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How HR and accountants can collaborate to promote inclusion

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Phil Toohey explores the idea that, with their access to data, accountants can contribute to even out inequality in the workplace. 

18th Aug 2021
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Traditionally, the human resources (HR) and accounting departments have played notably different roles in most organisations. 

HR handles the varying nuances of dealing with the employee life cycle, as well as creating strategies to increase overall satisfaction and equality. Accounting, on the other hand, is specifically focused on the company’s numbers.

Both departments have access to fundamental data about the current landscape of the organisation that, when collated and collaborated on, could be the key to unlocking workplace equality. 

Separate functions, similar goals 

Much like the data they rely on, HR and finance are siloed functions that don't often cross paths. This is potentially problematic when it holds back meaningful progress in tackling diversity issues. 

HR departments can implement diversity and inclusion (D&I) initiatives but without structure, consistent collection or tracking of data, and holding decision makers to account, the potential for change is limited. This process of accountability that accountancy derives its name from is not as regimented in the culture of HR.   

Accountants are trained to follow GAAP, a series of guidelines that outline the assumptions, principles and constraints as applied to accounting practices. 

Part of GAAP involves understanding how a company reports revenues, expenses, assets, and liabilities. By applying these principles to HR data, especially the complex landscape of employee rewards, the accounting function can help HR with the production of regulatory reports such as CEO pay ratios and gender pay gaps, which naturally flow to the more recent interest in D&I initiatives as well. 

In theory, by creating a system of collaboration between these two areas, HR could benefit profoundly. The benefit is to transfer core culture from the quantitative, rules based methodology accounting to a business discipline that is by nature far more qualitative. 

It’s not that accountants need to create D&I solutions or HR leaders need to begin accounting; there simply needs to be a collaboration to share well proven knowledge and methods. 

Moreover, collaboration could be a boon to the business at large. Per a report from Big Four firm EY, there exists a “powerful link between a business’ performance and the extent to which its HR and finance leaders collaborate”. 

The study found that CFOs and CHROs at high performing organisations have a better working relationship and spend 50% more time collaborating. 

Unlocking collaboration through collated data

Collaboration sounds like a no-brainer. But of course, there are hurdles in the way. Reward policies, processing and reporting falls under the control of HR, and is spread across a spectrum of non-integrated administration systems covering: payroll, bonus, pension, benefits and shares. 

Consolidating this data and normalising it into one system for reporting and analysis is essential for D&I initiatives that set out to deliver equal reward. The methods of consolidating data according to a consistent, rules based standard is very familiar to financial accountants via dedicated financial consolidation software systems. 

Traditionally, there has been no equivalent for reward but this has recently changed. It is now possible for the most complex global firm to digitise and automate reward consolidation for all employees and all rewards into one, real-time system.  

Finance is in a strong position to encourage colleagues in HR along this route which would create a true cost database to replace spreadsheets that are currently using a subset of actual data (usually from the payroll system) supplemented by estimates, allocations and assumptions which dramatically weaken the quality of data, and therefore reduce the effectiveness of decisions that are intended to improve D&I. 

The cost of collecting and interpreting information has never been lower, and with the correct setup, the process could be smooth and frictionless. That being said, some companies will find this transition more attractive than others.

Due to the aforementioned shortcomings, businesses have, for years, been able to claim they have progressive fair and equal pay policies, whilst, possibly, accepting that their actual performance does not match their rhetoric. A digital system that reveals the truth might seem to be a potential liability. 

In this respect, the culture of accountancy is helpful once again for its understanding that hiding a liability, even in a state of plausible ignorance can be worse than the liability itself.

There are clear benefits to a closer understanding between the accounting and HR departments. Ideally, through a project that seeks to create a single source of consolidated, total, real-time reward data, which would give both departments access to a greater degree of oversight concerning issues relating to gender, ethnicity, diversity in hiring, uneven promotion opportunities and overall wage disparity.

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Replies (2)

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By Paul Crowley
19th Aug 2021 19:55

Really did not follow what the direction of this is
Are you suggesting all data should have diversity issues added to it?

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By Hugo Fair
21st Aug 2021 17:32

The problem with building an (advertising) article on one premise ... when that premise is wrong!

"Reward policies, processing and reporting falls under the control of HR, and is spread across a spectrum of non-integrated administration systems covering: payroll, bonus, pension, benefits and shares."
Non-integrated?
Most medium+ sized organisations (i.e. large enough to have these needs) already have a single 'integrated' (i.e. single database without duplicate data items) People system that incorporates all aspects of managing HR/Payroll/Pensions, including Benefits, Bonuses and much more.

How else do you think they manage to comply with all the mandated Diversity reporting?
Whether or not they see value in greater analysis of the data already held by them is of course another matter ... but doesn't require additional software to do it!

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