Look around you. How many people in your company’s finance function had left in the past year? Chances are, if you have a 100-strong finance team, ten or 12 of them would have moved on to other companies or retired in the past 12 months.
The typical attrition rate in finance, according to panellists at the recent CFO Innovation Asia Forum in Singapore, is 10%.
That’s manageable, if the leavers are entry-level staffers. “I frankly don’t lose sleep over it,” said Steve Dwyer, Director of Finance, Asia, at US metalworking solutions company Kennametal. “We see the departures as an opportunity to upgrade.”
What is more worrying is when those who have been with the finance team for five to eight years become restive. “The key thing is that managers and supervisors and their experience and knowledge remain with the company,” said Ben Ho, Vice President Finance, Asia Pacific, at Henkel (China) Investments.
But what if finance managers, assistant treasurers and other mid-tier finance professionals feel they are ready for bigger opportunities than what the company is willing or able to give them? It is in cases like these that CFOs ask themselves: What should be done?
The panellists had plenty of suggestions. They include:
- Give your people a career path, so even if they are not promoted today, they know there is a ladder for them to climb
- Grant them ‘transition rewards’ while the company is not yet ready to promote them, for example by sending them on training and other assignments abroad
- Rotate people in different assignments – in accounting, transactions, treasury, shared services, business lines, countries – to keep them fresh and interested
- Nurture personal connections among finance team members and the CFO, for example through breakfast meetings, sports fests, karaoke sessions
- Widen the finance talent pool by recruiting outside the home market, to such labour-surplus countries like Myanmar and the Philippines
It is always interesting to listen to and interact with a panel of CFOs, whose experiences and insights originate from the trenches. In this case, the panellists came from a range of industries and company types.
In addition to Ho and Dwyer, who was previously Asia CFO for GE before moving on to Kennametal, the finance chiefs on the panel were Chey Hui Chia, CFO of Philips Electronics Singapore, Chee Ming Pang, Finance Controller at Steelcase, and Gabriel Low, Regional Financial Controller and CFO (SEA) at GEA Westfalia Separator.
It is relatively easy to develop career paths in a multinational organisation, given the range of business lines and geographies in a conglomerate such as GE and Philips, for example. Promotion paths may be rather limited in a regional or local company, and even more so in a start-up or a small or mid-sized business, where the CEO (and founder/owner) may also be the CFO-equivalent or may reserve that sensitive post to a relative or a trusted lieutenant.
But not everyone wants to be a CFO, a job that has become, in the MNC and large company setting, a multi-disciplinary, risk management, strategic and investor and media relations post, in addition to the traditional accounting, compliance and corporate finance functions. Still, this transformation of the finance function has also opened up new career paths within and outside finance, including finance business partnering and shared services roles.
The bigger companies typically have formal talent management programs. At consumer products, healthcare and lighting conglomerate Philips, said Chey, career paths are designed around the ‘two-times-two-times-two’ framework – to qualify as a talent, managers have to work in two business sectors, two countries and two different functions.
“We try to rotate people around when they have been two to three years within the company,” she said. In the past, employees regarded Singapore as “Disneyland” – people who are in the city do not feel they need to go abroad. “Now, increasingly, I’m seeing more people open to rotation, but people prefer to go to places in Asia rather than the Netherlands or the US,” said Chey.
At global office furniture maker Steelcase, finance controller Chee has identified two managers who can take over his post – and everyone knows about it. “We do very structured career planning,” he said. “We call it the transition coaching programme. We want to groom people from the so-called team leader level, manager level.” Chee reported that the attrition rate among middle managers is much lower than among entry-level staff doing transactions processing.
Henkel finance chief Ho is also seeing a change in attitudes in Shanghai, where the European company’s Asia headquarters is based. “I find that today’s younger generation is not just looking for money,” he observed. “They are looking for experience and training. So when you go on campus recruitment, you’re talking to a thousand people in a hall, they’re very excited when you go in there and show them the opportunity [to see the world].”
Ho has spoken with his peers in other companies in China about excessive reliance on hiring away mid-level finance professionals in other organisations. “If everyone does campus recruitment, no matter how small or big, then we will start to build a pipeline of talent and this problem [of job-hopping mid-career managers] will eventually be solved,” he explained.
But while there is still a relative dearth of mid-career talent, some companies in China reportedly promote finance managers even if they are not ready or award them fancy titles to encourage them to stay. There is no title inflation at Henkel. “We explain to them that their talent is more important, what they are doing and their career path in the future, rather than the title,” said Ho, who added that compensation is also utilised as an incentive for people to stay.
Making It Personal
It is said that people don’t leave companies; they leave other people, especially their managers. Nurturing personal connections with members of the finance team not only strengthens employee ties with the CFO and the company; it also encourages people to open up and bring problems and other issues out in the open so they can be dealt with at the early stages, rather than allowed to fester.
Dwyer takes people out to lunch. When he was with GE, he used to have a simple roti (Indian bread) breakfast with finance trainees and managers once a month off an alley in Singapore. “Even today, people would come up to me and talk to me about it,” he said. “It was a simple way to have eight or ten people sitting around and have a chat. The downside of a big company is that things tend to be very impersonal, especially if you’re young.”
“I do sports with them,” said Chey. “We go bowling sometimes.” When she was in Taiwan, she trained to run with ladies in the finance team who were interested in exercise and built up the relationship. “It’s not just the finance team, but also with purchasing, supply chain, marketing,” she added. “We try to encourage cross-function interaction.”
At Philips, one afternoon every month is designated as ‘People’s Day.’ Departments can choose to do one-on-one meetings, organise inter-departmental interaction or take the afternoon off to go bowling or other sports.
Deepening the Talent Pool
The panellists swear by the above strategies, but little can happen unless there is a basic ingredient: people. Particularly in labour-tight places like Singapore, making sure you have enough finance professionals to recruit, rotate, promote and retain can be a challenge.
This can be a bit more difficult for a relatively low profile company like GEA Westfalia Separator, which builds centrifuges that separates and purifies liquids from solids, compared with more prominent names such as GE, Philips and Henkel.
One of the company’s solutions is to source finance talent from other places in Asia to join its team in Singapore. Regional CFO Low reported finding particular success in recruiting from the Philippines and Myanmar. “You can advertise online six months ago and still get two or three applications a day today,” he said.
“The challenge is to find capable people who can, first of all, communicate well in reasonable English and who are actually trained to work in an MNC,” Low added. There are issues with immigration requirements and adjustments on the part of the recruits to a faster paced work and lifestyle environment. But Low said that the finance professionals Westfalia has hired are performing well.
Now the challenge is to keep them committed to the job.
About the Author
Cesar Bacani is Editor-in-Chief of CFO Innovation. He chaired the CFO Innovation Asia Forum in Singapore in April. He will also chair the CFO Innovation Hong Kong Forum on 26 October 2011, which will also feature a panel discussion on talent management. Click here to register for the Early Bird Special and save US$300.