CIMA E1 Syllabus E3. Human resources - How the finance function interacts with HR - Notes ^{1 / 2}

Traditionally, the finance function and HR used to work independently. 

Organisations now view employees as one of their greatest assets. Therefore, the finance function and HR work very closely.

The finance function helps HR to:

1. Identify appropriate KPIs

2. Assemble KPI data and information

3. Analyse this for insight

4. Give advice to HR based on this insight

5. Apply what has been learned to impact the achievement of the objectives of the HR function.

6. Ensure compliance with relevant regulations and legislation, such as health and safety, minimum pay rates and taxation implications of benefits in kind.

7. Performance management and appraisal can be carried out with the finance team as they can provide information on efficiencies of employee time, which feeds directly into the appraisal process.

The finance function does not participate in recruitment in the organisation.

How technology affects this interaction?

The use of enterprise wide computer systems or ERP systems as well as cloud technology and improved use of data are technological developments that are driving the interaction and support between finance and HR.

A study found that by sharing a finance and HR cloud system, integrating enterprise resource planning and human capital management systems made it easier track and forecast employee costs.

Improved use of data is allowing HR to quantify with more certainty the business impact of learning and developing spend. 

This allows a more targeted approach to the type of training and learning a business will invest in with a view to maximising the benefits to the organisation.