The labor market is changing. Millennials are now a dominant presence in the workplace and they are bringing a new attitude with them, with different priorities and little expectation of loyalty. In a survey by Deloitte, 44% of millennials said that they expect to leave their current employers in the next two years if given the choice. Meanwhile, automation and digitization are also rendering a number of roles redundant, with an estimated 47% of workers in the US’s jobs at high risk of potential automation. Ultimately, we are now in a world where the idea of gainful employment is becoming an increasingly fluid concept.
The finance function, for one, is recognizing the problem. In EY’s fourth global private equity CFO survey, 51% of private equity (PE) firms said they believe retaining talent is the top issue required to remain competitive in the future. A number of other surveys report similar findings. In a Deloitte survey of 312 CFOs and other executives in finance departments, 39% of respondents said they were either ‘barely able’ or ‘unable’ to meet the demand for talent to run their organization, while in the CFO Alliance’s 2016 CFO Sentiment Study, 70% of finance leaders said human capital is of concern, or of great concern.
These CFOs are right to be worried, as talent is critical to the finance function. KPMG’s 2013 survey of senior finance executives found that 44% of all respondents and 61% of the high performers (those with revenue and EBITDA growth of more than 10% over the past three years) felt talent management to be the most important factor for the success of their function. Just 6% said they believe there are other factors that are more important.
It is, therefore, vital that CFOs develop an effective talent strategy. This doesn’t simply mean gathering the finance team’s input in talent planning - it involves building a more comprehensive end-to-end strategy.
This starts with ensuring there is a high quality pipeline. Marketing finance as an attractive career option can help encourage young people to continue with relevant subjects into higher education. Furthermore, by collaborating with colleges and universities, companies can help better ensure that graduates have the skills they require. They also then establish a presence which means they are more likely to be attract people, and can nurture relationships with the best candidates.
Understanding what employees want is also important to attracting and keeping the best candidates. In a Staples survey of millennials, 29% reported that higher salary is the biggest contributor to their loyalty, compared to 20% of the broader workforce. The current employee base is looking for more than just traditional benefits and compensation, though. While 38% of employees also cited work responsibilities and 30% work/life balance as leading contributors to their loyalty, many are also now looking at it from a more moral perspective, taking into account factors like a firms’ environmental, ethical, and philanthropic values. Even having the best technology can help, as employees do want to work with the latest tools, not waste hours crashing around outdated software. The CFO must be creative to help ensure they stay motivated and engaged, and make sure to follow through on promises. It’s one thing seducing candidates with grand promises, but if you don’t hold up your end they’re not going to hang around. If you’ve promised them career progression, be transparent and open around what may be holding that back.
Another important part of an effective talent retention strategy is identifying top talent. Using workforce analytics to study employee data can help identify those who are succeeding and help prioritize who needs the most attention. It can also help identify when they may be showing signs they are likely to leave and what can be done to keep them - whether they will respond to additional training, mentoring, and so forth. Mentoring and coaching programs for younger staff has proven particularly effective at many companies. Reflecting on this and incorporating it into the annual performance review process has also been shown to have a positive impact on retention.
CFOs also need to make sure that staff are challenged within their roles and encouraged to be creative and offer strategic insights, which is especially important to millennials. If even one member of staff is bored it can spread like black death and create a toxic environment that can hugely damage productivity. If the CFO sees this occurring, they need to take immediate action to mitigate the negative impact. Ultimately, CFOs should be able to use their initiative if they see something is wrong and take any plausible action they feel will be of benefit. If a critical member of the team is bored, they should be talked to and a strategy designed to help them be more engaged. If someone is clearly stressed from a long commute and can work remotely, the CFO should accommodate them. High staff turnover is expensive and stifles innovation. More than 90% of CFOs do not expect millennials to stay with them for more than five years, but a robust retention strategy can greatly extend this.