“I think from a CFO finance standpoint, you automatically use systems all the time. You have a system that you enjoy using, you use it to get all your data, to look at budgets, to get real-time forecasts, that sort of thing, right. HR tends to have an HRIS. So human source information system, usually it starts with the ground level being payroll.”

The Other P&L: Podcast Section (Scott and Aaron Episode 2 Part 1)

Aaron: (00:03): I’m here with Scott again, and we’re talking about a whole host of things ranging in the HR and finance functions. One area that we were discussing offline was information systems and what kind of systems and tools that we use in the back office to help inform and make decisions. So, Scott, you know, as we look at tools, right, things that we log in and, and get information out of what, what are some things that really come to mind as to what system is important for us? And what do we find is mission-critical?

Scott: (00:39): Sure. So, you know, I think from a CFO finance standpoint, you automatically use systems all the time. You have a system that you enjoy using, you use it to get all your data, to look at budgets, to get real-time forecasts, that sort of thing, right. HR tends to have an HRIS. So human source information system, usually it starts with the ground level being payroll. Payroll administration is that sort of thing, right? Onboarding of new employees or the, in the payroll system, you know, what their pay rate is, you know, how much you are paying them, that sort of thing, more and more companies today are upgrading their, or HRIS. So it includes a lot of extra features, for example, recruiting systems or ATS, which stands for applicant tracking system. This is the tool that’s used when candidates apply for jobs, they apply into the system.

Scott: (01:38): And then the recruiters review the candidate resumes and decide who to bring in for an interview who not to bring in for an interview. It also might include, culture surveys or pulse surveys, which is a tool to be able to survey your employees every other month or quarterly about various topics. And being able to see where kind of on a heat map, what’s going, well, what’s not going well in terms of years of service or location or department or function, that sort of thing, even gender they can pull that together. And then there’s other information, for example, an ability for an employee to update their own personal information. So an address or enroll for benefits, or decide to take, put honored off and dependent or apply for leave of absence. And what those tools really do is they make the whole HR process much more efficient, and you can actually, and much more accurate.

Scott: (02:41): And the employees really appreciate being able to upgrade their own information versus filling out a paper form, and then somebody else enters it. So, HR is looking at these systems more and more, and it is critically important that those systems, have a connection and the ability to share information back and forth with the financial systems. And so that can be done through an API. It doesn’t necessarily have to be the same provider of the financial and the HRS software, but they should absolutely have an API that allows ’em to easily communicate

Aaron: (03:20): For sure. I mean, there, there’s a lot of different cross pollinization there with the accounting slash finance type of tools, right? So anytime we’re looking at maybe not so much historical, because, you know, we, we have the history we’ve recorded something on the general ledger, but maybe forward-looking. And so specifically, you know, as we look to hire additional people, how does that inform our future, projection? So if we have a rolling forecast process, or if we’re looking to, we’re bridging fiscal years for so many companies now, as we look to 2022, how do we formulate, you know, an operating budget or an annual plan based on the future headcounts. So having that, that handing glove approach, you know, really resonates with me. And in some cases in past stops, we’ve done that very well or some cases, it’s done by the dreaded spread and then the data entry. So, that whole integration and being very intentional, especially when you’re in a growth mode makes a lot of sense.

Scott: (04:30); Yeah, Aaron, wouldn’t, you love it as a CFO to be able to look in your system and know exactly when somebody’s expected to be hired and when they’re gonna start, you know, having to be paid, right. Number one, and number two, be able to look in the system. And say, okay, so and so resigned. So, I know the budget for this particular or the expense in this particular department is gonna go down by X. Because I can already see it, the resigning right now. You probably don’t get that information for two, three weeks, maybe four weeks, maybe a couple of months after all this stuff happens, but this is, this has the opportunity for you to have real-time data.

Aaron: (05:12): The real-time data resonates with me, for sure. And, and depending on the size of the client, right, sometimes you get a client who’s small and where we can share information. And at the same time on bigger enterprises counting on, Hey, look, we, we have 17 different departments and how does all that information get cascaded? When each department’s hiring several people, it staggered and you have people in and out. It, it does, it, it a lot of times, you know, when you close the month up and you realize, Hey, my payroll was a little higher than, what we had budgeted, or much less what we had forecasted what happened. And so just being able to close that gap to create information, if it’s a one-size A2Z, is it irritating? Does it talk about the lack of controls? You know, how do you have a finance presence to be able to have that visibility much less? What’s the automation there? Absolutely.

Scott: (06:09): Having that, I would also say there is some amazing technology out there and amazing platforms that provide a lot of really good information, very, very powerful. They connect with the finance systems to an API, and it just makes things more efficient, more accurate. You get better information. But one of the things I really wanna emphasize is that HR, the CHRO, and the CFO finance ought to be incomplete lockstep. And what are they, what are the needs of that system? How do they need, how do the systems communicate with each other, uh, how do they integrate that is critical. This should not be just an HR decision, and it should not just be a financial decision. It needs to be a joint, decision because these two systems are going to interact more than any other, maybe, maybe a CRM, right? The financial system and the CRM where they’re Salesforce or whatever, there’s gonna be a connection point there too. So I really wanna encourage the CFOs, and the CHROs to really have a good connection with each other, and, and really get together and understand what the needs are of each other’s functions.

Aaron: (07:24): Well, and, and just maybe a final thought on that or it’s a twofold thought actually. So, the first one is, you know, making sure that everyone operates with the same source of truth, right? So that we’re spending, spend less time saying, well, what do you have, well, what do you have? Well, look, we’re all looking at the same thing. We say it’s X headcount. I say it’s X headcount. We’re not questioning it. The second thing is there’s no, there’s no real glory of putting things in spreadsheets and spending my time with data entry and, you know, going through convoluted says, I wanna spend my time, you know, saying here’s the data, and everyone wants to have an easy button. I get it right. But in the end have a smooth, efficient process. So that when Scott, you, and I look at the data, not only do we agree on it, but time instead of cobbling this information together, questioning whether it’s right, understanding the information, we go into it with an already bait report. It’s an authentic report that we can say, is good. Or this is bad. This is an action we need to take. Or, Hey, we’re having these particular issues. Let’s have a real management conversation. And I think the synthesis of all these is the tools are that enable this type of real professional discussion that increases the value of the enterprise, as opposed to having a tool for the sake of having a tool.

Scott: (08:53): I completely agree with Aaron right on.

Aaron: (08:56): Cool. All right. And that there.