new challenges.”

Emma Parkin, Head of Propositions at The Access Group

Staying ahead of the competition

“Without HR and Finance openly communicating and providing the other with expertise and detailed on going data; a business will struggle to compete in today’s market. As a modern business in our ever evolving economy it is imperative to have full support between HR and Finance. The benefits are extensive, bringing production, customer satisfaction and profit to maximum potential.”

Cristine Sauter, HR expert

A HUB survey found that collaboration between Finance and HR was nowhere near where it should be, with 93% concerned about HR missteps with executive liability and 33% of finance executives expect HR to go over budget.

The good news is that many businesses are now embracing the opportunity for both departments to work closer together and seeing progress. Xerox, for example, shared their successful HR and Finance collaboration story working together to produce significant benefits. The Personnel Today article read:

"HR and finance working together at Xerox has brought significant benefits. Through sharing people data and the skill sets required to derive actionable insights from it, Xerox has been able to build predictive models for identifying the employees at greatest risk of leaving."

Although the benefits of collaboration are clear, HR and Finance often face significant obstacles that prevent them from working effectively together.

Different priorities and KPIs

HR teams are focused on people-related outcomes such as employee engagement, retention, and talent development. Finance teams, on the other hand, concentrate on cost control, return on investment, and meeting financial targets. These contrasting priorities can lead to tension when decisions about hiring, training, or benefits are made without considering the financial implications or the impact on workforce morale.

Communication gaps

The two functions often speak different languages. HR uses metrics like turnover rates, engagement scores, and time-to-hire, while Finance relies on figures such as operating costs, profit margins, and budget variances. Without a shared understanding of these measures, conversations can become fragmented and decisions misaligned.

Data silos

HR and Finance frequently operate on separate systems, which makes it difficult to share information in real time. For example, HR may have detailed insights into workforce trends, but Finance lacks visibility into these patterns when planning budgets. This disconnect can result in inaccurate forecasts and missed opportunities for proactive decision-making.

In large organisations, these challenges become even more complex. Multiple departments, global operations, and varying compliance requirements add layers of difficulty to integration. Reporting structures can be fragmented, and technology systems may not communicate effectively across regions. Without deliberate effort to address these issues, the gap between HR and Finance continues to widen, limiting the organisation’s ability to respond quickly to changing business needs. Read more about the challenges for HR teams in financial services and tips on how to solve them in our blog.

Effective collaboration requires shared goals, integrated systems, and clear communication. Here’s how to make it happen:

Aligning objectives

Joint planning sessions can be important and impactful. When HR and Finance align workforce planning with budget cycles, organisations gain agility. This approach ensures that hiring plans, salary reviews, and training investments fit within financial forecasts.

Leveraging technology for integration

Integrated HR platforms and financial planning tools enable seamless data sharing. Real-time analytics allow both teams to monitor workforce costs, predict future needs, and adjust plans quickly. Integration reduces errors and improves transparency. Integrated platforms like PeopleXD Evo are end-to-end AI-enabled, which allows data to flow and tools to work seamlessly together. AI-enablement is an important step in any digital transformation:

“AI has been overhyped for years, but now we’re at a tipping point. If you embrace it now, you can deliver those employee experiences, save your time so that you’re spending your time on the things that really matter, while also delivering on your organisation objectives. You’d be amazed at how much time that can free up. It can simplify your life. It can outsource a lot of the admin that you’re doing day-to-day—a lot of that stuff that is really low value.”

Oli Quayle, AI Evangelist at The Access Group in Episode 1: Mastering the Employee Lifecycle of our Do the Best Work of Your Life series

Building a culture of collaboration

Technology alone won’t build the trust and transparency between HR and Finance that is so important to business growth. Leadership should champion collaboration, and cross-functional training can help teams understand each other’s priorities. A shared language fosters stronger partnerships.

When HR and Finance collaborate effectively, the impact creates measurable improvements in workforce planning, financial performance, and employee experience. Here are some of the key benefits:

1. Improved workforce planning and cost control

Integrated planning helps businesses allocate resources more effectively. According to SHRM-cited research, companies that align workforce planning with overall business goals are significantly more likely to achieve better financial performance, including higher profitability. This alignment ensures hiring decisions and salary structures fit within financial constraints, reducing overspending.

2. Enhanced forecasting and risk management

Accurate forecasting depends on shared data between HR and Finance. This precision allows businesses to anticipate talent shortages and manage payroll costs more effectively.

3. Better employee experience through smarter investment

Collaboration enables smarter investment in people. LinkedIn’s Global Talent Trends report found that companies prioritising workforce analytics see 12% higher employee engagement. When budgets support career development and wellbeing initiatives, employees feel valued, which improves retention and productivity.

When HR and Finance work together, organisations can achieve measurable improvements in retention, productivity, and cost control. Emma Parkin explains how onboarding and employer branding deliver tangible results:

“Organisations with strong onboarding achieve 82% higher retention rates. Let that sink in - you could nearly double your retention just by getting onboarding right.”

“These same organisations see a 70% increase in new hire productivity. Your new starters aren’t just staying - they’re contributing faster, performing better, and reaching full productivity months ahead of their peers.”

Emma Parkin, Head of Propositions at The Access Group in Onboarding at Scale: From High Turnover 

Strengthening collaboration between HR and Finance requires more than good intentions. It involves structured processes, shared accountability, and the right tools.

Create joint KPIs that reflect shared objectives

HR and Finance often measure success differently, which can lead to conflicting priorities. Introducing joint KPIs ensures both teams work towards common goals. For example, instead of HR focusing solely on time-to-hire and Finance on cost per hire, a shared KPI could measure the cost-effectiveness of recruitment while maintaining quality standards. This approach aligns talent acquisition with budgetary constraints and strategic workforce needs.

Schedule regular collaboration meetings

Ad hoc communication is not enough for large organisations. Regular meetings between HR and Finance teams help maintain alignment on workforce planning, budget cycles, and upcoming organisational changes. These sessions should include data reviews, scenario planning, and discussions on how talent decisions impact financial forecasts. Consistency builds trust and reduces surprises during budget reviews.

Invest in integrated technology platforms

Data silos are one of the biggest barriers to collaboration. Investing in platforms that integrate HR systems with financial planning tools allows both teams to access real-time information. This integration supports accurate forecasting, improves visibility into workforce costs, and enables proactive decision-making. For global organisations, cloud-based solutions can ensure consistency across regions. Find out more about the benefits of integrated HR software in our article.

Technology and shared investment strategies can deliver significant financial benefits when HR and Finance collaborate. Emma Parkin highlights the ROI of workforce management and benefits programmes:

“Organisations implementing proper workforce management software achieve an average 7% reduction in labour costs. For a company with a £10 million annual wage bill, that’s £700,000 straight to the bottom line.”

Emma Parkin, Head of Propositions at The Access Group in Strategic Workforce Management: Right People, Right Place, Right Time

Provide cross-functional training

Knowledge gaps often create friction between HR and Finance. Training HR professionals in financial literacy helps them understand the impact of workforce decisions on budgets and profitability. Similarly, educating Finance teams on people management principles fosters empathy and better decision-making. Cross-functional training builds a shared language and reduces misunderstandings.

Aligning HR and Finance is more than an operational necessity. It is a strategic priority for organisations that want to remain competitive in a fast-changing business environment. 

When these functions work together, companies can optimise resources, improve agility, and make better decisions about both people and budgets. This alignment supports long-term growth and creates a stronger foundation for workforce planning and financial stability.

If you are looking to improve collaboration between HR and Finance, explore our solutions that bring these functions closer together:

Discover our Workforce Management Software to streamline planning and improve visibility.

Read our article on the benefits of an integrated HR system for practical insights on how technology can transform your processes.