There are so many things that HR and Finance have in common but there are also some areas of divergence that need to be considered. While it isn’t possible for every small business to have both a finance team and an HR department, the things they have in common might help you decide which department you can afford for your company, and which might be outsourced if budget is an issue. Let’s start with the similarities before getting into the ways in which they differ.
The Biggest Similarity
If you stop to think about what truly makes both finance and HR ecstatic, it would be seeing your business grow. Finance and HR play huge roles in growing your company, one from the perspective of financial capital and the other from the vantage point of human capital. So, if you had to do without one or the other, could you choose? Probably not, and you shouldn’t have to! Both are equally important to your bottom line. However, if you had to outsource one or the other, which would it be? Invariably, most businesses would say HR outsourcing services are the way to go. Here’s why.
Finance’s Relationship with the Board of Directors
There is something inherently special about the relationship between your directors and your finance team. It’s all about setting a budget and working within those numbers. Your directors establish goals, and the finance team works with numbers to make those goals doable. HR, on the other hand, is responsible for finding, training, and retaining top talent. HR works within a budget established by Finance, and with that said, they are also able to create incentive packages to attract the talent needed within their industry. This is something that also takes a great deal of marketing strategy to accomplish, which is why it is often best to outsource HR services. Their duties are much more varied, and each responsibility takes a specific expertise.
Reasons Why HR Is Often Confused with Finance
One of the main reasons why HR is often confused with finance is that they are responsible for payroll and benefits. This is all about money, but not in the strictest sense. It’s about using money allocated by finance, but HR doesn’t set budgets. They are held to them. When it comes to promotions and raises in salary, HR handles that but only to the extent that a budget for payroll has been set. Since both deal with money, it is easy to confuse the two. HR plays an important role in advising the board and the finance department on where money can be better allocated in terms of anything related to HR, but they can’t set the budget.
There are definite similarities between the two departments but if you had to outsource the duties of either one, it would be in your company’s best interest to outsource HR simply because of the broad reach of their services. HR goes beyond numbers and deals with everything from recruitment to training to retaining. They help to establish ways to streamline procedures in an effort to grow the company’s bottom line, and that makes the finance department extremely happy. In other words, HR demands experts in a number of areas, which makes outsourcing much more logical.