Over the course of my career as CFO and in other executive roles, I have tended to maintain a tight discipline when it comes to the budget. However, I often made an exception for one area: talent.
I leaned toward an “open-to-spend” policy to help ensure that I had the people with the relevant skills and experience to meet the demands of my job as they evolved. That policy allowed me the flexibility to add a “best athlete” for finance.
For me, 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
It’s no secret that talent can be the key to a CFO’s success or failure. Yet CFOs perennially list talent as one of their top challenges. Finding the finance talent needed to drive priorities and meet the expectations of not only the CEO and other business leaders but also the board, investors and others is an arduous task.
At the same time, those expectations can quickly shift as business, markets and other conditions change. The capabilities and experience finance needed last year, when your CEO gave you responsibility for executing a particular strategy, could well be different next year if the strategic direction changes, or if responsibility for executing other strategies falls in your lap, too.
In the same vein, the finance executive who was a superstar three years ago may no longer have the relevant skills and experiences finance needs today.
I do believe that what defines a talented finance team is not static, but rather continually changes based on financial, regulatory, technical, market and other developments. Furthermore, the pace of that change is accelerating.
Take, for example, how the CFO’s role and portfolio of responsibilities have expanded in the wake of Sarbanes-Oxley, the 2008 financial crisis, and now with the transformational impact of the digital revolution on business and financial models.
Updating the talent agenda
As a CFO during that period, I quickly learned that keeping up with new and increasing demands on my time and on finance meant constantly updating my talent agenda and building a talent assessment, development and recruiting process that aligned to the changing needs of the business.
Moreover, if I found an outstanding, talented individual who I thought would contribute value to the organization, I would hire that person even if I didn’t have an open position. I knew that, within six months, I’d have a need somewhere and that highly talented person would be there to fill it.
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. That also requires a sustained effort to stretch your talent so people don’t get too comfortable and become irrelevant to finance’s needs.
Choosing not to make those investments, especially at a time of change for the organization, might be understandable. However, it also can be a short-sighted choice, leaving finance without the skills to keep pace with new demands, such as in the areas of analytics, artificial intelligence, digitization and robotics, not to mention the skills to look ahead for business model disruption.
Conversing with the CEO
Assessing the finance organization’s talent needs should be done in the context of what skills, capabilities and experiences will help the CFO do his or her job exceptionally well. That process can begin by sitting down with the CEO to discuss what the company needs to do to build shareholder value, and understanding how finance fits into that strategy.
It’s important that CFOs get out of the office to personally get to know as many of their people as possible . . . Whenever I attended major analyst or investor conferences, I would bring along one of our high-potentials, so I could evaluate them myself
I did that every year. I also asked: “What did we tell you last year that we were going to do and where did we succeed and where did we fall short on delivering that to you?”
If that conversation with the CEO is at the top of the talent assessment pyramid, the next step is to layer in an understanding of how finance fits into the organization’s strategy and determine the big initiatives that finance will support.
Then, the CFO has to look across the finance organization and candidly assess whether the team has the players needed to execute the strategy and where talent gaps might lie. That requires a deeper dive with senior finance leaders to understand who are the high performers, who is developing on-track and who is not.
And a question that should be applied to all, whether high performing or not is: Are their skills and experience relevant going forward?
As CFO, I found that I needed to put the performance reviews generated by HR on steroids, with finance-specific talent criteria that took into consideration the organization’s needs.
For instance, HR may be great at evaluating technical competence, but in many finance functions, communications and strategic thinking are becoming critical capabilities. Reviewing individuals on these criteria requires discussions among senior finance leaders to evaluate individuals not only in terms of performance but also in terms of how they fit finance’s needs.
These discussions can be difficult and lead to hard decisions, such as passing someone over for a leadership position or replacing a well-liked individual who occupies a key role. But senior finance leaders are a vital part of the process in addressing those talent gaps.
It’s also important that CFOs get out of the office to personally get to know as many of their people as possible at all levels. That’s challenging, particularly if you oversee a large, global finance organization, but it’s worth the effort. For instance, whenever I attended major analyst or investor conferences, I would bring along one of our “high-potentials,” so I could evaluate them myself.
With so much competition for top finance talent and leaders, it’s critical to have a strong recruitment and development effort to help fill talent gaps at various levels, from entry-level programs and internships to leadership training for up-and-coming finance leaders. That also might mean you need to go the extra mile in your college and MBA recruitment, doing what it takes to hire the most qualified individuals with the most relevant skills from the best schools.
Aligning development to finance’s needs also may mean supplementing HR’s development programs, because they likely don’t have the deep understanding of your talent, where people are in their development and what they need to get to the next level.
And finally, it’s critical to retain your junior talent, so don’t skimp on nurturing them through their development. They are your next generation of finance leaders. You may well need them ready and available to fill the next new skill or talent gap sooner than you think.
About the Author
Charles Holley, retired CFO of Walmart, serves as an independent senior advisor to Deloitte LLP and as CFO-in-Residence of the CFO Program. For more information about Deloitte’s CFO Program, visit www.deloitte.com/us/cfocenter.
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