CFOs point to talent acquisition and development as one of their key challenges. But many find that building a strong business case for spending on major training programs is hard to do.
“Intuitively, we all know there’s a positive ROI on investing in people. But there isn’t a quantitative way to capture it because there are too many variables,” said Bob Thoenen, consultant at FP&A Coach and long-time practitioner, most recently at Kraft Heinz Company.
That’s especially true because the role of the finance function is fast evolving into that of a business partner and strategic adviser to senior management. A Q3 survey by Adaptive Insights reveals most CFOs expect their teams to double the amount of time they spend on strategic tasks by 2020. They also rank their staff’s business partnering capabilities at the bottom of the list. Clearly, there’s a gap between what CFOs see as their team’s strengths and what they want them to be. Training is the only way to close that gap.
An October 4, 2016 WSJ article authored by Charles Holley, retired CFO of Walmart and CFO-in-residence of Deloitte’s CFO Program, highlighted the importance of continuous investment in finance talent development. “For me,” Holley wrote, “having the best possible talent on the team is one of the crucial differentiators—and maybe the most crucial one—between being good at your job and being great… the finance executive who was a superstar three years ago may no longer have the relevant skills and experiences finance needs today.” As such, it’s CFOs’ responsibility to train their staff to handle new challenges and work with the CEO to define the required skillset to be successful as a finance professional of the future.
According to Holley, “Identifying, recruiting and developing the people best suited for the changing demands of finance requires a commitment of two valuable resources—a CFO’s time and the organization’s capital.”
Justifying the investment
Building the case for investing in talent is not a simple process. There are not easy-to-apply metrics from consulting firms or training organizations. According to Thoenen, the way to illustrate the effect of investment in talent is through compelling case studies and success stories, and over time distilling those stories into common elements and themes.
“You can look at the before and after of companies that have gone through training and certification [like the one offered by AFP]. You can compare them to companies who haven’t invested in training and see whether they perform better, although here, too,” he cautioned, “there are multiple variables at play.” Again, “intuitively you know that individuals with the right training and the right skills let you get to the right outcome. While you can’t show dollar and cents return, you can collect anecdotes and feedback.”
For companies that have a history of investing in talent, those success stories can be collected and shared as a way of convincing management of the importance of continuous investment in finance training and development.
One way to measure the impact of training is to look at the processes that better-trained finance professionals have put in place. The important thing to realize is that the outcome of better-trained staff and better processes is not in the form of one improved outcome or decision but multiple better decisions and outcomes. For example, an improved budget process can help the company meet its targets. A better rolling forecasting process can help management make better decisions, or hit cost reduction targets and make smarter resource-allocation choices. A finance function that is trained in business acumen and communication skills can work more effectively with the operations.
“You can talk to multiple people who were involved in the evolution of the process and the outcomes. You can find out three or four things that came about as a result of the talent investment. There’s never just one thing. That’s the whole point of using comprehensive case studies,” Thoenen said. Overtime, “you’re likely to find multiple repeated themes. It cannot be done overnight. It will be built overtime. There’s no equivalent quantitative method. Simple benchmarking is ineffective for this.”
Thoenen suggests that training advocates in finance talk to the CFO, the FP&A team and most importantly, the business. “Find out how the company’s training program prepared the finance team to drive the strategic objectives of the organization, and whether getting training helped them become better business partners, get invited to senior level meetings and whether their opinions count,” he said.
Systemic investment in people overtime should ultimately provide better outcomes, he explained. “The trick is to continually invest in people over time and keep finance up to date as the demands on talent change. That means not just in technical skills but train them how to coach, how to negotiate, how to drive results.”
Over time, you should be able to see a difference in the financial performance of companies that have a systematic approach to investing in finance talent development and those that do not, Theonen concluded. “The question for companies that make continuous investment in talent is: ’Is finance becoming a better business partner?’ The answer can only be provided by asking the business leaders,” he said. “That’s the measure of success. You should ask questions of the other stakeholders: ‘Do you trust finance? Do you take their advice? Do you bring a finance person with you when you go into major meetings?’ To measure the impact on the business, ask the business.”
Nilly Essaides is director and practice lead, FP&A, for AFP.