Talent – the lack of it – is a huge issue standing in the way of finance’s shift to a more digital organization. And becoming a digital organization is a big priority for finance. Finance teams almost universally agree that digital transformation will be fundamental to the survival of their business and their performance overall.
To get there, they need the right skills. Yet The Hackett Group 2018 Key Issue Study shows that talent will be the fastest-growing risk facing companies in the next couple of years.
Is finance ready to confront this challenge? We say no.
Only half of finance teams have developed a talent strategy to support digital transformation. Without a strategy, finance cannot define the new roles and develop a new talent profile to help existing staff get ready. That’s partly because finance is having a hard time imagining what those new roles will look like. Given that current adoption rates of technologies like robotics process automation and artificial intelligence are still low, finance executives are not yet sure how they’ll replace or augment human work. What’s certain is that a large percentage (46%, according to our research) report that they don’t have the skills in place to adopt new technologies.
Finance organizations that are early adopters, and that perform at the top of the digital transformation adoption metrics, tell us that data- and technology-savviness are the two most important but least mature skills in their organizations. That’s got to change if finance is going to make further inroads into the digital era.
Best practices in developing a talent strategy
The first step is creating that talent strategy.
- Make it well-rounded. The talent strategy needs to include training, mentoring, rotations inside and outside of finance, and clear discussions about career paths. A comprehensive approach is a successful approach. It recognizes that different people learn differently, and different skills must be taught in different settings. For example, while technical skills may be best developed in a training environment, building business partnerships is better to teach on the job, through rotations and mentoring.
- Address the needs of different levels in the finance hierarchy. The development needs of a senior analyst are different than those of a senior director or above. The talent development program needs to be specific to the professional requirements of the staff. Senior staff may need training in leadership and other soft skills like communication and presentation since they will be interacting with management and other decision-makers.
- Get a cross-functional group together. It’s important to involve the business in the talent development initiative. The perspective of internal customers is critical, and they can bring a lot of insight from their own staff development efforts. Finance should facilitate the creation of a standing meeting for a cross-functional team of talent/learning executives to discuss approaches and best practices on an ongoing basis and learn from each other.
- Stay agile. The business environment is changing faster than ever before. As a result, the talent and skill requirements for finance are also changing at a more rapid rate. While a talent program always looks forward and is flexible enough to adapt, it’s important to open it up occasionally for a thorough review and make sure it’s still responsive to the needs of the business. Best practice is to do that every two years.
- Don’t get caught up in (just) technology. It’s easy to get caught up in the current talk about the need to hone finance’s data and technology skills. But the adoption of digital tools is certainly a very big challenge, and finance is lacking in its capabilities to implement and use these tools. And these are by no means the only skills that the current environment demands. Even the best advanced analytics tool will not have the impact on decisions and actions if the analysis cannot be effectively communicated to decision-makers. So soft skills are a must. In addition, with finance increasingly expected to play a role of a strategic advisor to the business, functions like FP&A are playing a critical role working with business partners to evaluate choices and suggest next steps. That role requires the development of strong business acumen.
- Measure program performance. Finally, it’s important to measure the effectiveness of different training approaches, so that finance can improve what’s not working and do more of what does well. Assessing whether a training initiative worked is not always easy. Courses can end with a test of the learned skills. But even then, if staff is not given the opportunity to practice new skills, the training will not be effective. Softer skills must also be practiced. One of our clients assembles a test team of executives to listen to presentations given by developing staff and provide feedback on what can be improved. Finally, the talent development plan’s effectiveness needs to be completely incorporated into the annual review process. That not only acknowledges its importance, but also gives managers and staff a chance to talk about what skills were emphasized, acquired, practiced, and mastered (we hope) – and about what’s next on the agenda.
Becoming a digital finance organization is a must if finance is to support the enterprise as it faces fiercer competition and a quick-shifting business environment. To succeed, finance needs to build new strategies that address the needs of digital transformation.
For more on technology and financial leadership, see AI Is Helping Finance Become A More Strategic Partner.