Finance Remains Skeptical About HR’s Analytics Ability

Finance Staff

HR professionals believe they’ve come a long way in their use of data, with more than half saying they’re comfortable using prescriptive and predictive analytics. Unfortunately, many corporate leaders and Finance professionals don’t believe them.

That could make for trouble down the road, as more observers see a need for closer collaboration between the two functions. Donald Anderson, Oracle’s director of organization and talent development, believes the traditionally distant relationship between HR and Finance must change if businesses are to succeed in “today’s evolving market and talent economy.”

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This isn’t a new theme for Oracle. For several years the company has preached about how migrating HR and financial data to the cloud can increase collaboration and improve productivity. But a new report from the company, HR Moves Boldly into Advanced Analytics with Collaboration from Finance, (Who names these things?) contends that collaboration between the two functions is hampered by short-term mindsets and entrenched cultures.

At the same time, the basis for increased collaboration may already be in place. HR and Finance possess complementary skills that could be leveraged to gather and analyze data in ways that meaningfully impact business decisions, Oracle said.

Finance, of course, is used to influencing business decisions. But for HR that notion has been something like the Holy Grail. Financial professionals remain skeptical about HR’s ability to put data to meaningful use. While the report found HR professionals show a surprisingly strong propensity to use advanced analytics, they must work harder to convince colleagues that they’re doing it right.

Given the dynamics of today’s business environment—rapidly changing technology, demand for new skills to keep pace and increasing talent acquisition costs—the report suggests HR needs to take a fresh look at how it uses analytics, the skills its professionals require and its attitude toward working outside of its boundaries. (We’d add the same can be said for Finance.)

Does Truth Lie in the Numbers?

Conventional wisdom has it that HR and Finance speak different languages. However, the report uncovered a surprising amount of common ground, especially when it comes to analytics.

HR, Finance Analytics
Charts: Oracle

If you believe the charts above, HR is more comfortable with—or at least quicker to adopt—advanced analytics capabilities. Just more than 50 percent of HR professionals were comfortable using prescriptive and predictive analytics, a noteworthy gap between Finance’s 37 percent.

However, the report suggests HR professionals may be judging themselves with a certain amount of, shall we say, naivety. They may see themselves as advanced but, in reality, aren’t as familiar with, or as demanding about, sophisticated analytics. Another possibility the report proposes: HR professionals are overly impressed by the surge of data and data technology within their department.

Executives, also, don’t have the same faith in HR’s analytics chops. Only 37 percent of them said HR performed predictive or prescriptive analytics, compared to 51 percent of HR respondents. The executives said HR uses mostly descriptive or diagnostic data.

Is Collaboration Possible?

While most respondents said integrating HR and financial data will be a high priority this year, HR was slightly more emphatic about it than Finance. Eighty-five percent of HR professionals agreed or strongly agreed with the idea, compared to 79 percent of financial professionals.

What’s blocking closer collaboration? Oracle boils it down to three things:

  • Short-Term Mindsets: Seventy-one percent of survey respondents said their teams focus on quarterly results rather than long-term strategies. That’s not surprising if  they’re in public companies, where the issue goes beyond the realms of Finance and the workforce.
  • Culture Clashes: Nearly a third, 29 percent, said each function maintained “traditionally separate habits.” Twenty-seven percent cited mismatched skillsets while 17 percent mentioned organizational silos.
  • HR’s Lack of Analytics Skills: Seventy percent of financial professionals said HR teams lack the skills to act on data and solve issues. Some 55 percent said HR didn’t have the ability to use analytics to forecast workforce needs. That’s at odds with what HR believes. Remember, 50 percent of HR professionals were comfortable using prescriptive and predictive analytics. We wonder whether this finding is a corollary to the cultural issues.

Turn Numbers into Action

Whatever the barriers to collaboration, there was broad agreement that HR must use analytics more tactically. HR’s not arguing. “Cultivating quantitative analysis and reasoning skills” was a high priority for practitioners (64 percent), while 54 percent prioritized “advising business leaders by telling a story with data.”

Oracle sums it up succinctly: “Finance has historically been a source for analytics-driven insights and numbers-based expertise. So even though HR appears to be catching up, there may be some lingering doubts about the function’s ability to rise to Finance’s established reputation.”

But one can’t ignore the gains HR has made. As the report observes, many organizations now use analytics to manage talent pipelines, forecast attrition and select qualified candidates. It’s hard to argue when the report says, “given these results, it is perhaps time to reconsider the stereotype that HR functions are behind other key business areas in their use of data and analytics.”

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