Workday and KPMG Report: Strategic Workforce Planning Closes the HR-Finance Gap

As the workforce undergoes wave after wave of change—from the “Great Resignation” to the rise of contingent and hybrid work—it’s become clear that traditional, tactical workforce planning no longer suffices. Today’s employers need strategic workforce planning that aligns their people with their strategic aims, as discussed in the recent Workday and KPMG report, “Strategic Workforce Planning: Closing the Gap Between Finance and HR.”

With strategic workforce planning, finance, human resources (HR), and operations no longer have to stay in their respective corners. Instead, they come together to create a flexible, future-oriented workforce plan that matches talent with strategy—even as an organization’s strategies and skill needs evolve. 

This continuous workforce planning relies on decision-ready data. The problem? Only 12% of organizations say data is fully accessible to those who need it, according to a 2022 global Workday survey. To align workforce talent with the business, HR leaders must look at the needs of today while also forecasting the needs of tomorrow. They can’t do that with siloed data and static plans.

Prepared Now, Planning for the Future

The pandemic has caused people to rethink fundamental assumptions about the workplace—factors as basic as where and when they work. Employers must be able to understand those recalibrations.  

With people, financial, and operational data unified in one system, it’s easier to generate accurate, real-time insights around employee engagement and productivity. When workforce planning joins finance with HR, business leaders don’t have to rely on gut instinct or outdated data when determining whether to plan a change, such as making remote work permanent. They can make strategic, data-driven decisions.

And the capabilities and skills that will power an organization in the future likely will look a lot different than they do today. “To maximize talent, leaders need a comprehensive understanding of their workforce, its capabilities, and how they map to an organization’s future needs,” says Shetul Shah, a former financial planning and analysis (FP&A) practitioner and current Workday financial planning lead.

Strategic workforce planning considers the near term, of course, but also long-term workforce needs. It identifies the divide between today’s workforce skills and the impending future state, then implements a plan to bridge that divide. Simply hiring new people won’t be enough. More than half of organizations plan to reskill at least 50% of their workforce in the near future to stay competitive and agile, according to Workday research.

This focus on skills requires cloud-based workforce planning technology that unites HR and FP&A systems. When finance and HR work together, they can help their organization take a data-fueled approach to employee and skills development. 

“Workforce planning technology can help HR and finance collaborate more efficiently,” says Renee Sinha, director, enterprise solutions at KPMG. “Rather than working on different models, both functions can now approach talent using the same real-time data in an aligned manner. HR can share its requisitions and headcount planning more effectively, which helps finance better model its plans.” 

Spotlight on HR

With modern tools, HR leaders no longer have to guess or manually track how to develop top talent. They can harness data-driven insights on the specific capabilities required for talent success. And HR can use those insights to better identify promising candidates for professional development and to create programs geared toward long-term retention and career success.

Modern workforce planning moves beyond purely descriptive metrics to provide diagnostic and predictive data. That includes why people leave the company, who’s most likely to leave, and how the company can respond. With better understanding of the workforce and of workforce trends, HR can help drive company growth.

Spotlight on FP&A

People are a company’s biggest expense. No wonder, then, that finance traditionally has viewed employees as a cost item. But strategic finance leaders need to take a broader view of personnel that encompasses hiring and engagement. If the wrong people are hired, or the right people become disengaged and leave, financial performance suffers.

To maximize talent investments, FP&A leaders should look beyond headcount costs and collaborate with HR to model costs associated with hiring, retention, and attrition. These often-siloed teams can work together to leverage robust data and create what-if scenarios that compare possible workforce restructurings. As the workforce continues to evolve, FP&A leaders and HR leaders will need to keep collaborating.

The Way Forward

Before rushing to hire, business leaders might consider that simply filling empty seats could actually be holding their organizations back. When HR and finance teams collaborate using real-time data, workforce planning shifts from the tactical to the strategic. Rather than simply slotting people into open positions, HR can identify the skills that new hires should have now and in the future. They can also identify and mitigate acquisition and retention challenges and perform what-if labor analyses. All of which will allow companies to make the most of their most vital asset: their people.

Read the full report to learn more about how strategic workforce planning can close the HR-finance gap.