For public consumption, finance executives are happy to talk about what wonderful teams they have. In private, most are not very impressed with the talent at their disposal.

Finance managers rate few of their direct reports as effective in the behaviors and skills that drive excellent performance by the finance function, according to new research by CEB. And on average, finance workers are more skilled in the areas that have the least positive impact on value creation.

CEB, a subscription-based research and consulting organization with thousands of corporate clients, recently interviewed 673 finance managers at 78 global companies. The managers rated their direct reports – there were a total of 1,884 of them – on about 75 technical skills and 90 “soft” skills. The ratings were on a 1 to 7 scale, with seven equating to “very effective.” Researchers grouped all the skills and behaviors into five areas of competency particular to people it characterized as learners, doers, persuaders, strategists and builders.

Learner competencies include things like seeking feedback on performance, looking for opportunities to improve and willingness to change opinion. Doers have strong functional expertise, and they also take initiative, execute independently and break down problems into manageable tasks.

The skills that typify doers and learners may sound like important ones for finance professionals, and they are. But they are “table stakes,” says Kruti Bharucha, a CEB senior director who oversaw the research. “It’s not that they’re not important, but everyone in finance has to have functional expertise; that’s not negotiable.”

Given that perspective, the survey results are fairly remarkable. In the survey, managers assigned a six (“effective”) or seven rating for doer competencies to only 28 percent of their direct reports. Just 17 percent met that level when it came to learner competencies.

Still, ratings were even lower – much lower – for the other three competencies. A paltry 5 percent of those rated were considered “effective” persuaders, who articulate views clearly, simplify complex ideas, tailor communication styles as needed and challenge business assumptions. For “strategist” competencies – like strong understanding of business operations and emerging technology, as well as the ability to discuss financial performance in terms of key value drivers for the business – a mere 7 percent were rated effective.

Eleven percent were considered effective at builder competencies, which include creating vision, fostering buy-in, setting business-aligned goals for their teams, developing talent pools and challenging unethical behavior in others.

Overall, finance managers appear quite dissatisfied with the talent levels on their teams. Bharucha acknowledges as much. “We weren’t particularly surprised that the ratings were so low,” she says. In fact, she adds, one reason CEB did a report on talent is that when it conducted its annual interviews with CFOs last year, 85 percent said talent was a major concern.

“And it’s still a huge concern,” Bharucha says. “There is simply a shortage of finance talent available in the market. We hear it in every single conversation we have with CFOs. They feel they don’t have the right skills on their teams, especially at the middle-manager level. They feel many of those people are not building competencies that will set them up for effective decision support in the future. They are also not able to delegate effectively.”

Effective delegating is a capability many finance departments sorely need. “After the financial crisis, finance is overwhelmed with ad-hoc requests,” the report states.

But while finance-team members got the highest ratings for doing and learning, those capabilities were not judged to be difference-makers. Managers in high-performing finance teams – identified by answers to questions about things like feedback from business partners and how much influence finance has on business decisions – were asked which set of characteristics they considered the most important for driving finance-function effectiveness. The results: builders, 48 percent; strategists, 31 percent; persuaders, 18 percent; doers, 3 percent; and learners, 0 percent.

“Finance and its HR partners have become adept at recruiting accountants and [other] technical professionals who have learned how to apply new regulations quickly to financial statements and manage short-term variation in their careers,” says the report. “However, very few professionals have been taught the skills that will help them succeed in a more judgment-based role, which also requires advanced analytical and interpersonal skills.”

Judgment-based guidance is needed for strategic thinking about such key needs as business development, interpreting data and making recommendations about market share and pricing, the report notes.

In light of the research, CEB offered a series of recommendations for finance executives. Perhaps the most important relate to hiring. For one, finance should redesign hiring strategies around critical competencies and embed them into skill-development and performance-management protocols, the CEB says.

In addition, CEB recommends case-based interviews, where candidates are asked to solve problems related to hypothetical or real projects. The cases should be on topics unrelated to finance, which can reduce the influence of a candidate’s expertise and experience. That will lead to an evaluation of behavior strength, not just knowledge.

Case-based interviews also are good for assessing critical-thinking capabilities. Many companies, CEB says, do so using a standard set of behavioral-based interview questions and treat the assessment process as a tick-the-box exercise that adds little value to decision making. The best finance departments use case-based interviews to evaluate candidates on hard-to-teach and hard-to-observe competencies.

Other CEB recommendations:

  • Invest in training on soft skills. Even among finance teams that see themselves as business partners, only 41 percent make such investments.
  • Reward builder, strategist and persuader competencies. Most finance managers currently reward only doer and learner competencies.
  • Fine-tune strategies for rotating finance staff among roles. Rotation is a powerful recruiting tool and a strong engagement driver for employees, but a general rotation of finance staff throughout the company does not lead to better performance. Only intra-department and international rotations have such impact.
  • Tap sources of talent that may not be obvious. Doing so can generate 20% more candidate leads. Try looking at start-up firms, media firms, overseas graduates of U.S. colleges and management trainees.
  • Coach your staff. Coaching consists of: highly structured, personalized guidance on professional growth; narrative-based advice using stories, analogies and tangible examples; helping staff expand their professional networks; identifying work challenges; and teaching new skills. Coaching is more effective than classroom training, mentoring or leadership-development programs.

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20 responses to “Finance Leaders Bemoan Talent Shortage”

  1. Unfortunately, even as late as 2010, most companies, large and small, encouraged accountants to do their job and then go home. They were held to deadlines, yes, but doing anything to “change” business processes that would improve the accumulation and processing of data was severely discouraged as too expensive, not a critical operational factor, and did not provide added value. Any request to use technology, change operational procedures, revise data flow, or anything about changing the reporting process was not allowed. The belief that change is expensive and involves too many negative impacts on other members of the organization was rampant in most industries.

    Therefore, expecting accountants to suddenly take on a strategic understanding of the business, develop an understanding of business decisions within 3 or less years, is quite the paradigm shift for the majority of accountants, from junior to senior. The accounting culture, even for those who choose to make changes, has been very restricted to preparing the reports and do not embrace change at any level. Even changing the color of the paper a report is printed on was a major cost prohibition, as colored paper costs more than white.

    If management wants all levels of accounting to become more strategic, they need to communicate that to their accounting and finance departments, and then actually encourage that change. Most accountants understand the costs of change as well as the benefits, but the added value to the organizations must be understood and supported by management as worth that investment. The culture of repetitive work without change has been deeply engrained into the accounting and finance world for decades.

    “Changing” this culture will take more than a few years. Sarbanes Oxley, FASB, PCAOB, and the SEC have all mandated repetitive efforts. Therefore, any changes are viewed as unsupportable, leading to an inability to compare between periods. The fear of audit and MD&A disclosures have all discouraged any level of change. To encourage the contribution of accounting and finance at the strategic table and development of their involvement in business decisions rests equally with management’s openness to change as well as retraining for accountants and managers to embrace that contribution.

  2. I do not think that this problem is only effecting the finance leaders, it appears to be across the board for most profession.

    With the emphasis of balance lifestyle being the focus of the upcoming generation make recruiters change strategy or even outsource.

  3. emphasis on balanced lifestyle? in a day and age where corporations don’t hire additional workers when they have the capacity to do so, and instead get the same amount of work done with existing employees by working them longer hours, you’re blaming this on an emphasis on a BALANCED LIFESTYLE?

  4. This is not something that cropped up just now. this has been in the making for a few years. I am a Finance Manager and have been recruiting for a few years. I agree technical competence is a basic requirement and hence rarely do we hire people from a non finance discipline so i find that the roster is limited. the other major factor is that although we would like to hire hi potential talent, we are unable to compensate them as such. hence anybody with leadership or vision joins other areas which pay better. It cannot be fixed overnight. To attract and retain talent, compensation is a major factor.

  5. “Finance managers rate few of their direct reports as effective in the behaviors and skills that drive excellent performance by the finance function, according to new research by CEB. And on average, finance workers are more skilled in the areas that have the least positive impact on value creation.”

    “… when it conducted its annual interviews with CFOs last year, 85 percent said talent was a major concern.”

    Obviously, it must be a talent shortage if the finance staff is not meeting performance expectations, because it surely can’t be the finance manager’s leadership skills that are lacking.

    Within every organization, decision making drives performance. Every employee comes to work every day and makes decisions that impact performance.

    The workplace has many temptations that employees must resist, from the petty impulse to claim credit for someone else’s work, to the unscrupulous lapse of lying in a negotiation, to the criminal act of misrepresenting financial numbers.

    These decisions, at every level of the organization, define the corporate culture and drive performance.

    In 2008, Harvard Business School Professor Robert S. Kaplan and his Palladium Group colleague David P. Norton wrote The Execution Premium: Linking Strategy to Operations for Competitive Advantage. They outline six stages in their management system:
    1. Develop the strategy
    2. Plan the strategy
    3. Align the organization
    4. Plan operations
    5. Monitor and learn
    6. Test and adapt

    Using Kaplan and Norton’s work as a guide, a proactive finance manager can follow a process to lead their finance team.

    Step 1: Visualize the strategy.
    Step 2: Communicate strategy.
    Step 3: Identify strategic projects.
    Step 4: Align projects with strategy.
    Step 5: Align individual roles and provide incentives.
    Step 6: Manage projects.
    Step 7: Make decisions.
    Step 8: Measure the strategy.
    Step 9: Report progress.
    Step 10: Reward performance.

    One of the critical steps is to align individual roles and provide incentives that encourage high performance and intraprenuership while enforcing rules and aligning decision making with the finance manager’s goals and strategy.

    Finance managers can deploy a number of tools to implement and maintain a high performance culture, including:
    1) Effective policy management (utilizing an online policy library)
    2) Employee assessment surveys
    3) Performance Scorecards
    4) Event management and reporting
    5) Annual certificates to a Code of Conduct

    With the right tools in place, finance managers could have the actionable intelligence they need on an ongoing basis to gain confidence in their finance team, and effectively lead their team to meet performance expectations.

    I agree with Michalina Pietras, “If management wants all levels of accounting to become more strategic, they need to communicate that to their accounting and finance departments, and then actually encourage that change.”

    • The one aspect not mentioned is that of cross-functional training and placement.
      Within a department like finance, or even HR, it becomes imperative that team members spend at least 3 years within a functional team, e.g. cost accounting, debtors, payments, managerial accounts – however the company’s finance department is structured. Whilst in a specific role, the team member is trained for the next role. Sometimes the training is not necessarily technical, but could be managerial, for the movement up and across within the department.

      The experience gained during such a process of development leads to a better understanding of the department and its challenges when strategic conversations are held within the department and across the company.

  6. It is exactily because they are mostly accountants this issue is present.
    Furthermore, accountants only seem to hire accountants. Result is you have the heard mentality. There was a time in Finance when analytical skills were much more prised then an accountant hiring an accountant, much more of an efficient market existed as different schools of thought. The pendulum swings….

  7. I taught Courses in financial economics in Sweden for about six years. My students were brilliant, but after returning to Uppsala University from Australia I talked to the gentleman who had taught my course while I was away, who was from Georgetown University (in Washington DC), and he assured me that while my students were good, his students in Washington were better. That was when I realized that he was a fool, and that many of the persons teaching Courses in financial economics were the cause of the reported fall in the quality of finance and financial economics students. I did not teach financial economics in Singapore and Australia, but I took it upon myself to find out how teachers of that subject were in those countries, and please forgive me for saying that there were many shortcomings. We have the same problem in Sweden with energy economics, and if financial institutions want better employees, then it is clear that they will have to make this known to academia.

  8. Lot of students opt for finance majors because they think finance field has lot of money. In other words finance field has lot of people whose passion is not finance. When these people enter finance jobs they slowly discover that they dont like their jobs and finally they give lesser to the job then they would like to. This results in lesser drive from individuals working in finance field; thus lesser talent.

    Lesson: Do always what you like and thats what gonna bring you most dollars too.

  9. I think the role of Finance guys change in line with the changes happening in the organisation. This is easy to say but tough to digest for most. So, if you were just doing a follow-up job or 9 to 5 job, yes then the changes happening are too big to gulp. Business Models and the market volatility are the two key factors. When everything around you are changing, no choice.

  10. In general companies under value the roles of Accountants and Finance guys. They will only go after them when problems arise.

  11. I decided to change my lifestyle by quitting this shark word of finance and banking area where you hear word like “think-out-of-the-box”, “thight deadline”, “do more with less”, outsource or you will be fired !…

    This is the real life guys, be stronger every day or die. Is this life worth a salary 100k+ annually ? This is not the case anymore for me after 17 years of banking experience.

    So now when I read this kind of article, I laugh so loudly, when you know how people are pissed off in the finance industry and when you know that hardly 5% of managers do there job correctly and the other 95% are focused in politics and their bonus… JUST LET ME LAUGH !

  12. How about some employers not giving the professionals opportunity to go for training, even when the employee want to pay the training fee.
    Somewhere o’er here, to go for training, you have to: pay the fee yourself, salary deducted for the period on training. At the end, no incentive for development.
    I think employers get professionals (employees) overworked; more tasks, less employee.

  13. The talent problem is everywhere. People recruited for any skill and who are good at those skills will find new skills that can give them better pays. Even if pay is hiked for same skill they might get bored and move. So in effect talent can be retained only if recruitment happens for average talent and better pay so that employee sticks until the time skill matches the pay (and eventually moves).

  14. Finance should be wholly reinvented to accomodate customers’ participation & involvement as crowd sourced engagement in Open-Books transparency for effective Policing & guidance in this new world of Powerful, unmastered BIG-DATA

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