Maximising people power: effective talent management in finance
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22 Mai 2011 |
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KPMG ROMÂNIA S.R.L. |
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DN 1 Bucureşti Ploieşti, Nr. 69-71
013685 Bucureşti, Sector 1
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+40-21-201.22.22
Fax
+40-21-201.22.11
Website
www.kpmg.md
www.kpmg.ro
Executive summary
This report provides a follow-up to a March 2010 ACCA survey on talent management practices across the finance profession [1]. A key finding of this research was that less than 20% of organisations had a talent strategy that fully integrated talent identification, development, deployment and retention activity across the finance team. Most talent management practices were found to be informal, sometimes run in isolation, and often functionally based without being part of an integrated, wider plan.
This is a concern because finance functions now have a real opportunity to make a difference to their organisations’ success – whether in private or public sector, listed multinational or SME. The economic crisis provided heightened visibility of the value that professional accountants bring, and the next decade presents an enormous opportunity for finance professionals to help create and sustain long-term value for organisations. But this goal depends on the people within finance and the way that the organisation develops and applies their talents. In an economic environment focused on cost, the ability of employers to realise and leverage the talent within their finance functions will be more important than ever.
Integrated talent management brings together all three elements of the value creation cycle [2] that ACCA has previously identified: people, performance and professionalism. It recognises the importance of identifying people with talent and potential, and of creating targeted development opportunities.
It links recruitment and development structures with competency frameworks, performance appraisals and reward systems, creating clear standards and reference points so that a culture of high performance can be developed. These practices also help organisations sustain value, because great talent programmes ensure the right behaviours and promote the importance of professionalism. Finance professionals play a key role in sustaining value for the long term, adjusting their focus according to the changing environment in which they work and the challenges it creates. Integrated talent management frameworks are an essential ingredient to creating and sustaining value for the long term.
This report looks at how talent management can shape and influence the structure of finance functions, and highlights the practices organisations should be adopting in order to deliver the best possible talent development for finance professionals.
WHY TALENT MANAGEMENT MATTERS
Talent management is high on the agenda for many CFOs because of the significant challenges faced by finance functions. Finance teams are under various pressures: to minimise their own costs as well as costs organisation-wide, to generate maximum value in a period of slow economic growth and to position the company to take opportunities that arise as economic conditions improve, and to respond to new regulatory and tax pressures around the world. In order to meet these challenges and maintain a motivated pool of financeprofessionals, CFOs need to establish great talent practices.
TALENT MANAGEMENT WITHIN FINANCE RESTRUCTURING
In order to improve finance function effectiveness, CFOs typically consider restructuring finance operations. The preferred operating model for finance will be determined in part by the characteristics of the organisation and the wider economic environment. However, talent management must be incorporated into any planning for finance function restructuring. The success of moves to streamline finance activity, reduce transaction costs or improve the ability of finance to provide insight to operational managers depends ultimately on the availability of individuals with the right mix of knowledge and experience which must be facilitated by effective talent management. Furthermore, the future demands and needs that will be placed on the finance function will require differences in the way talent is identified, determined and developed.
FINANCE FUNCTION EFFECTIVENESS
A CFO’s preferred model for finance could incorporate a number of elements: centres of excellence bringing together specialists in disciplines such as tax or risk, shared services to improve efficiency, outsourced or offshored services to reduce costs and improve transaction quality and flexibility, and business partnering to provide analysis and support to the organisation through commercially minded finance business partners (FBPs). The FBP role has become increasingly important, positioning finance as a key provider of business analysis and insight to support decision making and achievement of strategic objectives.
SECURING THE TALENT PIPELINE
The challenge in bringing a preferred finance model to life is that certain skills, capabilities and experience levels will be required of the finance professionals who are employed. These may not necessarily be available in the organisation, or even in the wider recruitment market. The finance model must therefore take account of the current availability of skills, and the potential for the organisation to develop desired skills in future among its retained finance professionals. Creating the necessary talent pipeline can be particularly challenging for FBPs, as these require commercial knowledge and strong softer skills (communication and negotiation capability, for example), as well as core financial expertise.
Aspiring FBPs, for example, will generally require focused development, often involving rotations into non-financial commercial roles, to help them develop the capabilities and commercial insights they need. This pipeline creation is part of an effective workforce planning strategy, which should be developed and embedded within the organisation.
INTEGRATED TALENT MANAGEMENT
Integrated talent management practices are the next stage in the evolution of talent development and the development of these processes is essential for CFOs who aspire to run great finance functions. What does great talent management for finance look like? Our report suggests a number of key components, which cover all aspects of the individual’s employment experience.
Definition of talent
The organisation needs to clearly identify what talent looks like – the key skills and behaviours that finance professionals need to have in order to deliver the organisational strategy.
Recruitment and talent identification
Recruitment activity needs to take account of short-term and long-term needs. Sometimes experienced hires can fill core vacancies while younger finance professionals are developing their skills. Talent may also be recruited from elsewhere in the organisation, bringing individuals into finance who have an established business or commercial understanding.
Competency frameworks
These define the technical, business and behavioural competencies required in every finance role at each level. They can be used to benchmark existing talent, identify talent gaps and develop structured career paths that enable finance professionals to develop the necessary skills and competencies.
Targeted development
Some finance roles will be more critical to the success of organisations. The developmental needs of individuals in these roles should take priority where resources are scarce. Note that junior roles can be as critical as more senior ones.
Comprehensive learning
Leading organisations offer a comprehensive range of learning and development activities which can be selected to suit individual needs. Recent trends include a shift towards collaborative e-learning, while online finance portals providing access to management tools, research and best practice are also widely used. Experiential learning is particularly popular with younger finance professionals, and could include secondments, job rotations and ‘stretch’ assignments. Organisations are increasingly developing virtual finance academies to provide a structure to finance training and ensure consistency.
Structured career paths
Organisations need to develop structured career paths for finance personnel, so that individuals aspiring to reach a particular position – such as that of FBP – can clearly see the future steps that could help them develop the skills, competencies and experience necessary. From an organisational perspective these are also helpful with strategic workforce planning and succession planning in the business or institution.
Performance measurement and reward
The objectives against which finance professionals are targeted need to be aligned to the overall organisational strategy, with rewards linked to individual achievements. Tools can also enable individuals to benchmark themselves against desired competencies for certain roles, helping them to manage their own career development.
Ongoing review
The talent management framework needs to be regularly assessed to ensure it continues to meet the requirements of the wider organisation and the finance function itself.
THE DRIVE FOR TRANSPARENCY
With pressure on costs across organisations, transparency of talent management spend is increasingly important. Though evaluating return on investment is notoriously difficult in this area, new effort is being placed on finding ways to measure the impact of spending on different forms of learning and development and other aspects of the talent management framework. In this way, spending can be targeted on activities that have most impact on the creation of an effective, strategically aligned and value-adding finance function.
Introduction
Recent ACCA research [3] confirmed the vitally important role that finance plays within organisations, with over half of survey respondents indicating that the role of finance professionals had become more important since the global economic crisis.
One of the most critical roles is that of the Finance Business Partner (FBP) – the most business-facing finance role. FBPs provide the insight and analysis to support strategic decision making. Fulfilling the role effectively requires a mixture of strong technical and commercial skills and capabilities, which finance professionals will not necessarily possess unless they have undertaken structured development activity.
Securing the right talent is one of the biggest challenges CFOs face. In KPMG research among over 500 senior finance executives [4], over 50% of respondents said that difficulty finding and retaining skilled finance professionals was a major barrier to improving finance function performance. This was their number one concern, as it had been in previous KPMG studies. This is encouraging, because CFO ‘buy in’ to talent management is critically important – and not just when markets are buoyant, but for the long term. Sustained CFO support is necessary to maintain momentum behind development policies and practices.
Unfortunately, the economic slowdown has frustrated many talent management efforts. ACCA’s 2010 survey into talent management [5] found that the tough economic climate had impeded finance development activity. Over 50% of participants indicated that their organisation’s talent management programme for finance staff had been put on hold.
