This story, written by Steve Dunne, originally appeared on the Workday blog. We thought our local readers would also find it interesting.
Digital technologies create new opportunities for finance to add strategic value, and they are key to CFOs' ability to drive innovation within their function. However, CFOs face a significant obstacle to achieving their innovation objectives: a lack of talent.
Our "Finance Redefined: Workday Global Finance Leader Survey"—which gauged the views of over 670 CFOs and senior finance leaders around the world—pointed to a lack of relevant skills within finance as the number one barrier to driving innovation within the function. A lack of relevant skills outranked a number of other barriers, from budget constraints to the reluctance of leadership teams to challenge the status quo. This talent gap is also expressed in the EY study, "The DNA of the CFO 2016", with almost half (47 %) of respondents reporting that their current function does not have the right mix of capabilities to meet their future priorities.
How are finance leaders addressing this talent management issue? As part of our study, we spoke to finance leaders both externally and within Workday for their insights on preparing their teams for the future. We found that the skills needed in finance are evolving fast and finance leaders are going to have to reboot their approach to recruiting and developing talent if they are to close the gap between the skills they have today and what they will need in future.
The role of finance is evolving from a back-office function to a strategic partner of the business. Finance teams are focusing on looking forward and leveraging data to drive planning and support decision-making.
Only a third of finance leaders felt strongly that their finance teams had the strategic "soft" skills—such as strategic thinking or negotiating—to partner effectively with the business.
While traditional finance skills will always be important, the expanding role of finance and a greater focus on data and analysis is requiring new skill sets, from greater analytics skills to softer skills such as strategic thinking and communication. As Hamilton points out, businesses today require a finance professional who not only has experience in accountancy, but also some wider experience in other business areas.
New roles may also emerge in finance teams to support the need for these skills. According to the "Finance Redefined" study, data scientists are the most important emerging role for the future finance function, with statisticians and data security professionals reported as second and third.
How can finance leaders prepare their finance teams for the future and find the new skill sets and talent they need? In our research, respondents identified three ways they are helping to close the skills gap: Rethinking sources of talent, recruiting diverse skill sets, and retraining existing staff.
While finance leaders may have a clear view of the talent and skills they need on their teams, finding the right candidates can be a struggle. For example, Workday's survey found that 71 % of finance leaders say they face tough competition when recruiting the best analytics and digital talent.
Finance leaders may need to take a fresh look at their recruitment approach and where they are looking for talent. Traditional approaches to recruitment may not offer many of the emerging skill sets needed in the finance function. According to the Robert Walters survey, "Bridging the Skills Gap in Finance Functions", 61 % of CFOs have trouble sourcing candidates from traditional talent pools.
"A client recently said that they expected their college interns to be cutting edge, and really thinking about topics such as visualisation and analytics. But they were hiring their interns from the same places they hired their CPA (certified public accountant) graduates", says Matt Schwenderman, Principal at Deloitte.
Finance leaders recognise that new recruits with degrees in a wider range of subjects can bring greater diversity to their teams, such as backgrounds in economics or psychology.
Assessing for soft skills—such as communication or critical thinking—as part of the interview process can also help identify candidates who could be well suited for a business partnership role. The Robert Walters survey notes that psychometric testing, presentation exercises, and preparing case studies ahead of an interview may give recruiters an opportunity to assess candidates' soft skills.
Given the expansion and diversity of skill sets emerging in finance, finance leaders may also need to rethink the traditional finance career path and how to develop and retain team members. This was reflected in the "Finance Redefined" study, with 76 % of CFOs reporting that finance career paths and incentives need to be re-evaluated to meet the expectations of younger finance talent and to deliver on the more strategic approach that is required. Collaboration with their peers in HR can help define a long-term strategy for recruiting and retaining finance talent.
As finance leaders look to plug their skills gaps, collaboration with their peers in HR can help define a long-term and innovative talent strategy. However, effective collaboration between these teams may be lacking. Our study found that only 31 % of respondents reported "seamless" collaboration with the CHRO, with 58 % reporting "occasional" or "little to no" collaboration.
Robynne Sisco, Co-president and CFO of Workday, notes the importance of HR and finance leaders working together to make decisions about talent investment. "Finance and HR need to work closely to understand hiring plans and where we need to invest in growing teams to move our business forward", she says.
Addressing the skills gap is not just about recruiting new talent—the focus should also be on improving the skill set of existing staff. But how can this be done? Schwenderman describes the complexities of developing current teams. "As our business model becomes more integrated, our people need to be more integrated too", says Schwenderman. "But how do you evolve someone's collaboration skills, their analytics and insight skills, when they've grown up doing rotations around general ledger accounting, tax, and treasury? How do you get them to be collaborative partners and not order-takers, stewards, or technicians?"
The fast pace of change can also make it challenging to get existing staff up to speed with new technologies. "You have a number of folks that know their organisations well but that didn't grow up in a digital native age", says Schwenderman. "They are used to having more time to learn new tools and technologies and apply them than the pace of innovation is allowing today."
One solution is to provide better training and development opportunities in order to build the necessary skills. Over half of the respondents to the "Finance Redefined" survey identified "a training curriculum that focuses on digital and advanced analytical skills" as a priority over the coming three years, indicating the importance of training up teams to meet the demands of new technologies.
Another approach is to rotate staff into different parts of the organisation, such as operations or sales, so that they gain greater knowledge of the business and have an opportunity to build relationships.
For the full research findings behind the "Finance Redefined" global study, read the report here.
About the "Finance Redefined: Workday Global Finance Leader Survey"
We surveyed more than 670 finance leaders across the Americas, Europe, Asia-Pacific, and South Africa, covering 10 main sectors from September 2017 to January 2018. Over one-third (38 percent) came from large organisations with more than $1 billion annual revenues, with 35 percent between $500 million and $1 billion, and 27 percent between $250 million and $500 million. Over one-third of respondents were CFOs, finance directors, or chief accounting officers/controllers, and the remaining were drawn from senior finance roles, such as head of financial planning and analysis or vice president of financial operations.