The business leaders of the 2020s are compelled to ponder the impact of the employee experience. The pandemic, the Great Resignation, and the inflow of Gen Z professionals into the workforce have led organisations to recognise that delivering a more just, mindful, compassionate employee experience isn’t just good, it is imperative for business.
The benefits of EX-focused decision making are evidenced in the numbers that quantify its advantages. A PwC study from 2022 shows the link between employee experience and the bottom line. Specifically, the research attributes cost savings as a percentage of annual revenue to various parts of EX.
Savings between 0.5 percent and 1.5 percent are attributed to everything from flexibility of schedules and diversity to strong leadership and reduced workplace stress. But the prioritisation of wellbeing, training and development opportunities can lead to savings even greater than 1.5 percent.
With the bottom line at stake, it can now be strongly argued that it is time for CFOs to act. Finance heads must, if they haven’t already started, involve themselves in the inner workings of HR. The heads of both these units must become close partners for the good of the business. Right now, CFOs are laser-focused on productivity.
They know that quality work leads to all kinds of cost-side and revenue-side benefits. But culture and tradition are the sticking points between the figures you just saw, and the action needed to champion change from the finance side. Even some HR departments believe their job is limited to the implementation of a platform; and they would rather focus on this than partner with the whole business to drive a positive employee experience.
Enemy of everything
The problem here is not so much that tradition is the enemy of change. This goes without saying. No, the issue is that the change is already happening. If companies want to be able to compete for the talent they need, they must move on from old practices. Tradition, in the context of the modern labour market, is the enemy of recruitment, retention, productivity, brand reputation, and profitability.
Let us be clear. The HR head has a lot of policy power — around leave, shaping company culture, designing wellbeing programmes, and much, much more. Amid current economic pressures, employee satisfaction is tied inexorably to remuneration. Pay must be fair (in the employee’s opinion), other compensation must be reasonable, and all disbursements and reimbursements must be paid in full, on time, every time. Here, the CFO has a role.
To put it in a way a finance chief will appreciate, if one deals with a subcontractor and delays payment of an invoice, a relationship can easily be strained, even if this only happens once. That subcontractor may lose focus, deliver subpar results, and become otherwise disruptive in ways that ripple to other parties who were not even affected by the delayed payment.
Now apply this concept to payroll. To short or late salary payments. To budgetary constraints on travel, dining out, and other perks. At this point, if you are a CFO, you should see where your contribution can fit.
Automatic for the people managers
It will take time and patience to define how workflows and roles within HR and finance can intermingle without confusion being the result. But a great starting point is our now-old and faithful friend automation. We can use artificial intelligence to eliminate the complexities that lead to slow processing. We can streamline payroll if we have access to systems that, for example, calculate deductions for us and facilitate salary advances.
Perhaps economic externalities have seeped into the business to cause cash flow problems, leading to delays in paying employees. Automating accounts receivable and accounts payable in a way where they are balanced to ensure a healthy cash flow is a classic use case for some of today’s cloud-native accounting platforms.
With the right technology, HR and finance will have a joint finger on the EX-button. They will work in concert to keep the business healthy and ensure funds are in place to pay people on time. Remember that this will lead to cost savings. PwC’s analysis places fair compensation as saving 1 percent of annual revenue and the elimination of workplace stress is up near 1.4 percent.
However, joint finger aside, the CFO still holds the purse strings. This means they have a huge role to play in shaping corporate culture. HR leaders will be the innovators and dreamers, but it would be a creative initiative indeed that did not require any budget. CFO and HR team leaders should get together to identify areas for impactful investment. The modern workforce needs remote collaboration tools, hybrid workspaces, team-building activities, and employee benefits schemes. Investing in any one of these would boost morale.
The ideal advocate
Of course, despite the many studies linking EX to the bottom line, every business will want to see the results for itself. They will want to measure outcomes and attribute them to actions. The CFO’s expertise is invaluable in this regard. Who is better versed in joining the dots from strategy, decisions, and investment to real-world revenues and costs than the finance head?
CFOs who partner with HR can demonstrate the tangible value of investing in the employee experience. There is no greater advocate. Finance teams are ideally positioned to correlate HR initiatives with profitability and CFOs typically have a powerful voice in the boardroom. Most corporate change begins with scattered success stories from the outside world. EX has many of these now. The numbers are in its favour. CFOs have a lot to gain by becoming EX champions.