Senior executive hiring has returned at an increased pace over pre-pandemic levels in recent months. Pent-up demand, stimulus-induced growth, and less-than-predicted economic damage have many organizations aggressively seeking to bring in new leadership talent. This year is already among the top five years of recruitment activity I have observed in a 20-year executive search career. It may well go higher, barring no major unpredicted adverse health, macroeconomic, or geopolitical events.
The implications for finance leaders, their teams, and organizations as a whole are multifaceted. Consider for a moment the reality that a large majority of finance team members are being approached every day about new opportunities. Given the volume of recruiting activity, much of it becomes white noise. Also, recruiters, for the most part, are still not great at personalizing their outreach in a way that engages the highest performers (but they’re getting better). However, pair this increase in activity with the ongoing challenges a team may be facing, and a particularly bad day or a troubled interaction could open them up to external opportunities.
Can a CFO reduce those bad days or create a work environment attractive enough to minimize their impact on the retention of high-potential professionals? Perhaps, but having a solid team isn’t about shielding the talent from challenging work or bad days; it’s about building a solid foundation and inclusive culture.
I have expounded on team development and retention in a previous article, so I won’t rehash it here. However, there are a few nuances related to the current state of work that merit attention.
Most, if not all, finance staff has been working remotely for the past year (and according to several recent surveys, most prefer it). Providing continued flexibility on work location and the amount of in-office face-time required will be critical to retention. If an organization doesn’t have a model responsive to employees’ new expectations, current team members may leave for a firm that does. This is particularly true in a function like finance and accounting, where skillsets are industry agnostic.
Direct reports and their direct reports are ambitious finance professionals. Given the outsized impact the pandemic has had on the finance function, a great deal of executive development was put on hold. Refocusing on development is important for two reasons. Foremost, it is a retention tool. But given how hot the market is for finance talent, it would also be prudent to accelerate succession management programs as some attrition in the direct report team is likely.
Given the state of the market, firms will be reaching deeper into organizations for talent. Second-level reports are becoming more attractive candidates for skip-level promotional opportunities, particularly as companies move away from traditional job descriptions to more future-focused ones and aim to increase diversity. To address flight risk at these levels, the CFO and the senior team members should be having development conversations with professionals lower in the organization than they might have previously.
In only the first few months of the year, we have already seen upward pressure on compensation in search engagements. While financial rewards are usually not the prime motivator in making a career decision, the organization should review current compensation schemes to ensure it is competitive in the market.
This year is already among the top five years of recruitment activity I have observed in a 20-year executive search career.
Looking beyond attrition, how do you become more competitive in the search for external talent? A few of the items from the above list apply but with some twists.
This catchphrase represents the future of work, which has arrived and is here to stay. While providing flexibility for the current team may be on the table, leaders are often less flexible with new hires. In our recent survey, more than 80% of executives expressed a strong preference for working remotely or in some kind of hybrid model. Firms that lead on hiring the best executive talent are becoming more willing to have new senior-level hires work from anywhere.
It has been gratifying to see the strong and authentic focus on increasing diversity in the higher levels of finance and accounting. To truly move the needle in this area requires change on multiple fronts, not least in how we attract and evaluate candidates. Partner with the human resources function to create position descriptions focused on successfully doing the job versus on a rigid set of requirements that knock out high-potential talent with diverse backgrounds and experience.
Given how hard people in the function have worked over the past year, we are finding an increased desire to join firms with a mission they can support. Having a well-articulated employee value proposition that speaks to what a company believes in, beyond meeting revenue and earnings per share goals, will be imperative moving forward.
Whether competing for new talent or retaining existing talent, new rules apply. Key among them is flexibility in the approach to both attracting and retaining the best finance talent.
While each item outlined above should be included in a comprehensive talent strategy, work location is probably the most urgent to address and the easiest to address near-term. An organization would rather have its high-potential leaders receiving recruiter calls while sitting in their home office versus stuck in traffic during a one-hour daily commute to headquarters.
John Touey is a principal at executive search firm Salveson Stetson Group with 20 years of experience providing executive search, human resources, and management consulting services to the healthcare, financial services, utilities, manufacturing, and pharmaceutical industries. Follow him @JohnTouey.