Today’s Finance Workforce
No Longer Just the ‘Numbers Guys’

By Rodney Bergman and Rosanne Williams

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JUNE 2008 - Any CFO will acknowledge that the days when the corporate finance organization was home to the “numbers guys” are long passed. Today, senior management depends on its finance team for guidance on key corporate initiatives such as capital investments, outsourcing, major technology implementations, and business strategy. Consequently, finance is now viewed as one of the three most important workforces in virtually any company, according to recent research conducted by Accenture.

Meeting those expectations comes with challenges that, according to the research, can be attributed largely to underinvestment in the finance workforce. Although finance leaders recognize the finance workforce’s importance in helping a company achieve high performance, the investment in finance tends to be surprisingly small—often less than 2% of budgets, according to the Accenture study. Unfortunately, when companies make a more significant investment in their finance organization, they tend not to take a comprehensive approach but rather focus on a few “hot spots.” Generally, the initiatives that the authors find at companies deal with discrete aspects of the workforce, such as staff commitment and performance feedback. Unfortunately, these initiatives tend to have little to do with leadership, recruitment, or staff training. The result: Many finance executives believe they lack the organization, staff, or skills to meet their challenges.

Although such circumstances are prevalent, high-performing organizations are making an appropriate investment in both skills and capabilities. The Accenture study found that “finance leaders” believe they realize more benefit from their transformation programs and better returns on their workforce investments, and that they achieve a generally high level of performance. This comes in the face of research findings which show that corporate leaders are mindful of their responsibility to generate as much shareholder value as possible from building their financial performance. In ranking the functions most critical to achieving high performance, finance tied with strategic planning as one of the top three functions—just behind customer service and sales.

The research also found that finance executives believe that the skills and capabilities of their workforce are among the most important factors in achieving high-performance finance—more so than efficient processes, appropriate tools and technology, or an effective strategy.

Expectations

Finance departments used to be narrowly focused on the management and containment of expenditures, the timely collection of revenue, compliance with regulatory statutes, and the accurate reporting of financial results to shareholders and analysts. Over time, however, their role has changed, and the finance team has become increasingly responsible for the success of the corporation’s transformation programs. Finance also is expected to advise top management on such growth-related matters as mergers and acquisitions, product-line changes, organizational restructurings, and geographical expansions.

While CFOs and senior finance management have invested heavily in new technologies and business processes to support this greater role, they have largely overlooked the need to simultaneously upgrade and enhance the workforce. Without the advent of new skills, new training and, in some cases, new people, finance leaders can find themselves in charge of a function that falls short of performance expectations.

“There is an expectation that we in finance someday will be business leaders,” said one CFO interviewed in connection with the study. “So beyond the basic technical skills, the educational background and so on, you also need skills in change leadership and in performance management. We are ensuring that the people we’re putting in positions now in our finance and accounting organization are going to drive our long-term performance. Whereas 10 years ago, if you were a great finance mind, you were just going to keep moving up. It takes more than that now—I’m not promoting anybody to a VP position who isn’t also a proven organizational leader.”

Nevertheless, many of the finance leaders surveyed do not see the increasingly mission-critical finance function achieving high performance. Less than 20% of all respondents and just 13% of CEOs who named finance a top-three function said it performs at a high level.

Other Accenture research has found that most finance leaders do not believe they have the people with the skills needed to meet the challenges. Most say their workforce initiatives are inadequately developed or insufficiently applied, and only one-third are satisfied with those initiatives. Executives report facing such specific challenges as recruitment, retention, leadership development, and adaptability to change—in short, the entire employee lifecycle.

More specifically, the survey of finance executives found that:

  • More than 60% described their staff recruitment strategies as inadequately developed.
  • More than 50% said finding qualified finance staff is a challenge.
  • Fewer than 25% were satisfied with their recruitment and development programs.
  • More than 60% were dissatisfied or only somewhat satisfied with their retention programs.
  • Less than 50% said their departments adapt well to change, and even less believe they anticipate it well.
  • Only half believed that their top leaders work well together, and less gave a high rating to the team’s overall quality.

One CFO said: “We recognize that we are not doing what’s needed to get deep ranks in the finance organization and that our line of succession is very thin. … We know we need to dig in on these issues.”

Lack of Alignment

The authors believe this is where the inherent conflict comes in: While most finance executives participating in the study agreed that the workforce is more important than technology and process for creating a strong finance organization, these same executives allocate relatively few resources to the workforce, as compared to their investments in technology and process enhancements.

In fact, one-third of those surveyed reported spending 2% or less of their investment budgets on workforce improvement. These investments continue to be largely ignored during such company-wide transformations as enterprise resource planning (ERP) implementations, outsourcing, and post-merger integrations. (Nearly 40% of respondents reported either minor or no investment in workforce improvement at these times.)

By contrast, one respondent who invested significantly in the finance workforce during a major transformation said: “We would be in a very marginalized position … instead, we are enjoying a great degree of success and our people are optimistic. We often think of what would have happened if we had not invested in the workforce—I believe that we would be in a big hole and trying to dig ourselves out of it.”

Finance research has also revealed serious gaps in initiatives intended to make finance workforces capable of achieving high performance. For example:

  • 40% of respondents do not have leadership initiatives in place.
  • 81% have staff development initiatives in place for only half of their employees, and nearly 61% have them for one-quarter or less of their employees.
  • 66% have training initiatives in place for less than half of their employees, and just over one in three companies have initiatives to develop employees’ ability to respond to change.

The Leaders

An inescapable conclusion of the authors’ research is that moving from “talking the talk” to “walking the talk” requires finance executives to take a much more comprehensive approach to workforce investment. They also should consider making improvements in workforce productivity and service to the organization as essential as technology enhancements. About 30% of companies—the “finance leaders”—already do this for reporting skills that are equal to or better than those of competitors in three or four key aspects of the finance function. These leaders spend more of their budgets on workforce development and take a much more comprehensive approach toward that investment.

For example, 31% of these leaders spend a minimum of 5% of their budgets on workforce-oriented activities, compared to only 19% of the “laggards.” Similarly, while less than half the laggards said they had strategies to address four out of the six basic aspects of workforce development—leadership acquisition and development, organizational structure, talent management, workforce performance, employee engagement, and change management—the majority of leaders had strategies in place for all six.

A comprehensive approach to workforce performance can reduce costs while increasing productivity. Consequently, an organization can attract employees with higher levels of proficiency, decrease the time it takes employees to gain additional skills and knowledge, retain top performers, and put in place performance management processes that result in continuous improvement and higher performance.

Comprehensive workforce initiatives can be particularly important at key moments in an organization’s lifecycle, such as during a change in leadership or strategy, a merger or acquisition, a systems consolidation or ERP implementation, or even a period of increased regulatory oversight. In addition to helping win employees over to the organization’s new focus, goals, and procedures, comprehensive workforce initiatives help employees develop the skills they need to adapt, and ensure that change does not result in the loss of top talent. For companies implementing new enterprise performance management (EPM) toolsets, workforce initiatives can help the people who will use the new tools acquire the required skills and business acumen. During a post-merger acquisition, workforce initiatives can also provide that skills from the old and new organizations complement each other and align for maximum benefit.

Finance leaders report that they feel much better equipped to face the challenges that affect their ability to perform at a high level, and are less likely to report feeling extremely challenged by the following: “number or caliber of managers/leaders,” “organizational structure/job definition and alignment,” “skills and knowledge of workforce,” “employee engagement, morale, and commitment,” and “workforce adaptability to change.” Nearly 60% of leaders reported having finance leadership teams that are very capable of delivering high levels of performance, compared to only 34% of the laggards.

The same holds true for attracting and developing skilled staff. While nearly one in four laggards reported difficulty attracting and growing talented staff, less than one in 10 leaders reported the same difficulty. Furthermore, when it came to preparing for change, taking a more comprehensive approach also paid dividends.

Finally, the companies that invested significantly in workforce initiatives during transformation programs achieved a greater percentage of expected benefits than those that did not. This was found in terms of their control environment; the service provided by finance to the rest of the organization; operational efficiency; and data quality, speed, and access.

‘Walking the Talk’

Although the authors have observed that CFOs’ approaches differed in terms of how they implement change to maximize an investment in their workforce, each incorporated three basic steps: diagnosing shortfalls in current workforce performance, establishing a target state, and devising and implementing a comprehensive plan. What distinguishes leading companies are the tools and expertise they use to support these steps.

Diagnosing shortfalls. To help diagnose any shortfalls in finance workforce performance, companies need to use a combination of surveys, focus groups, and in-depth interviews with a wide range of stakeholders to gain insights into the state of the finance function, its desired capabilities, any differences from existing capabilities, and how it can best support the overall organizational goals. Going through this process also helps a company establish and support clear, objective performance metrics that will allow it to analyze the return on any workforce investments.

A company should focus on six key dimensions of workforce performance:

  • Leadership. Has the company focused its efforts on the most important issues to create a climate that attracts and retains top talent who will help the function build strong, productive relationships with the business? Accenture estimates that 15% to 20% of an organization’s business performance is determined by the quality of its leadership.
  • Organizational structure. This can enable finance workforces to better align with the organization’s strategic direction, understand how finance roles and leading practices can be integrated into the function’s structure, and customize the basic organizational structure that will deliver the specific finance capabilities required. Optimal organization design has been shown to contribute to lower cost, increased effectiveness, and improved focus on higher value-added activities.
  • Talent management. This ensures that the organization’s workforce is “fit for purpose.” Even when it isn’t, organizations with strong talent management know exactly where the fit is off and can act quickly to resolve the situation. The difference between a “right” and slightly “out of balance” talent pool can mean as much as 15% to 20% of the total labor cost for the finance organization.
  • Workforce performance. Driving high levels of workforce performance through on-demand, role-based information delivery to employees can help organizations achieve productivity increases of up to 20%. Furthermore, by bridging skills gaps in the workforce and elevating the performance of average workers, organizations have been able to significantly reduce project failure and achieve dramatic productivity increases, respectively.
  • Employee engagement. A Gallup study has shown that 20.6 million employees, or 15% of the U.S. workforce, are actively disengaged. This leads to lower productivity, lower talent retention, and high absenteeism, at a cost to the nation’s economy of $328 billion. Conversely, almost nothing can stop a motivated workforce armed with the tools and knowledge it needs to complete its mission. Focusing on employee engagement can help finance executives ensure that their workforces are motivated and not distracted by organizational changes or career frustrations.
  • Ability to change. Flexibility is critical in a changing business environment. The alternative leaves workforces in disarray and incapable of supporting continuous improvements and progress. Research shows that only one in nine workgroups can effectively manage change. By contrast, the creation of a change-ready culture ensures that the finance organization is capable of implementing, owning, developing, and sustaining the process and structural changes required for attaining high performance.

Establishing targets. Data collected in the shortfall diagnosis process should be synthesized, organized, and analyzed to provide a clear, actionable picture of where gaps exist within each dimension. The analysis should provide a view of where a finance workforce falls short compared to industry benchmarks, key competitors and peers, and the needs and desires expressed by shareholders. An organization can then prioritize each opportunity for improvement in terms of its value to the enterprise.

Devising and implementing the plan. Creation of a detailed action plan is necessary to improve each of the workforce dimensions that have been diagnosed as deficient. Such a plan should classify improvement opportunities into quick wins and long-term goals, and should be explicit about the dependencies between each. The ultimate goal should be developing superior capabilities in each of the six workforce dimensions.

Note that the comprehensive and holistic investment in the workforce does not necessarily mean addressing all six dimensions simultaneously. A company may already have sufficient capabilities in some areas and opt to focus on the areas that are lacking. Or, it might look for a substantial and immediate payback in one or two areas.

The All-Important Human Component

At a time when studies reveal that investment in the finance workforce remains small, the good news is that finance leaders readily acknowledge the importance of growing the skills and capabilities of their people in the face of their function’s importance within an organization. This conclusion is further bolstered by research which shows that by making the appropriate investment—in workforce skills and capabilities—high-performing organizations have reaped tangible rewards in terms of greater benefits from their transformation programs, better returns on their workforce investments, and a higher level of performance.

Even in a profession characterized by ratios, equations, and spreadsheets, the human component is what is most important, because people are most responsible for achieving superior financial results. Companies that take a focused and comprehensive approach to developing their financial workforce—using proven methods for implementing cost-effective and targeted programs to strengthen any weaknesses—are the ones most likely to achieve high performance.


Rodney Bergman is a senior executive in Accenture’s talent and organization performance service line, and Rosanne Williams is a senior executive in Accenture’s finance and performance management service line.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



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