Bridging the Gap Between the Finance Team You Have—And the One You Need

CFO Insights January 2019

Bridging the gap between the finance team you have—and the one you need

Given current technology trends, it seems year ago.1 And in the Q3 2018 report, CFOs improve cost efficiency, they will not fair to say that CFOs will be overseeing vastly said they foresee increased utilization of abolish the need for skilled employees. different finance departments in the not-so- outsourced, contingent, or gig workers, and And in this issue of CFO Insights, we will distant future—both in terms of who will be higher use of shared services or offshore discuss why acquiring and developing doing the work and how that work will personnel over the next three years.2 those skilled employees should be get done. embedded in an overall business strategy As finance moves through this technological and identify some key questions to help In fact, many finance leaders are already transition, focusing on gaining higher levels guide finance leaders as they build their preparing for a future where finance “talent” of insight, CFOs should expect a very real workforces of the future. comes in multiple forms. In the most recent gap between the workforce they currently CFO Signals™ survey, for example, 73% employ and the one they will need. For as of respondents said they will implement much as automation and algorithms may technology to replace talent—up from 58% a streamline processes, and outsourcing can Bridging the gap between the finance team you have—and the one you need

The big shift The path to developing and delivering those 2. How does the future of work change There is no denying that technologies, skills starts with a series of questions—and organization design and behavior? such as cloud computing, robotic process actions—that can help formulate a road The onslaught of new technologies will automation (RPA), and analytics tools map. Specifically: likely expand CFOs’ options for reshaping promise to revolutionize finance and improve finance for the digital era. Such tools can 1. How does your future digital performance. But while automation is likely to also create the opportunity to partner strategy address talent? From data replace some workers in repetitive task jobs, with human resources (HR) to determine to governance to investment decisions, such as those in accounts receivable/payable exactly what form the organization takes. implementing a digital future is hardly and invoicing, not every current position is For example, using data analytics tools, simple. To realize it, CFOs need to develop scheduled for extinction. Instead, the new CFOs can work with HR to gain insight strategies that address the kinds of work tools will transform many positions within into workforce trends, from pinpointing that are best done by smart machines the department, likely requiring members of turnover and attrition to identifying and the types that should be left to finance to demonstrate more strategic and workers in need of additional training. humans. When it comes to applying analytical skills. critical thinking, for example, humans It is possible CFOs may end up presiding CFOs, it seems, are well aware that the shift are likely to retain an edge. But by over an increasingly divided kingdom: to an insights-driven department will occur pairing human inventiveness, creativity, one group will be composed of more within a tight time-frame. In the Q3 2018 empathy, and influencing skills with traditionally skilled employees, focused CFO Signals survey, 63% of respondents cognitive technologies, companies have on incorporating tools such as RPA and said that the time allocation of the finance the potential to elevate their collective artificial intelligence (AI) into accounting workforce in three years will likely shift problem-solving capabilities. and reporting processes; the other toward analysis, prediction, and decision will provide data analysis, identifying As part of the exercise, companies also support. Moreover, 68% ranked analytical trends and patterns so they can act as need to determine the skills necessary skills, digital technologies/automation, and strategic advisors. Rewards, learning, and for the roles to be filled by humans, core business skills as the most important performance management programs will assess gaps in their current workforce, skills an organization needs to develop to also need to recognize and acknowledge and develop a plan to either build, buy, deliver finance effectively in three years.3 the importance of retaining and or borrow those skills (training, hiring full- motivating both the legacy teams and time, or using gig workers/contractors). the new, innovative groups.

Figure 1. Finance work expectations in three years (Percent of CFOs selecting a specific level of agreement for each statement.)

The majority of the time spent by my finance workforce will likely be on analysis, prediction, and decision support 14% 22% 50% 13% rather than accounting, reporting, and compliance.

Most finance work will likely be undertaken in and delivered 4% 23% 28% 38% 7% by real or virtual “shared service centers of excellence.”

Technology will likely enable significant productivity gains, and thus significant workforce reductions, in accounting, 7% 27% 46% 20% reporting, and compliance processes.

Office space required for finance workers will likely be 5% 44% 23% 24% 4% reduced by 30% or more.

Telecommuting and finance work in non-traditional or non- 8% 33% 28% 27% 4% company office locations will likely increase dramatically.

0% 50% 100%

Strongly disagree Disagree Neutral Agree Strongly agree

Source: North American CFO Signals, Q3 2018, CFO Program, Deloitte LLP.

2 Bridging the gap between the finance team you have—and the one you need

and forecast the results of tweaking certain qualifications (required years of experience, for example). Deloitte’s 2018 Human Capital Trends report found that 42% of the respondents believe that AI will be widely deployed at their organizations within three to five years—up from 38% the year before.4 •• Update job postings to attract digitally sophisticated recruits. Currently, there is often a mismatch between the jobs described in postings 3. How does leadership development 4. How does the future of work change and those that finance actually needs need to change? Enabling existing access to talent? Notwithstanding the to fill. Typical finance-related postings employees to make the transition to a fact that some highly desirable skilled specify credentials, years of experience more analytical approach to finance—or workers are in scant supply, the model for in financial reporting, and familiarity recruiting those who already possess acquiring employees has also undergone with certain software—in other words, certain crucial skills—may constitute a transformation. Digital technology has the same qualifications companies have a leadership challenge for CFOs. As reshaped every aspect of hiring, from sought for a decade. To be effective, they reinvent their workforces, finance sourcing to selecting to hiring. Here postings should instead stress activities, executives will need employees infused are some keys to getting in sync with a such as partnering with the business, with agility, able to learn, and capable competitive market: understanding the underlying drivers of performing productively in a •• Integrate technology into sourcing. of growth, and possessing skills in the changing environment. AI tools can help identify candidates engineering and science domain— who have a high probability of switching Figuring out who will thrive in this including proficiency with statistics and jobs, analyzing data to find those whose environment—and how to effectively scientific software, data management, employers are contracting, for example, 5 upskill them—may be as tough as and data analysis. CFOs would also be or who have logged a comparatively determining which technologies to wise to hire for core capabilities, and long tenure in their positions. prioritize. But while immersive learning stress differentiating aspects of the Predictive analytics can evaluate the 6 experiences and interactive chatbots position, such as flexible hours. quality of different recruiting sources represent digitally advanced options for retraining, there are also some practical Figure 2. CFOs’ workforce expectations tactics finance executives can use: (Percentages reflect workforces today and in three years.) •• Start a reverse mentoring program. With as many as four generations Percentage change inhabiting the workforce, why not assign Outsourced, contingent, contract, 8.3% older workers to learn from younger or gig workers providing finance 88% ones? By pairing more experienced work to our company 15.6% workers with so-called digital natives, the transfer of necessary knowledge can take on a face-to-face dimension. The finance workforce operating 19.3% 65% •• Encourage rotations. To develop in real or virtual shared services 31.9% skills, set up rotations for finance staff both within the function and outside of it. That way, workers gain an Our nearshore (e.g., within 42.3% understanding of different parts of the three time zones of HQ) finance 3% business—or a holistic view of finance— workforce, including contingent 43.6% so that they become better partners to workforce the business. Our distant offshore (e.g., more •• Make time for side projects. Try than three time zones from HQ) 15.4% assigning high-performing employees 43% finance workforce, including 22.0% to spend 10%-20% of their time on contingent workforce a special project inside or outside 0% 10% 20% 30% 40% 50% of finance, stretching their skills and capabilities. Those who eagerly accept Today In three years the offer will likely play a leadership role 3 in the company’s digital future. Source: Source: North American CFO Signals, Q3 2018, CFO Program, Deloitte LLP. Bridging the gap between the finance team you have—and the one you need

•• Redesign the working environment. recalculated what they want out of a organization “irresistible,” include ample As fashionable and functional as job. While digital natives may be sought growth opportunities and transparency cubicle farms may be, they are typically for their agility with technology, they do in leadership (see “Unlocking the secrets designed with full-time permanent possess other defining characteristics. of employee engagement,” CFO Insights, employees in mind. But given the For instance, many prefer workplaces August 2015). rise of task-specific work, performed devoid of hierarchy, suffused with teams, by contingent and contract workers, and supportive of work-life balance. And Once those highly sought-after prospects CFOs need to create a workplace that just as they expect to be able to manage come aboard, their performance should accommodates a variety of flexible their lives via smartphone apps, they be judged based on how well they are arrangements. In the Q3 CFO Signals anticipate using platforms to track their developing the skills the company will survey, in fact, 45% of respondents performance or align their goals. need, rather than those they already use. expected most finance work to likely And it will fall to CFOs to make sure those be done in real or virtual shared These employees, especially those whose skills are disseminated strategically. To services in three years.7 Another skills are in high demand, have the luxury the extent they succeed, finance may 28% believe there will be a significant of being very selective in choosing where be positioned to become an exporter of reduction (>30%) in office space they want to work. Exceptionally talented talent—training employees in a future- required for finance workers. workers are drawn to companies for oriented mind-set and sprinkling them reasons other than salary and benefits. throughout the business. In turn, CFOs 5. How do you develop a workforce They’re often searching for values and may serve as models to other leaders experience for the future workforce? a mission that resonate—which means when it comes to appreciating the value Just as CFOs are looking for new formulas that companies can gain a competitive of incorporating data and analytics into to measure the value of talent, so advantage in the labor market by actively decision-making—and developing the have members of the new workforce touting their distinct culture. Other digital talent to do just that. components that might make your Contacts Endnotes Jessica L. Bier Rob Dicks Ajit Kambil 1. 2018 Q4 CFO Signals, Tariff and gridlock expectations stoke recession fears, p.14. Managing Director Principal Global Research Director, 2. 2018 Q3 CFO Signals, Fading optimism, led by trade, Deloitte Consulting LLP Deloitte Consulting LLP CFO Program tariffs, and talent concerns, pp.13-14. 3. 2018 Q3 CFO Signals, Fading optimism, led by trade, [email protected] [email protected] Deloitte LLP tariffs, and talent concerns, pp.12/14. [email protected] 4. 2018 Deloitte Global Human Capital Trends: The rise of the social enterprise, p.73. 5. Transcript of webcast, Building a digital-ready finance workforce,” Deloitte Dbrief, October 2018. 6. Ibid. 7. 2018 Q3 CFO Signals, Fading optimism, led by trade, tariffs, and talent concerns, p.12.

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For more information about Deloitte’s Deloitte CFO Insights are developed with the guidance of Dr. Ajit Kambil, Global Research Director, CFO Program, Deloitte LLP; CFO program visit our website at: and Lori Calabro, Senior Manager, CFO Education & Events, Deloitte LLP. Special thanks for Josh Hyatt, Manager/Journalist, CFO www.deloitte.com/ us/thecfoprogram. Program, Deloitte LLP, for his contributions to this edition.

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