Best Practices in Creating a Digital Talent Strategy for Finance
Finance professionals are increasingly under pressure to adapt to a digital way of doing things. This is not just a finance issue. It’s an enterprise issue. Our 2018 Key Issues Study revealed that talent risk is the fastest-growing risk over the next 12-18 months. It’s already one of the top three risks. Yet almost half of finance organizations in a recent The Hackett Group finance talent study said they don’t even know what these new roles required by digital transformation would look like.
Ninety-one percent of participants in our 2017 Digital Transformation Study told us that they believe digital transformation will fundamentally affect the culture, roles and skills of finance teams. Greater automation, and the introduction of smart technologies like artificial intelligence, means finance will have to do less of some things and more of others. Ideally, finance professionals will be less burdened by low-value, repetitive tasks. That should free them up to focus on more strategic activities, like analytics, and working with the business to drive better performance.
The upshot is that finance professionals must develop two main skills: technical skills and business partnership skills. Without understanding the concepts that underlie tools like robotics and advanced analytics, professionals won’t be able to get comfortable with using them. As finance becomes a more strategic advisor to senior management and business leaders, it also needs to enhance its business acumen and hone its interpersonal skills.
Best Practices in Developing a Talent Strategy
It’s imperative that finance organization develop a comprehensive talent strategy to prepare their teams for the new normal. Here are six approaches that can make it successful:
Make it well rounded. The talent strategy needs to include training, mentoring, rotations inside and outside of finance and clear discussions about career pathing. A comprehensive approach is more likely to be a successful approach. It recognizes that different people learn differently, and different skills must be taught in different settings. For example, while technical skills may be best developed in a training environment, business-partnership skills are best taught on the job through rotations and mentoring.
Address the needs of different levels in the finance hierarchy. The development needs of a senior analyst are different than those of a senior director or above. The talent development program needs to be specific to the professional requirements of the staff. Senior staff may need training in leadership and other soft skills like communication and presentation because they will be interacting with management and other decision makers.
Get a cross-functional group together. It’s important to involve the business in the talent development initiative. The perspective of internal customers is critical, and they can bring a lot of insight from their own staff-development efforts. Finance should facilitate the creation of a standing meeting for a cross-functional team to discuss approaches and best practices on an ongoing basis.
Stay agile. The business environment is changing faster than ever before. As a result, the talent and skill requirements for finance are also changing at a more rapid rate. While a healthy talent program always looks forward and should flexible enough to adapt, it’s important to open it up every two to three years for a thorough review and make sure it’s still responsive to the needs of the business.
Don’t get caught up in (just) technology. It’s easy to get caught up in the current talk about the need to hone finance’s data and technology skills. How to work with machine is certainly a big challenge. But these are by no means the only skills that the current environment demands. Even the most advanced analytics tool will not have impact if the analysis cannot be effectively communicated to decision makers. So soft skills are a must. In addition, with finance increasingly expected to play the role of a strategic advisor to the business, functions like FP&A are playing a critical role working with business partners to evaluate choices and suggest next steps. That role requires the development of strong business acumen.
Measure program performance. Finally, it’s important to measure the effectiveness of different training approaches, so that finance can improve what’s not working and do more of what does. Assessing whether a training initiative works is not always easy. Courses can end with a test of the learned skills. But even then, if staff is not given the opportunity to practice new skills the training will not be effective. Softer skills must also be practiced, for example by doing mock presentation in front of a panel of peers or leaders who can provide feedback. Finally, the talent development plan’s effectiveness needs to be incorporated into the annual review process. That does not only acknowledge its important but also gives managers and staff a chance to talk about what skills were emphasized, acquired, practiced and mastered (hopefully). And talk about what’s next on the agenda.
There’s a very large gap between the importance of digital transformation for finance and its existing capabilities to execute on a digital strategy. Our Key Issues Study showed that almost universally, finance executives believe digital transformation will have a fundamental impact on finance’s performance and delivery model. But only 36% of respondents reported they have the right resources and competencies to execute it. Creating and implementation a digital talent strategy is a critical step towards closing that gap.