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boardroom challenges: Responding to the skills shortage | accountingweb

How CFOs are tackling the finance skills shortage


Experienced CFO Neil Cutting asks Hamish Halliday, a director at PwC, for his thoughts on how CFOs are responding to the boardroom challenges on the skills shortages in finance.

1st Mar 2023
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Spending his days transforming complex organisations, director at PwC, Hamish Halliday is acutely aware of the boardroom challenges facing finance teams. Whether that’s operating model changes, process optimisation, system implementation or improving capabilities. A common challenge on the transformation agenda for finance leaders is ensuring they have the appropriate skills, capabilities and ways of working across their teams.

I recently had the pleasure of sitting down with Halliday to discuss the challenges in the areas of finance talent and skills. We discussed this boardroom challenge and what senior finance leaders can be doing to ensure they have the people and skills to meet the increasing demands of their boards, external stakeholders and the business.

Areas of disruption

Over the past four to five years, boardrooms have undergone two big disruptions that are relevant to the finance function’s capabilities. 

The first area of disruption is the external factors of Covid, geopolitical uncertainty, the increasing level of volatility in the economy, the cost-of-living crisis and inflation. These factors have meant increased demands on finance to provide insights and decision support. The second disruption area is technology. The rapid pace of change in technology is providing the opportunity to change how finance provides its services but keeping pace with these changes is not straightforward.

These two big disruptions have resulted in the boardrooms having to deal with some of their biggest challenges in recent history. They have therefore demanded that their finance teams provide rapid timely insights to help the business navigate these challenging times.

This expectation from the boardroom is forcing finance leaders to look at their functions and understand how they can adapt rapidly to change where needed. Alongside what finance needs to do tactically in the short term (budget timeframe), finance teams also need to consider what skills and capabilities they need in the longer term (business plan).  

Halliday sets out some of the requirements that boards are demanding to be delivered by finance, each of which have implications for the skills and capabilities needed in the team. 

  1. Understanding and trusting the financial Information “How do you present financial information in the right way so that the CFO and business leaders can look at one page and go, ‘I get it, I trust it’?” said Halliday. The issue here is both ensuring rock-solid governance and controls to ensure the numbers are robust, together with the ability to add value by deciphering the big data to help analysis.
  2. Commercial Beyond getting the numbers right, the role of the finance function now is in providing commercial insight around business decisions and organisational performance. “The business is asking finance to not just ‘produce the numbers’, but also tell them what it means, tell us what we need to do. And that is often a different skill set. And there’s an evolution” said Halliday. Boards need to know: “What are my options and do you have a recommendation? And why?”
  3. Newer business requirements Beyond the above requirements the CFO is asked to bridge into new areas of reporting which require access to data and new knowledge and skills. For example, the evolving ESG reporting and all that type of work that’s taken for granted.

Finance professionals still need to develop the core “hard/technical” accounting capabilities that underpin everything they do. But Halliday reminded finance leaders that “the broader softer skills, the relationship skills, the commercial acumen and the need to understand the business processes are what the finance leadership needs to be developing within their teams.” These are the capabilities that will make the finance team want to keep coming in, working hard and doing amazing work. 

Assess the gaps between current and desired state

“Having alignment on a vision and strategy is critical to delivering a coherent change programme,” said Halliday.

For a CFO to understand where to focus on building skills and capabilities, they need to focus on a “gap analysis”. Each of three perspectives will be covered:

  • Current state (“As Is”) – Where are you today? What are the teams’ strengths and weaknesses?
  • Desired state (“To be”) – What’s your vision for the finance function and what does that imply for the people and skills you need?
  • Tactical vs strategic focus (next 90 days) – What do you need to do in the first three to nine months and how does this align to your longer-term people plans?

In producing these three perspectives, it is important to consider the following categories.

  1. Strategic resource planning Halliday emphasised the importance of strategic resource planning. “It’s investing the time now to understand the skills we need to have in the future and the size of the teams with those skills. For example, we’ll want to have stronger analytical skills, we’ll want to have stronger commercial skills. We’ll want to make sure they're embedded within the different roles we've currently got or develop new teams. And then it’s about saying, ‘What is it that we need to do to actually bridge that gap?’” 
  2. Structure “It’s putting the right ways of working and structures in place to understand the current capabilities and gaps and then having the right processes to get the best from your current team,” said Halliday. This means starting with an ‘as is’ skills assessment to baseline your current skills, but then building a credible plan to address the gaps. It’s important to consider multiple elements to the plan:
  • How can the performance management processes be used to develop skills?
  • How does it feed into the recruitment process?
  • What is the impact on budgets? Is there a business case for investing in new skills?
  • Does the plan align to the vision for the finance functions?
  1. Training and development You can start by putting the right building blocks in place to develop your people and the 70:20:10 Learning and Development model is proven to deliver results. On-the-job development is a critical part and Halliday has seen the benefits of a culture of openness with continuous feedback to help people progress. “I don’t see that consistently at all across organisations where leaders have the courage and confidence to be able to say you’ve done great but I think you can improve in these areas,” said Halliday. Structured training and mentoring programmes are also often underutilised but can really help upskill the current teams.

One area of evolving skills needed by finance functions is in relation to data. With more data available for business leaders, the challenge is having the right structures, governance, teams and roles to manage and control data, that the data captured is stored efficiently and, crucially, that you can drive the insight needed from this data. 

“I don’t want to have a scenario where I’ve got 50 people going into a finance or data team who have to prioritise requests,” said Halliday. “A great answer is you build that data capability, with a user interface to enable detailed, meaningful analysis at speed. It’s a different skill set to what’s available in a lot of traditional finance roles.”

The insights from thinking strategically on the future skills needed for finance followed by getting a detailed understanding of the current skills allows for credible gap analysis and enables the production of the CFO’s capabilities action plan.

Measure and manage transformation

Now the action plan is in place, the question is how the leadership team knows in three to six months that they’re achieving success.

To assess whether the finance function is meeting the needs of the business you need a deep understanding of how your team is performing. Halliday pointed out that mature finance functions have a balanced scorecard, which measures all areas including dedicated metrics on people.

Halliday suggested capturing regular feedback from the finance team, but also the customers of finance. This provides an internal perspective on how individuals are feeling and progressing, but also gets an external view on whether the changes are positively influencing business performance. “It’s about proactively seeking feedback and adjusting direction as needed. If you don’t ask, you don’t know,” said Halliday.

Halliday used the example of a recent conversation with a CFO. “He was really proud that the finance engagement score had increased. It was proof that his initiatives to improve the morale in finance were working. But what happens when it goes down? What is the action plan? What do you do differently?”

Keep driving continuous improvement

Now it’s the job of the CFO to evaluate and improve the transformation to maintain continuous improvement.

The continual improvement of talent and skills in an organisation is a way of working and the real challenge is embedding the culture of continuous change. There is no endpoint, but there are achievements to be celebrated along the way. Halliday’s north star through any transformation is filtering everything through the concept of “getting better at getting better”. 

But if the CFO and other finance leaders are busy, some CFOs make the argument that HR should take the lead on talent and skills. Halliday disagreed. “Finance leadership should be collaborating with HR, with a little healthy tension, to make sure that everyone is doing the right thing to support the organisation and develop their people.”

The summary of what to do to tackle this boardroom challenge of ensuring finance’s skills meet the demand is to keep getting better at getting better.

If you work with boards and would like to be interviewed by Neil then please send Neil a DM or comment below.

And if you’re inspired by this article and already demonstrating your excellence as an FD, enter the brand new Finance Director category in the Accounting Excellence Awards and, as a judge, Neil will be keen to see your entry.

Replies (1)

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By ColA
02nd Mar 2023 11:32

Tricky - inevitably recording finance transactions is 80% retrospection with 10% budgeting/planning & 10% analysis/interpretation.
Over many decades the ability to bridge these three areas has caused many producers & information receivers to struggle: key failure being communication & the inability of top management to admit their financial naivety.
Classic example must be this week’s disclosure of a monumental annual loss by a grocery trader, announcing the following day that ‘it might have to defer significant investment’.
Closer scrutiny of previous voluminous accounts reveals astronomic reward packages for said management.

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