Bennet
Sung
Published on
October 9, 2023
Funding innovation often stands as the key differentiator, HR (Human Resources) and Finance leaders find themselves at the forefront of a crucial conversation. Unlocking alternative ways to budget or fund innovation in the digital workplace is not just a strategic endeavor but a necessity to keep organizations competitive and agile. I had the privilege of sitting down with two leaders, Ashley Womack, CFO (Chief Financial Officer), and Cindy Hartman, Leader of Global Shared HR Services, to delve into this vital topic. The interview navigates through seven pivotal questions, from exploring the domain expertise of HR and Finance to understanding how metrics drive expectations, and from strategic budgeting experiences to innovative approaches like ROI (Return on Investment) calculations and pilot programs. This insightful journey uncovers how HR and Finance are working together as one team to shape the future of workplace innovation.
A Chief Financial Officer (CFO), exemplified by Ashley Womack's role, is a pivotal executive in a company, responsible for overseeing its financial well-being. In Ashley's current position at Alpha Two, a healthcare software firm under private equity ownership, her role involves managing the company's financial growth and fostering innovation while ensuring it meets both top-line (revenue) and bottom-line (profitability) expectations. Drawing from her prior experience as the CFO of Abrigo, another software company, Ashley brings a wealth of knowledge to her position. She has spent over 20 years in performance improvement consulting across various business sectors, shaping her perspective on business growth. Her approach centers on achieving a harmonious balance between expanding the company's operations efficiently and maintaining financial stability. This perspective closely aligns with the core principles and solutions provided by MeBeBot, underscoring the CFO's instrumental role in making strategic financial decisions that drive the company's overall success.
The Head of Global HR Shared Services at International Game Technology (IGT), Cindy Hartman plays a crucial role in managing human resources for a company with around 11,000 employees engaged in the casino, slot machine, lottery, and digital gaming sectors. With 13 years of experience at IGT and a long history in HR, Cindy's current role is particularly exciting and challenging. Cindy is focused on digital transformation and digital services, aiming to explore how these initiatives can positively impact the company's financial performance and enhance the overall employee experience. This entails adapting to the unique challenges and regulations of the highly regulated gaming industry, making her role both intriguing and demanding. The Head of Global HR Shared Services role is pivotal in shaping the company's future by leveraging digital solutions to optimize operations and improve the employee journey.
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The panel discussed the results of a pre-webinar poll on LinkedIn regarding people's confidence in building a business case for and purchasing AI in their companies. The poll showed that the responses were quite evenly split: 39.4% were confident, 33.3% were not confident at all, and 21.2% were confident.
Beth White, the founder and CEO of Mebebot, explained "I am not surprised to see some uncertainty because many are still in the learning phase about AI. However, she emphasized the importance of asking questions, learning, and having conversations with vendors and industry peers to gain confidence in presenting a business case for AI."
Ashley Womack, "A bit surprised at the high percentage of respondents who were confident about AI. She suggested that this might reflect how rapidly the market is changing, with AI becoming more mainstream and trusted for everyday productivity. She mentioned the recent rise of AI technologies like ChatGPT and the acceleration of AI adoption, which was not as common a year or two ago."
The expectations between HR and Finance include the sharing of key metrics and KPIs (key performance indicators) to align on various aspects related to the workforce and financial management. Here is a summary of what Cindy and Ashley had to say:
Cindy highlighted the importance of sharing HR metrics with Finance, including turnover rate, cost of hire, and time to hire. These metrics are vital for workforce planning and allow Finance to forecast the costs associated with hiring and employee turnover.
Ashley also emphasized the significance of aligning HR and Finance metrics. She mentioned two key areas of focus:
- Employee Retention: Ashley pointed out that employee retention is a critical KPI (key performance indicators) that impacts the organization's financial health. Metrics related to employee satisfaction, turnover rates, and the cost of hiring and training new employees all contribute to understanding employee retention. High attrition can be costly in terms of recruitment expenses and productivity losses.
- HR Expense Ratio: Ashley suggested evaluating the ratio of HR expenses to the number of employees. This metric helps determine how efficiently the organization is managing its HR costs. An optimized ratio ensures that the organization is investing appropriately in its employees' well-being without overspending.
Overall, the key expectation is that HR and Finance collaborate to share relevant metrics and KPIs that provide insights into the workforce's impact on the company's financial performance. The specific metrics may vary depending on the organization's size and complexity but should contribute to informed decision-making and cost-effective management of human capital.
The shift from traditional tactical budgeting to a more strategic approach, as discussed by Ashley and Cindy, is a transformative process in financial management. Historically, budgets often followed a routine of replicating prior year's allocations with minor adjustments. Ashley emphasized the importance of aligning budget decisions with an organization's overarching strategic goals. She stressed the need to link budget allocations directly to desired business outcomes, urging a forward-thinking perspective that considers long-term strategic objectives, rather than just the current fiscal year. Continuous evaluation and monitoring were also key, emphasizing that strategic budgeting is an ongoing, adaptive process.
1. Outcome-Focused Allocation
- Link budget decisions to specific business outcomes
- Move beyond historical spending patterns
- Focus on investments that drive measurable results
2. Cross-Functional Collaboration
- Involve both HR and Finance in budget planning
- Ensure alignment between workforce strategy and financial goals
- Create shared accountability for results
3. Long-Term Perspective
- Consider multi-year impacts of budget decisions
- Invest in capabilities that build future competitive advantage
- Balance short-term needs with long-term strategic objectives
4. Continuous Monitoring and Adjustment
- Implement regular budget reviews and adjustments
- Track performance against strategic objectives
- Adapt allocation based on changing business conditions
Both leaders discussed innovative approaches to funding workplace technology and digital transformation initiatives:
Cindy emphasized the value of starting with pilot programs to demonstrate value before requesting full funding. This approach allows organizations to:
- Test solutions on a smaller scale
- Gather concrete data on effectiveness
- Build confidence among stakeholders
- Reduce risk of large-scale implementation failures
Ashley highlighted the importance of building business cases based on clear return on investment calculations:
- Cost Savings: Quantify reductions in operational expenses
- Productivity Gains: Measure improvements in employee efficiency
- Revenue Impact: Connect innovations to revenue growth opportunities
- Risk Mitigation: Factor in costs of not innovating
Both leaders discussed collaborative funding approaches:
- Shared Services Funding: Pool resources across departments
- Innovation Budgets: Dedicated funding for experimental initiatives
- Success-Based Scaling: Increase investment based on proven results
The conversation revealed several key strategies for successfully securing funding for AI and digital workplace innovations:
- Present clear metrics and benchmarks
- Use industry comparisons and best practices
- Provide concrete examples of expected outcomes
- Include risk assessment and mitigation strategies
- Engage both HR and Finance in the planning process
- Ensure leadership understands the strategic importance
- Build coalition of support across departments
- Address concerns proactively
- Start with proof-of-concept projects
- Scale based on demonstrated success
- Allow for learning and adjustment
- Minimize initial financial commitment
- Highlight competitive advantages of innovation
- Demonstrate risks of falling behind
- Show how innovation supports strategic business objectives
- Connect to market trends and customer expectations
The discussion revealed several common challenges in securing innovation funding and strategies to overcome them:
Challenge: Limited available funds for new initiatives
Solutions:
- Identify cost savings from current operations to fund innovation
- Propose phased rollouts to spread costs over time
- Explore shared funding models across departments
- Consider leasing or subscription models versus large capital expenditures
Challenge: Fear of investing in unproven technologies
Solutions:
- Start with low-risk pilot programs
- Provide detailed risk mitigation strategies
- Share success stories from similar organizations
- Offer guarantees or trial periods from vendors
Challenge: Multiple initiatives competing for the same budget
Solutions:
- Clearly articulate strategic alignment
- Demonstrate unique value proposition
- Show how innovation supports multiple business objectives
- Present comprehensive cost-benefit analysis
Challenge: Decision-makers unfamiliar with technology capabilities
Solutions:
- Provide education and training sessions
- Use simple, business-focused language
- Arrange demonstrations and hands-on experiences
- Leverage external expertise and testimonials
Both leaders emphasized the importance of establishing clear success metrics before implementation:
- Cost per Employee: Reduction in HR service delivery costs
- Time to Resolution: Faster response to employee inquiries
- Productivity Gains: Measurable improvements in employee output
- ROI Timeline: Clear path to return on investment
- Employee Satisfaction: Improvements in engagement surveys
- Adoption Rates: Percentage of employees using new tools
- Self-Service Utilization: Reduction in manual support requests
- Retention Impact: Connection between innovation and employee retention
- Process Efficiency: Reduction in manual tasks and processes
- Error Reduction: Decreased mistakes in routine operations
- Scalability: Ability to handle growth without proportional cost increases
- Compliance: Improved adherence to policies and regulations
The conversation concluded with insights about the evolving relationship between HR and Finance:
- Joint ownership of employee experience outcomes
- Collaborative goal setting and measurement
- Integrated planning and budgeting processes
- Regular cross-functional reviews and adjustments
- Shared platforms for data and analytics
- Integrated reporting and dashboard systems
- Collaborative decision-making tools
- Unified view of employee and financial data
- HR and Finance as equal partners in business strategy
- Joint presentation of business cases to leadership
- Shared responsibility for innovation outcomes
- Collaborative approach to risk management
Based on the insights from Ashley and Cindy, here are the essential elements for successfully funding workplace innovation:
1. Start Small, Think Big: Use pilot programs to demonstrate value before seeking larger investments
2. Speak the Language of Business: Present innovation initiatives in terms of business outcomes and financial impact
3. Build Bridges: Foster collaboration between HR and Finance from the beginning
4. Measure Everything: Establish clear metrics and KPIs before implementation
5. Tell the Story: Use data and success stories to build compelling business cases
6. Plan for Scale: Design funding strategies that can grow with proven success
7. Embrace Change: View innovation funding as an ongoing process, not a one-time event
The conversation between Ashley Womack and Cindy Hartman illuminated the critical importance of collaboration between HR and Finance in driving workplace innovation. Their insights reveal that successful funding of digital transformation initiatives requires more than just a good idea—it demands strategic thinking, collaborative planning, and a commitment to measurable outcomes.
As organizations continue to navigate the challenges of hybrid work, digital transformation, and evolving employee expectations, the partnership between HR and Finance becomes even more crucial. By working together, these functions can unlock the funding needed to create innovative, efficient, and engaging digital workplaces that drive both employee satisfaction and business success.
The key is to approach innovation funding not as a cost to be minimized, but as an investment in the future—one that requires careful planning, clear metrics, and ongoing collaboration to achieve maximum impact.
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