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Numerical Insights publishes articles on a variety of topics including data analysis, data visualizations tools, improving business results, supply chain analytics, HR Analytics, gaining competitive advantage, strategic workforce planning, and improving the bottom line. Feel free to browse our topics below.

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Procurement, HR or Finance: Who Will Ultimately Own the Cost of the Workforce?

When we think about our workforce, we generally think about employees of our company. These are the full time and / or part-time people who are on the company payroll and whose names exist in HRIS systems. For this group of people, most of their experiences are driven by the activities of HR (training, performance evaluation, recruitment, promotions, etc.)

There is another portion of the workforce that is growing as the freelance economy progresses. As an independent consultant, I tend to fall into that category with my clients. My experience with the company, aside from working directly with the leadership area that hired me, is primarily with the Procurement department. They control the approval process for my relationship with that company.

For both types of workers mentioned above, Finance deals with the budgeting process. They tell you whether you can afford the employees you say you need and they approve a separate budget line item which sets how much you can spend externally. 

The total cost of your workforce will include the items associated with all workers: employees, contractors and external consultants. Since Finance sets the budgets for these, do they ultimately control the cost of the workforce? Not necessarily. A budget is a just a budget and the area which controls whether you can go over budget on internal or external headcount will control the total workforce cost.

In some companies, budgets are closely monitored and it is difficult to exceed your budget without a great many approvals. In other companies, if approval of a new internal or external headcount resides within a local division, then corporate HR and corporate Finance have little control over the cost. 

At current time, it seems that no one area of the company owns the cost of the workforce, especially since employees and external workers land on separate line items in Finance. As we move toward a greater percentage of the workforce coming from freelance individuals, it seems that we will need substantial collaboration between Finance, HR and Procurement, in addition to substantial changes to HRIS systems to track all workers and accurately assess the cost of the workforce.

Tracey Smith is an internationally recognized business author, speaker and analytics consultant. She is the author of multiple books and hundreds of articles. Tracey has worked with and advised organizations, both well-known and little-known, on how to use data analytics to impact the bottom line. Her career spans the areas of engineering, supply chain and human resources. If you would like to learn more, please visit www.numericalinsights.com  or contact Tracey Smith through LinkedIn. You can check out her books on her Amazon Author Page.