By 2030 the UK workforce will be multi-generational, older, and more international, with women playing a stronger role, according to UK Commission for Employment and Skills. Alongside this changing demographic it is also likely that the highly skilled will push for a better work-life balance whilst many others will experience increasing insecurity of employment and income, due to a variety of factors such as the increasing onset of automation.
Many companies are beginning to see ripples of the US coined ‘Great Resignation’. The popular phrase refers to the roughly 33 million Americans who have quit their jobs since the spring of 2021, and the UK is seeing similar signs.
According to a study by the Centre for Economic Performance, one in five employers are raising issues of retaining staff and other research shows that up to a third of UK workers are considering moving jobs, citing salary and bonuses but also a lack of flexible working conditions and not feeling valued.
Companies are struggling to recruit and retain employees due to external factors such as Brexit and a general skills shortage but also because of their own internal issues such as what the company brand stands for, flexible working policies, gender inequality or lack of diversity. In addition, companies are upgrading systems and automating but not upskilling or developing their employees in tandem. Dissatisfied employees then resign leaving huge gaps.
Companies offering hybrid or remote working are less likely to be affected by resignations with nearly a third of workers claiming that flexible working policies are encouraging them to stay in their current job. Employees are also calling for better technology and ways to stay connected.
The role of the CFO
In a PwC survey, more than a third of CFOs said they’re very concerned about staff turnover remaining high indefinitely and affecting revenue growth.
The survey showed that in response companies are making some substantial changes. Many are becoming less dependent on employee institutional knowledge and are changing operational models with revised location strategies and an increase in outsourcing.
Traditionally the finance and HR teams have been seen as two distinct businesses within an organisation. However, this is no longer the case and most finance teams see recruitment as an important investment as opposed to an expense.
CFOs play a major role in this process and decision-making because finance has access to organisational data and plays a key role in compensation and employee investment. The finance team, therefore, needs to be a part of the integrated approach to running the business and be a part of moving to rolling financial planning whereby the finance teams conduct skill and labour gap analysis against business and strategy and not just actuals with forecast updates. Its critical that finance is a part of the drive of moving out of in year management where often it’s too late to close gaps and into a role that supports leaders with early visibility of gaps in years two and three.
All too often I have seen examples of where the two departments (HR and finance) don’t talk. In one example, a business rewarded an operations manager for achieving budgeted production output at a time when sales were running 40% behind. As a result, the company incurred the cost of renting additional warehouse space to house the excess inventory produced, lost key staff and eventually ran out of cash.
CFOs must lead these strategies, fund necessary changes, and work closely with executives in line-of-business units and others in the C-Suite to strike the right balance.
I strongly encourage senior finance leaders and their teams to think about the following:
- Visibility: Companies need to plan ahead and link their business strategy with their HR plans. The finance team needs to align its forecasting with a look ahead to what type of people they need to start recruiting ahead. For example one of the companies we worked with could see that they would need to hire data analysts and modelers over a 5 year period. The finance department was able to include the cost of this in their forecasting but also were able to share their insights with HR to start the recruitment process early.
- Training: One of the most important roles of the finance team for many businesses is to put suitable resource and funding into the training of its staff to enable staff to use new technology and systems effectively. All too often we see too many businesses continue to be run on spreadsheets as they have not made the corresponding investment in training and educating to enable people to use the system effectively. Conversely there are also businesses that have still not invested in technology as they are run by a generation who are suspicious of homeworking and the misuse of the internet in the workplace. This can halt any serious progress of the business and it is here that the finance and HR team need to work very carefully together to ensure that the rise in technology is mirrored by investment in people.
- Invest in your staff: To combat the Great Resignation and in order to attract and retain talent, the finance team needs to look inwardly at its own policies and practices which demonstrate they value their employees and their needs. Recent research from Global Equity Organisation (GEO) shows, that as a result of the Great Resignation, 22% of European firms surveyed said they would make more share grants in the future as part of their long-term incentive programmes. Employees needs to be incentivised monetarily but also with work-life balance policies and mental health. The pandemic has shown us that with the high level of technological advancement, a high degree of flexibility in the workplace is attainable and CFOs need to recognise this.
- Diversity: It is important to look at diversity within your work force. This helps not only retain employees but breed productivity as the ability to grow and learn from each other is expanded. The American apprenticeship schemefor instance for certified public accountants exemplifies another perspective on recruitment – one that has also been adopted in London – in order to encourage candidates from less affluent backgrounds.
- Better quality work: Younger employees want instant access to data, systems that perform predictive analytics and the reward of more strategic roles. If employees are frustrated with the tools that they use at work, that could be a big factor in their decision to look elsewhere — especially in a hot market where new opportunities are plentiful.
- Mobility: We are seeing our multi-national clients helping staff transfer skills between countries and allowing talented employees to be mobile between countries. This ensures skillsets remain within the company while providing employees with a planned career progression across a wider geography
The Great Resignation will affect all areas of the business and the finance sector is no exception to this trend. We see many companies whose finance teams don’t feel that their work contributes to the growth of the company or their values – they often feel a very separate function.
This is a major contributor to dissatisfaction within this department. One of our clients has ensured that the finance team are equipped with process and tools that turn budgeting into a significant non-event allowing the finance team to focus on activity that supports growth and where accountability is clear with rolling forecasting and gap analysis. This has helped with morale and a much happier and productive team.