Asking five deceptively simple questions can help CFOs identify critical performers and develop strategies to keep them loyal and productive.
Economic volatility. Tax reform. IFRS and convergence. Hedging strategies. The scope of a chief financial officer’s (CFO’s) responsibilities is constantly evolving and expanding and calls for a team of highly skilled leaders as well as deep bench strength. Identifying and keeping that talent is far from easy.
In fact, it is the talent paradox. Despite continued high unemployment rates, CFOs tell us that they cannot find the talent they need. In the Q1 2011 CFO Signals survey, for example, one out of three CFOs surveyed said they were having trouble filling open positions, and nearly 60 percent were taking steps to engage and “lock in” top performers.1 At the same time, critical talent is on the move. Since the end of the recession, for example, voluntary quit rates have nudged higher, according to the Bureau of Labor Statistics, and employees leave for a variety of reasons (see figure 1). In addition, finance employees are at greater risk of being poached as companies compete for the same highly skilled talent pool.
None of that bodes well for CFOs who want to move beyond their operator and steward roles and focus long term on the development and execution of strategy. It is hard to move forward when you do not have the team you need to make such an advance. When CFOs honestly assess their teams, they often do not see the talent necessary to free them up to spend more time on broader business priorities. So when critical talent can be identified, it is even more imperative that CFOs work to retain that talent and neutralize the numerous triggers that can lead to a separation.
In a recent issue of CFO Insights, we looked at the benefits of having a finance strategy that identifies the people and skills needed at the macro-, micro-, and individual levels; integrates and deploys those people and skills into both the finance and business functions; and supports finance professionals across the employee life cycle—from acquisition to retirement.2 In this issue, we take a deeper dive into ways to identify critical performers and develop strategies to keep them loyal and productive. In addition, we will discuss how to align those best-in-class finance executives with all-important value creation.
With finance-talent at a premium, it might be easy to view everyone on your team as essential. After all, it takes time and money to identify and develop critical skills—a real deterrent to changing up talent even when the situation warrants it. In addition, it is often easy to get caught up in the “rescue fantasy” associated with trying to mold certain subpar performers into the talent that is necessary.
But identifying your truly critical players is the first step in developing a world-class team, and the process entails more than just measuring productivity. Instead, it requires a careful evaluation of a) who has the skills necessary to execute on your current set of priorities, b) who can be trusted to effectively execute those priorities, and c) who can raise the bar on performance and reshape expectations. As one CFO recently told us, his yardstick was to imagine exiling all of his employees out to the parking lot and then inviting back only those he could not do without. Our alternative is to simply ask the following questions:
But identifying your truly critical players is the first step in developing a world-class team, and the process entails more than just measuring productivity.
Once the key players are identified, the challenge then becomes how to motivate and retain them. That’s not so easy when many are eying the door. In fact, among 356 global employees surveyed in March 2011 for Deloitte’s Talent Edge 2020 study, only 35 percent expect to stay with their current employers, down from 45 percent in 2009. Moreover, 65 percent of global employees report they are either passively or actively testing the job market.3
Once the key players are identified, the challenge then becomes how to motivate and retain them.
In finance, such turnover could be devastating, given the leanness of most operations and the current focus on growth. But the solution is not simply a matter of increased compensation or benefits. Rather, in the same research study, we found that retaining top talent in the changed environment mandates an understanding of employee expectations. And in finance, we would argue, it is up to the CFO to develop the finance-talent strategy to meet those expectations and tailor it for critical performers.
Specifically, the research identified several departure triggers. Here, we offer some suggestions for muting them for top performers:
Simply knowing the triggers, of course, does not guarantee retention, particularly with high-demand talent. That is why it sometimes pays to incorporate creative incentives that leverage critical players into a finance-talent strategy. Take the case of the telecom CFO who recently challenged his team to elevate the process of finance hiring and leveraged 25 key performers as mentors to summer interns. Those key performers not only helped identify future finance leaders, but also helped reinvigorate the finance career track at the company.
Another CFO we recently worked with sought to transform his department into a “net exporter of talent.” Concerned that other parts of the business did not truly value finance, he developed a competency model and finance-talent strategy that determined which high performers were prime candidates to move out into the business units. Those critical staffers not only gained valuable strategic skills, but helped raise the profile of finance throughout the company—so much so that the program is now being adapted for other parts of the business.
Sometimes retention is tied to other more basic factors. Another CFO recognized a critical member of the team was working long hours on a deal in addition to making a long commute. He proactively encouraged the adoption of more flexible work arrangements from home to help the employee feel valued, reduce travel time, and avoid burnout.
In each case, the CFO was thinking strategically, as well as tactically, about how to retain his top performers and keep them performing to create value. Such creative thinking is a competitive weapon at a time when recession as a retention strategy no longer has merit. And by developing finance-talent programs that keep top talent committed and challenged in their jobs, excited about their prospects, and confident in their leadership, you may not only thwart the triggers that lead to separation, but also set your organization apart as a world-class employer.