Building finance departments: from recruiting to retaining; What might be viewed as a "perfect storm" brewing in the labor market--an aging workforce, talent shortages, fewer people entering the workforce and wage pressures--can be counteracted to avert a talent crisis.
Companies now must expand not only the number of financial professionals they employ but also their skill sets. The result: businesses everywhere are vying for top financial talent, while, in many cases, demographic and economic trends are working against them. A recent survey of hiring managers commissioned by Robert Half International (RHI) and CareerBuilder.com cited the primary hiring challenge businesses face: a shortage of qualified workers. Furthermore, most of those surveyed expect it to remain difficult.
Talent shortages have hit finance departments especially hard. Although accounting enrollment has started to rise, following years of declines, the supply of graduates has yet to catch up with the increased demand. In addition, the first wave of baby boomers is approaching retirement age, and demographic patterns point to fewer skilled professionals entering the workforce.
And, with an encouraging but still inconsistent economy continuing to limit corporate budget increases, many companies appear hesitant to boost employee compensation significantly. Another RHI survey found that the majority of U.S. employees are not expected to receive higher raises and bonuses in 2006 than in 2005. Less than one-third (29 percent) of CFOs polled said they will give bigger salary increases this year, and just 20 percent anticipated boosting bonus amounts. The apparent employer reluctance to markedly increase compensation may likely complicate or delay efforts to recruit and retain top talent.
These converging trends may cause a further tightening of the market for accounting and finance professionals, and an even more pronounced shift to a candidate-driven market. In this challenging environment, finance departments may need to intensify their efforts to attract and hire skilled professionals.
Carefully analyzing current and anticipated needs on a regular basis is a fundamental step for building a finance department that truly supports an organization, particularly as needs change. The following address some key considerations to help decide whether a company has a short- or long-term requirement for additional staff:
* Why has a need arisen? Is it in response to a lasting change in the business, or a temporary operational issue or problem? If one primary goal is to expand the company internationally through acquisitions, finance personnel are likely needed to handle the additional work, particularly if the business begins operating in new areas. If, however, the company is implementing new enterprisewide technology and needs assistance with data integration, it may be more beneficial to bring in professionals on an interim basis to address immediate needs.
* Do existing personnel have the skills, capabilities and time needed to achieve the goals of a particular project or initiative? If a firm is growing in different directions or finance is taking on new responsibilities, such as primary ownership of compliance initiatives, an executive will need to get a clear fix on existing and projected gaps between his or her department's current collection of skills and knowledge and the future needs, and formulate a plan to eliminate any gaps. For instance, senior-level staff members with knowledge of Securities and Exchange Commission (SEC) regulations may need to be added.
* Is the work critical to the organization's mission? Will hiring someone yield a significant return on investment (ROI)? A company in the manufacturing sector may find that it makes more sense to hire cost accountants to help the business manage production costs and maximize profit than to add staff-level accountants to assist with quarterly reporting. The addition of a cost accountant would likely have better ROI potential as well, while tasks associated with quarterly reporting might be better handled on an as-needed basis.
Also, if there's uncertainty about whether to add staff, bringing someone in on a project basis can be a good option because it provides the opportunity to "audition" candidates prior to deciding on a permanent hire.
Whether or not talent needs continue to grow, it's best to keep recruiting and networking efforts active. Ideally, financial executives will always be meeting prospective new hires and collecting information on strong candidates to draw upon on when a new position opens. Especially in an environment where the supply of talented candidates is likely to remain constricted, a successful recruiting strategy requires a sustained effort.
Finding the 'Right' People
Because finance departments today have very specific knowledge requirements, they need more than just a certain number of people to carry out their ever-expanding responsibilities. They need the right people--individuals with specific skills and certifications who also are a good cultural fit.
For this reason, the job description should be a cornerstone in the recruiting efforts. The more time spent refining the description and ensuring that it's an accurate reflection of what a position truly entails will result in successfully hiring and retaining the right people.
Be sure to exert as much time and effort identifying the soft skills that a candidate needs to possess as the technical skills. A dozen candidates might have the certified public accountant (CPA) credential a position calls for, but only one may have the interpersonal skills needed to work in a collaborative, team-oriented environment.
Although the job description is central to the recruiting effort, it's equally important to convey to prospective employees what an organization offers compared to other employers. The human resources department and functional area managers should work closely together to ensure they communicate the best attributes of the firm and department in their recruiting messages. These features might include a positive corporate culture, flexible work arrangements, well-defined career paths or a prestigious customer base.
It's also critical for candidates to understand how a position with a new company might differ from previous jobs. For instance, a private firm that is considering hiring a candidate from a large public company would want to emphasize the differences in environment, culture and benefits that the individual will likely encounter. Although the benefits might not be as competitive as those offered by the larger, public company, there may be greater opportunity to add value and earn bonuses. A small, private company might also have a flatter organizational structure that encourages more active participation in decision-making.
To gain confidence in its hiring decision, one small private company asked its outside CPA to interview the leading candidate for the firm's CFO position. The applicant had previous experience at both a large public company and a Big Four accounting firm.
Companies that succeed in identifying and conveying those attributes that define their corporate culture, values and business approach improve their ability to recruit candidates who are a good organizational fit. This approach is valuable in any job market, but as the talent gap widens, as many labor experts predict, it will become even more critical for companies to excel at marketing themselves to prospective employees.
The more a department can integrate recruiting and hiring into its ongoing responsibilities, the more seamless the process will become. By having certain steps and guidelines in place for screening and selecting candidates, an executive can expend more time and energy identifying the best candidate, rather than deciding how to proceed.
For example, a policy can be established that requires a candidate to gain the support of two senior financial managers before being interviewed by an executive at the next level. While it's important to follow a structured hiring process, companies must also act swiftly to avoid losing top candidates to other offers.
This might mean occasionally compressing a timeline or moving ahead with an offer that is contingent on successful reference checks. Extending offers as quickly as possible improves the odds of hiring a first-choice candidate. It's also likely that the individual will view a company's eagerness to hire him or her as a sign of a good match.
The Multigenerational Workforce
Another important factor in building an effective finance function will be a company's ability to attract and retain an increasingly multigenerational workforce. Just as departments benefit from having a mix of skills, it's also advantageous to have employees with a diversity of experience and perspectives.
Demographers explain that workers of different ages have fairly distinct generational differences in attitudes that influence their career goals, work styles, motivations and benefit preferences. For instance, some demographers contend that members of Generation Y--whose oldest members have yet to turn 30--place less emphasis on financial rewards than do baby boomers, and place greater value on having time for pursuits outside of work. Understanding what attracts and motivates the workforce of the future will be critical to meeting hiring goals.
Also important to consider in the years ahead is how to retain older workers. Finance departments may be especially vulnerable to impending retirements because of a shortage of mid-career professionals who would normally fill the void left by retiring boomers.
To lessen the possible impact of losing experienced workers, take stock of the knowledge and skills essential to each department's success and identify veteran employees who possess these competencies. Consider how to better leverage their experience--for instance, through mentoring programs, increasing the use of teams, encouraging phased retirements, inviting retirees to work as consultants and promoting knowledge-sharing between workers at different ends of the experience spectrum.
While awareness of attitudinal differences may exist among workers of different generations, it's important to avoid stereotyping or buying into myths. The best way to really understand employees from different demographic groups is to find out through surveys, employee advisory groups and one-on-one interviews what they value in terms of work environment, benefits and career incentives. Information on how to retain future workers can also be learned through exit interviews with departing employees.
A Word About Retention
Bringing the best talent on board is only half the battle. Employee needs are always changing, and the best employers will find ways to change along with them. This means continually evaluating and adjusting retention strategies.
Some factors that contribute to retention may be relatively unchanging--competitive compensation, a good working environment and challenging work are always important--but additional offerings may be needed. These include more vacation time, a mix of short- and long-term financial incentives or greater flexibility in how employees carry out their work.
More than anything, the process of building a strong finance department should be a perpetual one. And, in light of the factors complicating efforts to recruit and retain qualified professionals, financial executives will have to make talent issues a priority if their organizations are to compete effectively for tomorrow's workforce.
Max Messmer is Chairman and CEO of Robert Half International Inc. (www.rhi.com), the parent company of Robert Half Finance & Accounting, Accountemps and Robert Half Management Resources, for full-time, temporary and senior-level project professionals, respectively. He is author of several books, including The Fast-Forward MBA in Hiring: Finding and Keeping the Best People.
RELATED ARTICLE: A Recipe for Success
California Pizza Kitchen's (CPK) strong corporate culture is one of many factors that enables its finance department to attract top talent. The company expresses its cultural values with an acronym: ROCK, which stands for Respect, Opportunity, Communication and Kindness.
CFO and Senior Vice President of Finance Susan M. Collyns says employees throughout the company identify with and seek to embody the ROCK values. Those that do are singled out for the company's "ROCK Star" award.
Another success factor is the finance department's disciplined approach to defining personnel needs. Careful thought is given to the experience, technical skills and people skills required for a position, and key responsibilities are clearly delineated. The department then works with an internal or external recruiter to fill positions, and Collyns relies heavily on trusted colleagues within finance to identify the best candidates.
Once talented professionals are hired, she focuses on retention. An employee feedback process that is part of annual performance reviews helps CPK continually improve its practices. Finance professionals also benefit from a grading system that outlines a clear career path, including projected time frames and salary potential.
Additionally, Collyns aims to help employees achieve a good work/life balance. The fact that 85 percent of recent finance hires are women prompted her to develop a more supportive maternity leave policy that eases the transition back to work for new parents. In one case, the company set up a home office for a key employee on maternity leave. After some dedicated time off, the individual gradually resumed her duties, initially working from home on a part-time basis.
Collyns believes such efforts are a "win-win." She notes that when you have professional workers who respect their responsibilities and appreciate the benefit you're providing, retention naturally follows.
RELATED ARTICLE: takeaways
* Talent shortages in finance and accounting have businesses everywhere vying for top talent and economic and demographic trends are working against employers.
* Carefully analyzing current and anticipated needs on a regular basis is a fundamental step for building a department that supports an organization as needs change.
* Finding the "right people" means identifying individuals with specific skills and certifications who are also a good cultural fit.
* Adapting to today's multigenerational workforce is a key factor. To really understand employees from each demographic group, survey or interview them.
Hiring managers were asked, "What is the primary challenge in finding qualified workers for jobs within your firm?" Shortage of qualified workers 47% Insufficient support from HR 2% Insufficient recruitment budget 6% Inability to offer competitive compensation 20% Inability to offer career advancement opportunities 10% Ineffective recruitment tools 4% Limited employee brand recognition 2% Other 9% Source: Robert Hall International Inc. and CareerBuilder.com survey of 600 hiring managers Note: Table made from pie chart.
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|Title Annotation:||fundamental step for building a finance department|
|Date:||Mar 1, 2006|
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