Strategy

Most CFOs Rely On External Support for Major Initiatives


In this Q&A, Robert Half’s Tim Hird and Protiviti’s Jay Thompson discuss the top reasons CFOs are turning outside their organizations for support.

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When faced with a major one-time business initiative, more CFOs are looking outside their organizations for immediate and specialized help.

A Robert Half Management Resources survey found nearly seven in 10 CFOs (69 percent) work with external resources, often in combination with internal staff, for major one-time business initiatives, such as a merger, acquisition or regulatory compliance transition.

FEI Daily spoke with Tim Hird, executive director of Robert Half Management Resources and Jay Thompson, a Protiviti managing director in the Business Performance Improvement practice, about the many reasons CFOs are relying on external support and the miscommunications and challenges they see in the relationships. 

FEI Daily: Sixty-nine percent of CFOs are relying on external resources, often in combination with internal staff, for major one-time business initiatives, such as a merger, acquisition or regulatory compliance transition. Walk me through the reasons that CFOs shared.

Tim Hird: I think, big picture, there's no doubt that accounting departments are just a lot leaner then they were a few years ago. What we've typically seen when we're engaging with CFOs across the globe, and not only in the U.S., but in other global markets as well, is that everyone is trying to do more with less. I think when these one-time events come up, whether it's a merger, an acquisition, integration activity, an accounting system implementation upgrade, shared service centers, material weaknesses, remediation work, the CFO has to address these initiatives, while at the same time, keep the lights on in the department day-to-day.

It's compounded by the fact that if CFOs are working off much leaner teams, particularly on the middle management level, they don't have the capacity or the skills to manage it internally. And this is = why a lot of external CFOs now are going externally, because there's no slowdown in the one-time events. But everyone's working off leaner teams where they don't have the capacity to be able to scale up and down their teams, and also get access to the expertise they may need to address the particular project. 

The other thing I'd say, if you look at a calendar year for a CFO, there are certain things that need to be done in every given month of the year, and the cycles in the month. And by loading up lots of permanent headcount, it can often result in inefficiencies. Whereas the idea of bringing in external resources allows them to flex up or flex down. Not only on a one-time event basis, but also to address some of their business-as-usual work.

Some of this also is being driven by the employee demographic. I was speaking at an FEI Chapter event in Denver, Colorado last week and in Sacramento two weeks ago on this exact topic. There are more and more accountants now that are looking for ways to accelerate their career development, their skillset, knowledge, and more and more people are prepared to take on these flexible types of work arrangements in order to do that. 

Jay Thompson: One of the things I would enforce is accounting departments are the end of the chain. But it's one-time events, or just bad decisions, bad processes, they all end up in accounting. Accounting is the one who has got to deal with it. There's nowhere it goes after accounting. That's why, from a scale standpoint and a skill standpoint, it's hard for CFOs, controllers and the sort, to really plan ahead and be able to anticipate what they are going to need in the next year. And that's why having these external relationships is very attractive for a lot of accounting leadership levels.

FEI Daily:  How are CFOs and companies going about finding those external resources? And how are they determining the right fit?

Hird: The talent ecosystem now is a lot broader than it was. There are many different types of sources that CFOs can access this talent from. One is obviously from consulting firms. The other is from the traditional contractor market that is very well-developed and mature. But then there are all of these other emerging areas of alternative ways to attract labor through the gig economy, the human cloud. There's also the onset of robotics and automation that is changing a lot of ways that CFOs can leverage their talent. That’s not necessarily a direct source, but it does change CFOs’ decision making on the skills they need, because if they can automate a transactional, repetitive type of task, it also means it frees up their ability to hire people into more strategic analytical-based roles.

Hiring is just one piece of it. It's also about making sure that the change management is addressed. Because if organizations have got this higher volume of consultants and contractors coming in to do this type of work, that can directly or indirectly give a message to the actual permanently employed staff within those organizations. That may bring risk. It may bring uncertainty, which can also result in staff turnover.

There's a lot being written about how technology is changing the CFO office. But what people aren't really talking so much about is how are they dealing with the talent and the capacity gaps around that, and the change management to go with it.

Thompson: The tight labor model is really impacting us. Now, as Tim said, there are a lot of ways to find talent now. But in a tight labor market, if you want good people, you have to go find those people, and pull them out of where they are. Going through resumes… What I've heard from our clients is that it takes a lot of time, and their success rate of getting someone in that works and that's going to be a good resource for a long time, that percentage is pretty low. 

Hird: That’s a really good point. There are two dimensions. One is the tight employment market and the second is the changing expectation of people when they're hiring. The skillset ranges need to be a lot broader now in people they're hiring. It’s not enough to be a technical accountant, they have to have the ability to look and review and analyze data. And they also have to be a really good communicator, an influencer of people outside the finance department. 

CFOs are looking for a much broader skillset than maybe what they had five, six, seven, ten years ago. And as a result, they are being forced to bring these external subject matter experts in because it's much harder to find those skillsets in the employed market. It may be that they simply don't have that cocktail of different skillsets in their existing people.

FEI Daily: What are some of the common pitfalls you see and what tips do you have for working with external service providers?

Hird: The biggest thing is the organization trusting the firm they're partnering with. That they have a really good in-depth understanding of their business. The other thing is credibility.

Thompson: And one other thing is the culture fit. If you're in a situation where you feel like you're fending off all the people that your service provider's giving you, and you don't really understand the value, and you're not sure if you're the priority in the relationship, that's not healthy. 

When the service provider comes to the client, says ‘Okay, here's what we've got done. Now we're going to start scaling our people back, because we've accomplished the objective. So here's our wind-down process and here's how we're going to roll people off.’ That's when clients feel like, ‘Okay, you're working for me. You've got my interests at heart.’