A new talent crisis is about to hit corporate finance. The word “new” is deliberate. This time, the challenge is not about the rising cost of good people. It’s about what good people do.
About 5 years ago, CFOs and controllers were complaining about the rising cost of accounting talent. In the wake of Sarbanes-Oxley, the proverbial work/life balance became unbearable, and the work itself grew highly technical, in the classic sense of applying accounting rules and controls testing. People who yearned for the excitement of swashbuckling M&A deals exited quickly. In just about every major American metropolitan center, the market for experienced corporate accountants tightened. Turnover soared, as did the salary requirements of finance folks on the move.
That was then. What I have been hearing lately as part of my research at APQC is that senior finance executives are deeply concerned about a dearth of people in the market who possess the so-called “soft skills.” Those include critical thinking, problem-solving, negotiation, communication, and collaboration. Apparently, finance professionals with soft skills in abundance can name their price.
About 5 years ago, CFOs and controllers were complaining about the rising cost of accounting talent. In the wake of Sarbanes-Oxley, the proverbial work/life balance became unbearable, and the work itself grew highly technical, in the classic sense of applying accounting rules and controls testing. People who yearned for the excitement of swashbuckling M&A deals exited quickly. In just about every major American metropolitan center, the market for experienced corporate accountants tightened. Turnover soared, as did the salary requirements of finance folks on the move.
That was then. What I have been hearing lately as part of my research at APQC is that senior finance executives are deeply concerned about a dearth of people in the market who possess the so-called “soft skills.” Those include critical thinking, problem-solving, negotiation, communication, and collaboration. Apparently, finance professionals with soft skills in abundance can name their price.
There are four primary reasons why we see this trend. First, the financial crisis has sparked an era of re-regulation, and to finance executives, this implies more nuanced risk management. That in turn means you’ll need more critical thinkers, as opposed to people who can apply GAAP in their sleep. Just one example: Treasury management experts now say that the Dodd-Frank Wall Street Reform and Consumer Protection Act restricts the availability of Federal Deposit Insurance for certain types of corporate demand-deposit accounts. This, apparently, will force corporate cash managers to perform more intricate assessments of counterparty risk and portfolio risk when they invest spare cash. While stronger risk management is a good thing — from a shareholder’s perspective — it’s going to drive up the demand for people who can spot a dodgy derivative on sight.
Second, the slow-moving recovery means that companies are risk-averse when it comes to investing in growth opportunities. For comfort, they are building their ranks of strategic financial analysts who can deploy a range of sophisticated analytical techniques. The idea is to surround senior executives with “fact-based analyses” so that they can make important decisions with greater confidence.
Third, there’s a growing demand for finance people who possess relatively high levels of technological competency. In particular, the largest companies have been applying automation to large swaths of financial operations, with many of them linking global finance, accounting systems, and processes to speed the flow of regional performance data to the senior executives at headquarters. Finance managers who hope to advance in their careers will need a functional knowledge of ERP systems, data warehousing, systems integration strategies, and so on.
Finally, core accounting and auditing is becoming more complex than ever — and it will no longer suffice to be simply a good accountant. The trend is toward specialization — whether it means a person who has mastered hedge accounting or one who grasps fair value accounting.
And, as always, to be successful, finance people must have the ability to understand and support the organization’s core business strategies and partner effectively with operating managers.
Tie all this up in a package, and you’ve got a growing need for advanced skill sets in finance. So, how can you to address this need when you can’t count on the external labor pool for a steady talent supply? According to my latest research at APQC, companies now want to double-down on efforts to retain, train, motivate, and groom tomorrow’s senior finance people from within. This is a new area of research for me, and I will be reporting findings in this space as I go. Meantime, I’m keen to hear of novel ideas for confronting these challenges.
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