One of the challenges facing today’s finance executives in transforming the finance organization from a back office function into a successful front office strategic advisory role is a shortage of talented finance professionals and leaders.
Without the necessary finance talent and an operating model to support finance transformation initiatives, it is increasingly difficult for CFOs and their teams to effectively influence business decisions.
Have An Effective Finance Talent Strategy
The skills necessary to successfully influence strategic decisions are different from the skills required to fulfill finance’s stewardship and operator roles.
It is therefore critical for CFOs to take stock of the current talent and evaluate whether the available talent is capable of moving the business forward.
Although in most organizations the HR function is responsible for overseeing the overall talent strategy of the organization, it is critical for the CFO to collaborate with HR to determine Finance talent needs and allocation with the function.
The CFO is in a better position than the HR Manager to know and understand the skills required to drive Finance effectiveness.
In one of their CFO Insights publication, Deloitte identifies critical questions that Finance leaders must answer prior developing their organization’s finance talent strategy:
- What knowledge, skills, abilities, and experiences do we need now? Where do we need them? How many do we need? When do we need them?
- Which skills will be most critical to our business in the next three years? Five years? Longer term? How are these skills and skill mix changing?
- What are the specific competencies that we need to develop in our finance workforce, from both the technical and leadership perspective? Are there new competencies required in both finance and the business generally?
- What are the “people” or talent programs, policies, and practices necessary to realize both those technical and managerial competencies? Can we leverage or build upon what HR already provides, or do we need something new or unique?
- Why would somebody join our company’s finance department, given the high demand of finance professionals? Why would they stay? What makes our finance function a career destination rather than a career way station?
- What is my role and those of our finance leaders and C-suite colleagues in fostering a talent experience within finance that emphasizes the right combination of development, opportunity, and work-life balance?
Honestly answering the questions above will help you identify strengths and weaknesses in your current talent strategy and act as a starting point for a successful transformation journey.
It’s imperative to have an effective strategy that not only supports Finance, but also the broader strategy of the business.
Effective Decision Support Goes Beyond Reporting on the Past
Reporting on the past alone is not enough. Finance professionals must also be able to extract meaning from the numbers and influence business decisions.
This requires the function to increase its commercial acumen as well as improve its leadership and influencing behaviours.
The CFOs role is more than producing management accounts. It is not about putting data together but asking the right questions. The CFO must be able to interpret the numbers produced, have a good understanding of all the facets of the business and be solution-focused.
Thus, Finance needs to stop focusing on historical backward looking data (descriptive analytics), and leverage predictive and prescriptive analytics for better decision-making. Are you looking to the future through the use of leading key performance indicators?
You need to be a good story-teller and help executives understand the drivers of the numbers and map the future and its outcomes. Are you helping your CEO look at the future differently?
Finance Transformation is a Journey, Celebrate Small Wins
Transforming the finance organization into a successful strategic advisor is a journey and not a once-off initiative. There will always be room for improvement.
It is therefore imperative that CFOs take a strategic approach to adding value.
Instead of tackling all decision support opportunities at once, they need to collaborate with the business and identify requirements, challenges, priority areas and activities.
By focusing on these priority activities, Finance will be able to focus attention on what is critical, allocate resources accordingly, deliver real value and prove the function’s add-on value to the business.
As a Finance leader, care must be taken that you are engaging your team in many activities at once as this will probably cause your team to lose focus and produce sub-optimal results, which in turn will relegate Finance back to the back office.
Small wins will result in further collaboration opportunities in the future.
Get the Basics Right the First Time
If the numbers are not right the first time, then it becomes difficult for the CFO to build credibility and become a strategic advisor.
Although there is increased demand on the CFOs to be more strategic in their approach, stewardship and operator roles still remain critical and must never be regarded as non-critical.
These roles still play a critical role in delivering the broader Finance strategy of the business.