To truly be effective, HRdepartments not only have to hire more professionals withanalytical talent, but they also really need to collaborate morewith their finance departments.

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While HR departments are investing more heavily in predictive analytics to determine theeffectiveness of their talent acquisition strategies, if they don'tcollaborate well with their organization's finance department, theywon't be able to gain the insight needed to be truly effective,according to the Oracle study, “HR Moves Boldly Into Advanced Analytics with Collaborationwith Finance.”

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Why? Finance departments were the first to adopt analytics solutions, mainly because they arethe most “numerically oriented” function within an organization,according to the study. On the other hand, HR departments were lateto start investing in such capabilities, likely due to a lack ofaccurate data, a heavier reliance on human decisions and low buy-infrom the rest of the organization that the HR department reallyneeded to invest in such capabilities.

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Related: Growing importance of HR driving job growth andsalary increases

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But things have changed and more HR departments are nowinvesting in advanced solutions, according to an Oraclesurvey of 1,510 HR, finance and business professionals. However, totruly be effective, HR departments not only have to hire moreprofessionals with analytical talent, but they also really need tocollaborate more with their finance departments, the studyasserts.

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“In many companies, personnel costs are the highest expense, andhiring/retention plans are often based heavily on financialforecasts,” the authors write. “For these reasons and others, it'simportant for HR and finance to collaborate in their use of dataand analytics.”

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Collaboration can be challenging though, according to Oracle'ssurvey. Barriers include cultural habits–HR and financetraditionally have not worked together, and mismatched skill setsthat impede effective collaboration. But the biggest barrier wasthat both functions acknowledge they have a “short-term mindset,”focusing on quarters rather than future strategic direction.

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The good news is that more and more HR and finance departmentswithin organizations are finding ways to overcome such barriers andare working together. In Oracle's survey, more than (57 percent) oforganizations plan to achieve more holistic, enterprise-wideinsight through collaboration and 52 percent of HR and financeprofessionals believe it will help them become more strategicpartners.

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Indeed, a good number of departments within organizations arealready working together. When asked to specifically describe howthey are using analytics for joint HR and finance objectivescurrently, “forecasting headcount and budget needs” and “gaining acomplete picture of business priorities” were ranked most highly inthe survey. Other relatively highly ranked choices included“handling workforce management” and “predictive modeling ofchanges.”

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For the upcoming year, the top objective for collaboration wasto “improve business performance,” ahead of “enhance organizationalagility” and “become strategic partners to the business.”

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“Both agility and strategic partnership are worthy but somewhatabstract benefits that may be difficult to measure,” the authorswrite. “Business performance is easily measured, but is the resultof a variety of factors beyond HR–finance collaboration onanalytics. As a result, it may be difficult to know if theseobjectives are realized.”

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The study recommends several best practices for effectivecollaboration, including keeping it simple by working in“bite-sized chunks.”

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“Create small teams that agree to answer a specific question,”the authors write. “The team should consider what data will answerthat question, the source of that data, how it should beinterpreted, and what action plans would achieve the bestresults.”

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The survey also asked how both departments plan to leverage AIto help drive business results and key findings include:

  • While a quarter (25 percent) of survey respondents areprimarily using AI to identify at-risk talent and model theirtalent pipeline (22 percent), they are rarely using AI to forecastperformance (18 percent) or find top talent (15 percent).
  • Over the next year, 71 percent of survey respondents plan touse AI to predict high performing candidates in recruitment andsource best-fit candidates with resume analysis (70 percent).
  • Other AI priorities for survey respondents include modelingtheir talent pipeline (58 percent), flagging at-risk employeesthrough attrition modeling (52 percent) and supporting employeeinteractions with chatbots (38 percent).

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Katie Kuehner-Hebert

Katie Kuehner-Hebert is a freelance writer based in Running Springs, Calif. She has more than three decades of journalism experience, with particular expertise in employee benefits and other human resource topics.