Finance’s data doesn’t match HR’s. Who is to blame?

In this week's 5 Minute Friday, we have David Creelman, CEO of Creelman Research as our guest blogger. 

Finance’s data doesn’t match HR’s. Who is to blame?

A miserable moment in every HR pros life is when they present some data, and someone pipes up to say, “That’s not the number Finance gave.” This can occur with various types of people data, but it’s most notorious for occurring with headcount. HR will say there are 110 people in a department, while Finance says there are 107. People ask, “How could HR get something as straightforward as counting people wrong?” (Strangely, they rarely ask, “How could Finance get it wrong?”) 

Whenever HR’s and Finance’s numbers disagree, however disconcerting it feels in the moment, there is really no mystery to it. If you look up the details of how each department calculates their number, then you will find a straightforward explanation. For example, Finance may report full-time equivalents (FTEs) such that two people working part-time show up as one FTE, while HR counts up the actual number of people. Hence the variation can be reconciled…but only after some tedious detective work that added no value.

One could suggest that HR and Finance adopt a common methodology for headcount and other people-related data, but that won’t work. The departments have different analytics and reporting needs. HR often needs to look at people in terms of the reporting structure. Finance often needs to look at people in terms of which budget they come from. Both data structures are needed.

The next suggestion is usually that we should integrate the two approaches to managing people data. It is theoretically possible to create some kind of data structure that automatically reconciles the two, however that is a huge amount of work. Furthermore, it’s work that probably doesn’t add much value. 

Our advice is to determine where you really need to integrate Finance and HR data and then build the system that addresses the need. Remember too that for analytics we don’t always need to have numbers accurate to the last cent. Integrating Finance and HR data is a matter of being pragmatic, not a quest for a beautiful system. 

Once you—and the leadership team—recognize why Finance and HR numbers don’t always align perfectly, and you have integration where it’s most crucial, then we can all heave a well-deserved sigh of relief.

David Creelman

CEO, Creelman Research

P.S. Thanks to John Pensom of PeopleInsight for all his, well, ‘insights’ on this topic.

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