For most US federal government agencies, it is untenable to keep working the way they have been. The new administration’s proposed budget includes $3.6 trillion in spending cuts over 10 years, the most ever proposed by any US president in a budget. And the responsibility for finding these savings will largely fall on non-defense agencies.
OMB’s recently published memo on Agency Reform (pdf) adds more complexity to the current situation. It requires agencies to submit a reorganization plan to improve efficiency and reduce the size of their workforce. This new structure will ask all those teams that support an agency, such as HR, Finance, IT, and so on, to become more efficient and prioritize the most effective activities.
For government finance teams this means making their “governance” activities, such as accounting, as efficient as possible while also making their “guidance” activities, such as analyzing cost data and helping line managers understand where they can save money, more effective (see chart 1).
Chart 1: Activities mandated by OMB M-17-22 Source: CEB analysis.
Start with Your People
Given the pace of change and the speed of the news cycle, many government finance executives have become overwhelmed by short-term priorities. Both the proposed budget cuts and Agency Reform memo will require CFOs to make critical decisions quickly. Yet, it’s also important for CFOs not to lose sight of their long-term goals and vision.
The best foundation to make a success of the coming years is to start with Finance’s most critical asset – its people – by helping them develop more guidance-type competencies. These are the critical skills, such as data analytics or strategic planning, that help finance staff move beyond being “good enough” to become more like decision support partners.
However, only 35% of those that work with Finance find them to have effective guidance capabilities, according to CEB data. Given this concern about internal guidance competencies, many finance functions look to external third parties to provide consulting support for major projects.
But the problem is that it’s extremely hard to source these kinds of guidance competencies externally, and projects relying on external consultants to help finance teams start providing that kind of support often struggle to succeed. In fact, 56% of these projects deliver the forecasted benefits, as opposed to 85% of projects that are less reliant on third parties, according to CEB analysis.
There are two steps that agencies’ Office of the CFO (OCFO) can take today to begin the transition from a transactional processor to a valued business partner. These two play a key role in preparing Finance staff for strategic partnership. And, in a fast-paced and uncertain time, they ensure that employees remain engaged and focused on how their work supports the mission.
Finally, they can also help OCFO identify and develop the next generation of Finance leaders who will help guide their agencies in the years ahead.
Develop OCFO’s mission statement and behavioral expectations to promote strategic partnership: Finance often struggles to manage its perception among business partners, who tend to view it as a functional expert and administrator, rather than a valued business partner. To change this perception, one government finance team in CEB’s networks created an OCFO mission statement that focused on delivering insight and strategic partnership.
Once OCFO has created (or refined) its mission statement, CFOs and their teams should begin including it in external communications (such as presentations or email signatures). The mission statement should also define the staff behaviors that support the organization’s mission. From there, Finance can work on developing the competencies needed to support these behaviors.</li?
Use illustrative tools to show the skills and experiences needed for staff to become strategic partners: Finance’s talent strategies have often struggled to catch up to the current work environment. An estimated 70% of finance positions will experience a change in skill requirements over the next five years. Also, the competency areas that are most likely to determine the effectiveness of a team are the least commonly found among finance teams.
Many finance teams emphasize a single, linear career path to leadership roles. However, future career paths are likely to change as linear progressions within a single part of the team might not provide the experiences and skills needed to succeed in senior roles. One finance team in CEB’s networks used career maps to illustrate the experiences needed for staff to reach a single, critical role. The career maps contain “connector roles,” which are lateral moves to help employees gain new competencies and skills for the critical role (see chart 2).
Another CEB member organization had their staff develop “future résumés.” These future résumés allowed them to illustrate their aspirational career progress in the medium-to-long term. This process helped staff reflect on their experiences and the opportunities needed to reach their desired role.
Chart 2: Sample career map for a federal chief financial officer Illustrative Source: CEB analysis