Anyone who has participated in the corporate budgeting process knows that it can be an arduous endeavor. Without good collaboration and communication, this process can easily stretch into a lengthy exercise in which participants battle over strategic items like sales targets, capital investments, hiring, and compensation. When it gets bad enough, it can even devolve into arguments with department heads over the budgeted expenses for trivial items like office supplies and coffee flavors in the company cafeteria.
An FP&A team staffed by more highly-tenured employees can help mitigate some of the contentious conversations and financial battles that arise in the annual budgeting process. FP&A professionals with several years of experience under their belt are more likely to have relationships with business leaders across the company and a deep understanding of business operations. That relational experience and business expertise can aid in the communication process when it’s time for tough conversations with operational leadership.
In a competitive labor market like the one we have today, leading organizations stand out for their ability to retain finance employees longer than their peers. Based on data from our Planning and Management Accounting Performance Assessment, APQC finds that organizations at the 75th percentile have employees with eight years of tenure — twice as many years as organizations at the 25th percentile.
Longer-tenured FP&A professionals bring benefits to the process that go beyond communication and relationship-building skills. These employees are often a critical success factor in reducing the cycle time for budget preparation because of their experience with the process. They can also serve as mentors to newer colleagues in order to ensure that best practices and effective approaches carry on even when they eventually leave or rotate to another role in the business. Simply put, the technical skills, soft skills, and hands-on experience with the process that these employees have will always be a benefit to the planning and budgeting processes.
Organizations without long-tenured FP&A employees are not automatically destined to a choppy or difficult budgeting cycle. The reality of a tight labor market is that employee turnover in all areas of an organization may be inevitable.
FP&A teams with newer or short-tenured staff can use this dynamic as an opportunity. These employees can approach the budgeting process with a fresh set of eyes and offer their ideas for new approaches to a process that may have become stale and status quo. For example, an FP&A leader that is new to the company, in her effort to learn the organization, may ask probing questions that were never previously asked and lead the organization to different strategic decisions. These new questions and insights undeniably add value to the process.
Given the benefits that both well-established and newer FP&A employees bring to the budgeting process, the ideal team should be a mixture of both. But retention is a challenge for many organizations, especially right now. What can you do to increase employee satisfaction and ensure that FP&A team members stick around longer?
One good initial step is to ask how FP&A employees spend their time. Are they busy acting as strategic partners to the business and formulating analysis that can help you make better decisions? Or are they spending a lot of their time gathering data and carrying out tedious, repetitive tasks?
Our FP&A research found that the latter is more likely to be true in many organizations. Specifically, we found that the average FP&A employee spends 75% of his or her time gathering data and administering the process, leaving just 25% for providing value-added analysis to the business. If this sounds like your FP&A team, you should think seriously about investing in automation tools that are proven to help free up time for finance to do more valuable and engaging work.
It’s also important to provide your team with ongoing opportunities to develop newer talent and keep more well-established talent engaged. Opportunities like job rotations and cross-functional stretch assignments help newer employees build relationships and expertise in the business. More established FP&A employees benefit from opportunities to act as mentors to newer employees, refresh their knowledge of best practices, and network with their peers in other organizations. We’ve even seen more informal development practices like book clubs or lunch-and-learn talks used with great success to engage FP&A talent. All of these activities help to sharpen a team’s technical and soft skills, which will pay big dividends when it comes to an activity like budgeting.
Experienced FP&A employees often have a deep knowledge of business operations, relationships with business leaders, and the know-how to carry out budgeting more quickly and efficiently. Without newer talent, however, organizations risk complacency and can fall into routines that are no longer effective. Clearing space for your FP&A team to carry out value-added work and providing opportunities for them to keep growing their skills helps to ensure that all of your employees are more engaged and satisfied with the work they’re doing. As a result, they’ll be more likely to stay and continue adding value to your budgeting process.
Perry D. Wiggins, CPA, is CFO, secretary, and treasurer for APQC, a nonprofit benchmarking and best practices research organization based in Houston, Texas.