Could digital skills be the key for finance teams avoiding talent disruption?

Disruption for finances teams can come in many forms – a pandemic, banking volatility, FX fluctuations, supply chain blockages.

But there is another challenge which has started to rear its head more regularly for CFOs, and that is disruption caused by volatility in the talent market.

Digital skills could be the answer to mitigating future disruption caused by talent shortages which significantly impact finance teams’ operations, according to new research from Gartner.

The report, published in April 2023, says lack of digital skills in senior finance leaders will drive half of unwanted staff turnover by 2026.

“An already-wide digital skills gap between management and their reports will increase in coming years if unaddressed, and digital-laggard CFOs will increasingly struggle to manage staff who are delivering their digital initiatives,” says Marco Steecker, research director at Gartner’s finance practice.

Research published by American Express last week, revealed that while 88% of UK finance leaders said they were confident about their business’ performance and prospects over the next 12 months, 74% agreed it was getting harder to find and recruit talent into the finance function.

This was attributed to the evolving skill set now required of professionals looking to enter corporate finance. The past decade has seen the finance function become increasingly digitised.

Steecker says CFOs must prioritise their digital education and effectively engage with “digitally-savvy” staff to prevent turnover and mitigate further disruption.

“CFOs are preparing their teams for a time when finance will operate autonomously, driven by technologies such as AI, yet not many finance leaders are learning digital skills themselves,” he says.

To prepare themselves for the increasing demands of digital literacy, Steecker recommends that CFOs and their senior finance managers pursue reverse-mentoring opportunities with digitally literate junior staff helping to upskill those more senior.

Steeker also recommends finance leaders revisit and update finance manager competency frameworks to prioritise digital competencies while also establishing and participating in wider organisational digital upskilling efforts.

“The most successful digital upskilling programs we see are the ones where the CFO is personally visible and involved in the coursework,” says Steecker adding that “this goes beyond just a powerful signalling effect and provides leaders with the fluency to speak the language of their key talent.”

Steecker states that an already-wide digital skills gap between management and their reports will increase in coming years if unaddressed, and digital-laggard CFOs will increasingly struggle to manage staff who are delivering their digital initiatives.

According to Gartner, the corporate finance sector will witness a significant shift in hiring trends by 2026, with AI and automation resulting in 50% of new hires having non-finance or accounting backgrounds.

In the report, Gartner also revealed that the lack of digital skills among senior finance leaders is a major hurdle in achieving ‘autonomous finance’.

“CFOs are preparing their teams for a time when finance will operate autonomously, driven by technologies such as AI, yet not many finance leaders are learning digital skills themselves,” says Steecker.

Furthermore, associates who are digitally literate consider people management as one of the top deciding factors when selecting their workplace.

Gartner’s research further reveals that 18% of finance staff demonstrate digital competency, compared with just 11% of their managers stating that with the growing demand for tech skills and waning traditional accounting backgrounds “the knowledge gap will also grow unless senior management, including CFOs, step up their digital education efforts”.

“Our research shows that CFOs who directly champion AI and other digital efforts significantly impact the success of those programs compared to those who take a passive role,” says Steecker

“CFOs who develop greater digital literacy will be able to engage with their most vital talent and mitigate unwanted attrition that could derail their transformation efforts.”

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