CFOs and other senior finance executives say their top priority next year will be making sure they have someone to replace them.
Responses to CEB’s annual surveys of functional executives around the world show that, for finance teams, the focus will be on hiring and developing the right staff to deal with the new demands that are being placed on the function, and to lead the function in future years (see chart 1).
Beyond that, finance managers worry about cost cutting in what has been a difficult year for the world’s firms – if the Q4 earnings of the S&P 500 companies meet their estimates, it will mark their first three consecutive quarters of year-over-year declines since 2009 (pdf) – and finance IT.
Chart 1: Key finance challenges for 2016 Source: CEB analysis
Building the Right Team
Companies are larger and more complex than at any time in their history, and to cope they are asking employees to work in different ways.
One of the most recognizable results of this change has been the type of work that corporate finance teams are called on to perform. In short, Finance must move from providing “governance” of established, formal, repeatable processes (ensuring people are hired in accordance with company policy, that they are paid on time, that the company’s accounts are accurate and don’t break the law, and so on) to providing “guidance” on the decisions their colleagues are called on to make.
And this will require a different set of skills. The senior finance team needs to think about hiring, retaining, and developing staff differently. This post will help with hiring and developing, and this one with managing and retaining staff.
Cutting the Right Costs
Seventy-three percent of finance leaders report that they are under pressure to reduce the growth of general and administrative (G&A) costs – all while helping the business to grow.
The reason G&A costs remain so stubbornly high is the same reason that finance teams are having to rethink their talent strategies. The move for all corporate functions (who are funded by G&A costs) from providing governance to providing guidance takes more time, costs more money, and is less easily codified into a set of repeatable processes that can be outsourced or made more efficient in a shared services center.
This post has more on managing G&A costs, including the value of building a G&A service catalog.