HR and Finance: How Collaborative Workforce Planning Drives Enhanced Business Performance

On the surface, a strong relationship between HR and Finance might seem like oil and water. One function deals with people, while the other deals with dollars.

Dig a little deeper, and it’s clear these two functions depend on each other to support their strategic goals and overall business performance.

Workforce planning is a crucial area where HR and Finance can collaborate to align on their organization’s most valuable assets — its people.

In this article, you’ll learn what workforce planning is and why Finance is critical to the process. Plus, read about collaborative workforce planning in action at one of Planful’s customers.

Download our eBook: The Ultimate Guide to Collaborative Workforce Planning.

Workforce planning is just how it sounds: Planning for your current and future workforce needs. This means building a process that involves key players from across the company to assess, analyze, and forecast your organization’s talent needs over time.

It’s simple in theory. Plan for future workforce needs to help you reach your goals today and tomorrow.

However, workforce planning is vital to supporting a healthy business and seeing positive growth. It requires accurate and reliable data to understand workforce trends, analyze workforce demands, and forecast personnel and talent requirements over time.

When approached strategically, workforce planning helps organizations strike a delicate balance between their staffing and budgetary needs. This process saves money by avoiding over-hiring, idle workers, or excessive costs. It also ensures an organization has enough skilled workers to achieve its long-term goals effectively.

What is the difference between workforce planning and headcount planning?

No matter what department you’re a part of, “headcount” is a term you are likely familiar with, and it is one component of an overall workforce planning strategy.

Headcount refers to the number of employees an organization has at any given time. It’s also one component of a workforce planning strategy.

With headcount planning, you can determine the number of workers needed to reach your organizational goals properly.

With workforce planning, you combine headcount planning with an understanding of personnel needs and the unique skills they must possess for your organization to succeed. From there, you can get even more granular to consider areas including the budget, profitability, corporate planning, etc — any considerations critical to your organization’s bottom line.

Effective workforce planning goes beyond headcount to uncover the story behind your data, and it involves forecasting for different scenarios, like a changing economy or unexpected staffing needs. It also allows for organizations to become more agile in planning in case of surprises.

Finance manages investments to support the success of their organizations. As it turns out, people are one of the most significant investments an organization can make.

This intersection between people and data offers a pathway for HR to partner with Finance on workforce planning. Finance can lay the groundwork for a healthy workforce planning budget based on HR’s view of the business and see where personnel investments and reductions provide the most value within an organization.

In other words, Finance provides budgetary-driven insights, while HR understands the nuances of talent development.

There’s no one golden standard for the percentage of your budget that goes toward labor costs, but generally speaking, most industries stick to roughly 20% to 40% of their overall operating budget. These labor costs go toward staffing, including salaries, benefits, and managing promotions and bonuses, and require accurate and trustworthy oversight to stay within budget.

If you’re looking for industry-specific information, the U.S. Census Bureau is a helpful starting point. There, you can find an interactive data viewer that offers detailed insights based on data from millions of businesses, broken down by segments, including industry, state, and county.

Global agricultural company The Andersons needed to streamline its workforce planning process to bring more meaningful visibility to decision-makers.

One of its most significant challenges was that HR’s processes were unaligned with FP&A. As a large company with over 2,300 employees, The Andersons struggled with systems that didn’t connect, causing discrepancies in data and a lack of detail that made it tough to see a comprehensive view of spending on labor.

“We were on a two-week payroll cycle that did not match up with us posting entries monthly,” recalls Adam Zobler, Senior Business Analyst at The Andersons. “When it came to reconciling budget versus actuals, it became very time-consuming to find the true numbers.”

The company was able to integrate Planful’s workforce planning software with its existing human resources information system (HRIS), resulting in:
Enhanced detail and visibility by cost center.
Clear connections between the General Ledger (GL), HRIS, and budget.
Comparative insights against workforce forecasts and budgets across periods.

“Our managers can quickly see how their costs are going up or down each month, and that’s a huge value we’re getting from Planful,” Adam concluded. “They can view budgets versus actuals by worker and gain visibility into overtime to see what drives their profit and loss (P&L). It would be impossible to do this analysis at the employee level without Planful.”

With Planful, The Andersons now has a comprehensive view of monthly, year-to-date, and full-year forecasts broken down by individual employees. This empowers decision-makers to conduct merit analysis, consider open positions, and confidently make data-driven decisions.

Read how global agricultural company The Andersons uses Planful to streamline workforce planning while increasing visibility across the business.

According to a recent Planful study of CFO sentiment, half of all surveyed respondents cited workforce planning as their top pain point.

Even more, research firm Gartner found that only 33% of HR leaders believe they’re effectively leveraging their data through workforce planning. These findings make a compelling argument in support of cross-functional HR and Finance collaboration to improve strategic workforce planning.

Thanks to collaborative workforce planning HR and Finance are more strategically aligned to make informed decisions regarding workforce data.

Planful helps organizations tackle their workforce planning needs with accuracy and efficiency. That’s because it’s used by both Finance and HR, aggregating your workforce data in a centralized, easily accessible solution.

We know what it takes to make workforce planning a collaborative effort. That’s why we wrote the book on it.

Download “The Ultimate Guide to Collaborative Workforce Planning” to get started.

Ready to transform your workforce planning process? Book a demo to speak with a Planful expert.