Many local government agencies still have not recovered from the Great Recession that occurred from 2007 until 2009. Emergency reserve funds are not up to the levels they were prior to the recession. Some agencies had to cut personnel by almost ten percent as a result, and now currently rely much more heavily on contract workers and temps, potentially tarnishing the perception of job security within government.
The scars of the Great Recession are not yet fully healed for some local government agencies, and it’s practicing good financial sense to be prepared if another one arrives – in fact, ongoing interest rate increases plus the recent volatility and fluctuation of the markets are causing concern among economic insiders. Some agencies are fearful of what another recession might mean for them. But in the decade since the recession, many have devised new strategies to help them better allocate staffing resources and hire and retain top talent.
Over 80 percent of agencies have chosen to integrate their human capital management and finance solutions when purchasing new software, enabling them to protect their two most valuable resources: their employees and finances. Human capital management software entails hire-to-retire functionality such as recruiting, onboarding, personnel management, payroll, compensation management, performance management and succession planning. Core financial functionality includes fund accounting, accounts payable, requisitions and purchasing, accounts receivable and bank reconciliation.
What are the benefits?
The benefits of integrating human capital management and finance are felt immediately by agencies when they make the switch. These benefits include a reduced risk of error, because they eliminate the need to manually enter duplicate data across two different platforms, and greater savings in time and cost because agencies can reduce overtime hours and work more seamlessly with a single software vendor. For overextended small- to mid-size HR departments, these benefits can be game-changing. But that’s not why integrating human capital management and finance solutions has become such an attractive strategy.
Smarter staffing and attracting top talent
Through the power of increased analytics, local agencies can make faster, better and more impactful decisions about their finances and human capital. When agencies integrate their human capital management and finance solutions, they are able to mine valuable business intelligence from data collected across the two solutions that were previously disconnected and turn that data into clear metrics that can be easily understood. As a result, agencies can now succeed in spotting trends in employee data, attrition risk, retention, cost of human capital and more.
For example, instead of needing to rely on contract workers and temps, government agencies could temporarily redirect employees to more revenue-generating departments agencies. They can utilize analytics to maximize current employee potential and save on the unintended cost of replacement and retraining new hires down the road. In the event of a recession, for example, this would minimize disruption so that agencies wouldn’t have to dip as far into emergency reserves. If their solutions are not integrated, they miss out on all that data.
Another feature of integrating human capital management and finance solutions allows local government agencies to better plan and budget for future growth and compensation. It is critical that the public sector is able to do this and do it well, because they have both a unique obligation to taxpayers to responsibly budget funds and a responsibility to government employees to pay out growing pensions, increasing healthcare costs, salaries and more. Integration of this kind allows agencies to truly invest in their human capital while remaining efficient.
Now is the time to fortify your agency with human capital management and finance integration. This integration gives agencies the power to plan, prepare and safeguard their finances and human capital to the best of your ability, no matter what comes your way.
So, if your agency is deciding how it’s going to plan for a safe and secure financial future when it comes to allocating staff time and investing in their acquisition and retention, there is one big idea they should remember: human capital management and finance integration.