The Finance Talent Challenge

By Sam Silvers and Steven Ehrenhalt

It’s hard to find good help these days.

That may sound like a cliché, but it’s also a real complaint from CFOs facing the headaches of a talent crunch. The job market for finance professionals is red hot, and good people have more choices than ever. Unfortunately, this challenging situation is not likely to change anytime soon. If anything, the finance job market will only become more competitive over time.

Are the most talented, highest-potential candidates knocking on your door? Or are you having enough trouble just hiring the people you need? Are you getting the most out of your high-talent people? Or are they too busy sending out their résumés?

A recent survey by Deloitte Touche Tohmatsu (DTT) and the Economist Intelligence Unit shows that finance talent is already in short supply (see figure 1). And most companies expect the problem to get worse before it gets better.

 
Source: “The Finance Talent Challenge: How leading CFOs are taking charge,” Copyright 2007 Deloitte Development LLC.

The survey also shows that many finance organizations are ill-equipped to excel in value-adding activities. Only about 50 percent of survey respondents reported their finance organization as strong in the competencies needed to align finance with the business or to stimulate the organization to achieve its strategic and financial goals. The most significant gaps are in areas such as strategic thinking, critical thinking, change management, and business savvy — capabilities that are increasingly vital for today’s finance organizations.

“We set out a vision for the global finance function, dubbed ‘Finance for the Future,’” says Andrew Bonfield, executive vice president and CFO of Bristol-Myers Squibb. The vision included initiatives that would help finance people focus “on business risks and opportunities, rather than just going into the detailed number-crunching exercises that organizations tend to like to do. When they’re busy producing numbers, they feel safe, but that means they are not looking to see how they can create value.”

How can CFOs and other finance leaders find the talent they need to deliver on finance’s ever-expanding role in the business?

 1. Start with a plan 

The finance function has unique needs and must therefore have a unique strategy for managing talent. Yet in our experience, most finance organizations don’t have a strategy. Some companies have an overall talent management strategy, but only a third of our respondents reported that they have a strategy for managing talent in finance. Chances are the other two-thirds are merely filling job openings rather than developing the people they need for the future.

If you don’t have a good strategy for managing finance talent, you’re simply filling the gas tank, not improving the engine.

It’s not just about making room for more bodies in the budget. Talent management means thinking broadly about the types of people you need now, while also preparing for what you’ll need in three to five years. And that requires some serious thought.

What must you do to develop talent from within? What are you doing to deploy resources more effectively…both for you and for them? How can you address the needs of today’s multi-generational workforce — particularly the challenge of attracting and retaining the next generation of workers? These are the types of issues an effective talent management strategy must address.

 2. Own the problem 

Calling Human Resources or a headhunter isn’t a talent strategy. While HR and recruiters obviously play an important role in the process, finance needs to own the strategy, to drive it, to execute it. After all, talent is a key input to delivering on your strategy and achieving your objectives. Unless you have the right people with the right skills and capabilities, you’re likely to come up short in the areas that matter most.

It’s okay to delegate some of the details such as recruiting and workforce administration. But when it comes to developing an overall talent strategy for finance, you need to be actively involved. Relying on outsiders to define your talent strategy is a recipe for failure.

“My job as a senior leader is to develop leaders for the future,” says Mark Buthman, senior vice president and CFO of Kimberly-Clark. “I have a functional accountability to make sure the pipeline of talent for senior financial roles is full — or that we have strategies to acquire talent from the outside.”

 3. Don’t expect a magic fix 

Some organizations plan to dodge the talent problem by outsourcing or offshoring some or all of their finance activities. In fact, the survey results show that alternative sourcing strategies are expected to be the biggest change in how organizations manage talent in the future. However, this “talent strategy” may be nothing more than wishful thinking.

The talent squeeze is a global phenomenon. Sure, there may be lots of great finance people in places such as China and India, but you won’t be the first to discover them. A lot of other organizations are bidding for their services too, which is rapidly eroding both the supply of talent and the cost advantage.

According to the survey results, today’s biggest talent shortage is in the Asia-Pacific region, where 67 percent of respondents reported that finance talent is already limited or inadequate. Eastern Europe isn’t far behind at 63 percent. Companies that are counting on these two regions as future sources of finance talent are likely to be disappointed.

The same goes for outsourcing. Potential vendors face the same talent constraints you do, which means you can’t address the talent shortage simply by making it somebody else’s problem. Even if your vendor somehow finds enough qualified people to do the job, they won’t be cheap. And you can be sure that one way or another, those costs will be passed on to you.

 4. Focus on critical workforce segments 

When it comes to finance talent, you can’t fix everything overnight. Priorities must be set. That means starting with your most critical workforce segments — the employees and positions that have the greatest impact on finance’s overall performance and business impact. Take financial planning and analysis (FP&A). Our research shows that within the finance function, FP&A is prime hunting ground for future CFOs since these professionals are able to turn data into actionable intelligence. FP&A is also vital to finance’s increasingly important role in business strategy. If you have a dearth of talent in this area, it might be time to take action.

Similarly, you might need to focus more attention on hiring MBAs and people with general business savvy. According to the survey results, many finance organizations continue to favor CPAs over candidates with a broad business background. Overall, 36 percent of survey respondents indicated that an accountancy certificate is important to the success of professionals in the finance organization, and 24 percent say it is critical. Meanwhile, only 31 percent indicated an MBA-type degree is important, and very few (9 percent) say it is critical — even though someone with an MBA is perceived by many as being better positioned for business leadership than an accounting specialist might be.

A strong emphasis on accounting and financial reporting was entirely appropriate over the past several years as companies struggled to regain investor confidence and comply with regulations such as Sarbanes-Oxley. However, now that the finance function is expanding beyond its role as corporate steward and is beginning to play a larger role in business strategy and execution, it needs more people with business savvy and general business experience — not just specialists with deep expertise in technical accounting.

 5. Mind the gaps 

As you identify the competencies required for your finance organization, chances are you will find plenty of gaps. Some of these skills can be taught; some can’t. That’s why it’s important to understand your required competencies and assess your staff on a person-by-person basis.

Bristol-Myers Squibb built a finance development framework, which set out the different competencies needed in different functional areas within finance, “so we could get people to focus on what their development needs are, and where they need to improve their skills,” says Mr. Bonfield. “We discovered technical gaps in individuals, as well as large skill-set gaps in the organization. The finance organization was focused very much on delivering the numbers, not how they delivered them.”

Find out exactly what is lacking across the finance function, within a given business unit or department, and for each current member of your finance team. Once you have pinpointed the gaps, you can develop a prioritized, multi-pronged strategy and roadmap to address the organization’s shortcomings. This will likely include a variety of elements, such as succession planning, performance management, rewards and recognition, recruitment, workforce planning, knowledge management, and leadership development. Improvements in each of these areas can help tailor your company’s standard HR programs to work most effectively for finance.

 6. Grow your own talent 

As demand for finance talent continues to outpace supply, finance organizations must find new ways to satisfy their growing talent needs. But, on a more encouraging note, in many cases the answer is right in front of you. The people working for you today may also be one of your best sources of talent for the future. You just need to help them develop and expand their skills and experience. A greater focus on career development can enable your finance organization to create the new capabilities it needs to support the business. It can also help you hold onto the talent you already have.

According to the survey results, lack of career advancement opportunities is the main reason talented finance people quit. Yet only 46 percent of companies develop their finance talent as a routine part of talent management. Career development is particularly critical for highfliers. Unfortunately, many finance organizations discourage their most talented people from gaining experience outside of finance. The survey shows that only 28 percent provide people with opportunities in other parts of the business, and 38 percent say their finance organization is reluctant to release talent to pursue outside opportunities.

Given the huge challenges of finding and developing qualified staff, it’s not surprising that many finance organizations do everything they can to keep people locked up in their current positions. Ironically, however, that loving embrace often becomes a death grip that sends finance’s most talented employees running for the exits.

Job rotations and other programs that provide high-potential people with opportunities outside the finance function offer a wide range of benefits: extending finance’s influence across the company; giving finance people the broad experience and personal connections they need to do their jobs more effectively; and, perhaps most important, keeping finance’s best talent stimulated and engaged — boosting their productivity and increasing the chances they will stay with the company.

“There’s any number of people I can name who’ve moved away from financial management to general management,” says Peter Gregg, CFO and executive general manager, strategy, of Qantas Airlines Group, “largely driven by the fact that we’ve given them the capability to do so.”

 7. Brand finance as a launch pad for results 

Once you have developed the programs and capabilities to make finance an incubator for talent, you need to spread the word. This is something that a lot of finance organizations talk about, but never quite master. In the survey, for example, 51 percent of respondents agreed that branding finance is important, but only 33 percent said their finance organization was doing a good job developing its brand.

Promoting finance as a launch pad for career progression is an essential strategy for attracting top-notch talent. It can also help to elevate finance’s role in business strategy. With better talent, finance can generate more value-creating ideas for the business. This can open up more opportunities for finance to play a leadership role in the organization, which can in turn help attract better people. It’s a virtuous cycle.

Changing the way people view the finance function can be a real challenge; however, companies that have done this well have reaped the rewards many times over.

 8. Practice what you preach 

As a finance leader, it’s easy to get so caught up in the task of developing your organization’s capabilities that you neglect to develop your own skills and experience. The survey results show that while finance leaders strongly urge highfliers to capitalize on development opportunities and seek diverse, practical business experience, they often forget to take their own advice.

Find international opportunities that give you first-hand experience at managing a global business. Look for opportunities that take you into the field to better understand the company’s business units. Expand your relationship with the board of directors. Actively pursue a greater role in shaping and executing business strategy. These types of opportunities can help expand finance’s profile in the organization, while giving your own career a big boost.

 No time like the present 

Tackling today’s talent challenges is hard work. But there’s no way to avoid it, so you might as well give it your best effort. Also, since many companies are currently ignoring the problem — and secretly hoping it will go away — you may be able to gain a competitive advantage by getting ahead of the curve. Talented finance professionals are already in great demand and the shortage of talent is only going to get worse. The sooner you get busy building and executing your talent strategy, the better. DR

 Sam Silvers is a principal with Deloitte Consulting LLP.
Steven Ehrenhalt is a principal with Deloitte Consulting LLP.