People Practice » Higher salaries no longer enough to retain top financial staff

Higher salaries no longer enough to retain top financial staff

CFOs must rethink their strategies to secure the skills needed by their teams and wider organisations

A significant remuneration package may no longer be enough to keep top talent within finance teams, according to new research and CFOs within the market.

Jonathan Howell, CFO at software company Sage says employees today are looking for much more than pay from their companies.

“Employees today require a more diverse mix of support and benefits from employers than perhaps ever before,” he says.

“It is not just about remuneration, but the culture benefits an organisation can bring, such as career progression, well-being and greater flexibility as to how, when and where they work.”

Howell says that for any successful organisation, the attraction, development and retention of talent “has to be number one priority”.

Hiring and retaining staff will be the most difficult task CFOs face during 2023; a recent survey by Gartner identified tight labour market conditions and skills shortages as one of the biggest challenges to corporate profits alongside inflation and supply chain disruptions.

Gartner’s poll of 234 CFOs also found that hiring and retaining staff was the only challenge selected by a majority of respondents.

“The data from CFOs aligns with what we are hearing from human resource leaders – namely that competition for talent is expected to become fiercer over the medium term and retaining that talent will become more challenging,” said Marko Horvat, vice president for research at Gartner’s finance practice.

“CFOs will need to deploy a variety of strategies to ensure critical roles remain filled while also protecting margins,” he added. Horvat also noted that businesses would need to identify the few “critical areas” where investments should be “accelerated”.

This would likely be around human capital and digital investments while optimising costs against a backdrop of stubbornly high inflation.

Gartner believes companies will have to raise remuneration for their top performers, but – like Howell – notes compensation alone will not solve this challenge and ultimately put pressure on margins.

Its report says that companies need to refine their employee value proposition to meet expectations for increased flexibility. CFOs should also reassess their organisation’s recruitment efforts in collaboration with human resource departments to ensure critical roles are being prioritised and more avenues of attracting staff are activated across the organisation.

Flexible working is needed

Similar findings were also included in research from McKinsey, which reveals an attractive salary is no longer enough to retain staff.

Its survey found that uncaring and uninspiring leaders caused many people to leave their jobs, along with a lack of career development. Flexibility, meanwhile, is a top motivator and reason for staying in a job.

McKinsey identified four employment strategies that companies should pursue to attract and retain talent. These include offering a better value proposition in terms of career paths, compensation and benefits alongside new offerings that revolve around flexibility, mental and behavioural health benefits, and a strong company culture.

Companies should also aim to make jobs sticky by “investing in more meaning, more belonging, and stronger team and other relational ties.”

McKinsey advises companies to broaden their talent-sourcing approach to include the self-employed and freelancers, students, temporary workers, on-call workers; and attracting back those who have left their jobs.

“Each stage comes with its own challenges and opportunities and those leading the charge on talent are looking at the issue holistically, nurturing from the education system onwards, supported by workplace initiatives that help to build a pipeline of talent,” says Sages’ Howell.

Finance focus on tech skills

A recent study by Sage concluded that over four-fifths (83%) of finance leaders believe the industry needs a new breed of CFO.

Finance leaders today must take a more holistic approach and rely on data to engage with the wider strategic priorities of their organisations.

CFOs “have become a hub of business information and are diversifying their expertise to include recruiting the right talent,”, Sage’s study said.

The study found that many finance teams are now prioritising technology skills over financial experience when looking to source talent and that this is impacting the hunt for new skills.

Candidates with substantial experience working with artificial intelligence were often considered more appealing than strong finance candidates willing to train and develop AI skills (38% compared to 34% respectively).

Sages’ study also found organisations are prioritising people and empathy in business decisions. About 75% of financial decision-makers are being encouraged by their organisations to prioritise people (77%); account for empathy and understanding when making business decisions (75%) and put purpose over profits (74%.

“Our research shows that a third (32%) of finance teams are now looking for candidates with coding, developer, AI experience,” says Howell.

“This means that, while finance teams have typically been viewed as keepers of the purse, the reality is much more nuanced.”

Howell notes that today’s finance teams and leaders need to be more “future-focused”, strategists and advisors that can provide guidance and commercial insights where their businesses need them most

“While getting the numbers right will always remain critical, there’s now a real blend of traits using real-time analysis, predictive modelling and forecasting to shape the future as well as reporting on what’s gone before,” he says.

“This requires greater flexibility from finance teams and a balance of more traditional skills set with an appreciation for emerging technology and an awareness of how to balance purpose and profit to deliver long-term, sustainable value to the company.”

 

Comments are closed.