It’s Time to Rethink How to Reskill the Finance Function

The term “reskilling” seems destined to appear on the Word of the Year lists that linguists, dictionary editors and search engines publish annually. It’s also a safe bet that more CFOs and other finance executives are becoming increasingly familiar with this term, as they know they need to plan how to reskill their finance functions.  

CEOs and functional leaders across all industries are realizing that traditional talent-sourcing and staffing approaches are increasingly ineffective as their organizations struggle to hire, retain and develop analytical, technologically savvy professionals amid fierce competition. In fact, 93% of CFOs report that it is challenging to find sufficiently skilled job candidates today, according to a survey of 1,100 finance chiefs conducted by Robert Half Finance and Accounting; the same respondents indicate that it takes an average of five weeks to fill management-level positions.

As the skills crunch intensifies, more corporate finance leaders will evaluate and implement their own versions of the massive, enterprise-wide reskilling and upskilling initiatives that companies like JPMorgan Chase, Walmart, AT&T and others have recently launched. In July, Amazon announced it would invest $700 million during the next six years to retrain its workforce. Also of note, one of the key pillars of the World Economic Forum’s (WEF) Preparing for the Future of Work Project includes the pursuit of a “reskilling revolution.” As corporate finance functions join this revolution, finance leaders should evaluate their options for the labor model that is optimal to support ongoing reskilling efforts.

Moving on From Traditional Approaches

The traditional labor model is already being supplanted within a growing number of companies, especially those within the technology sector. In 2017, Google parent company Alphabet employed roughly equal numbers of full-time and outsourced workers. Microsoft adheres to a similar model, relying on a large percentage of outsourced or “managed services” staff as part of its overall workforce.

The use of contractors, contingent employees and similarly flexible staffing mechanisms has surged to the point at that it is now referred to as the “gig economy.” By 2027, the WEF expects that most of the workforce will be freelancing. These developments show that many companies are striving to establish and manage more complex talent ecosystems that extend beyond their traditional boundaries. And like other functions, finance organizations are embracing this approach as well. 

Significantly more finance organizations leverage relationships with managed services providers that deliver a blend of full-time staff, contract professionals and third-party experts compared to traditional outsourcing arrangements, according to Protiviti’s 2019 Finance Trends Survey. CFOs and finance vice presidents now use managed services providers to meet more than 20 percent of staffing needs in their financial planning and analysis, tax, risk management, and strategic finance (M&A) activities. 

It’s interesting that although the rapid growth of the gig economy is a relatively new development, the model is part of a concept that arose 30 years ago. In his 1989 book, The Age of Unreason, the organizational behavior and management expert Charles Handy introduced the “Shamrock Organization,” a framework for organizing the workforce of the future into three categories (or “leaves” of a shamrock). The model offers a potential solution to address the mounting strains on the traditional labor model, especially for finance organizations:

1. Full-time employees who form the company’s “professional core”; 
2. A “flexible labor force” consisting of resources deployed to temporarily address peaks in staffing needs; and
3. A “contractual fringe” consisting of resources the enterprise leverages by contracting with other organizations to provide additional capabilities and are compensated on results, not hours.

 By organizing their extended workforces into three categories, as outlined by Handy, finance organizations can better position themselves to address two significant issues:

• Hiring, developing and managing each labor pool in an optimal manner; and 
• Understanding and harnessing technology’s role in simultaneously supporting, challenging and shaping each labor pool. 

As competitive, regulatory and technology-driven changes intensify, the ever-shrinking professional core of full-time employees at most companies – and within most finance groups – needs to become more adroit in responding to and managing change, as well as more deeply practiced in key areas (via reskilling). 

How to Get Started

To develop a more agile and flexible finance labor model that leverages innovative sourcing strategies, CFOs and other finance executives should consider taking the following steps: 

1. Assess the extent to which economic forces, technological advancements and changing generational expectations of the employer-employee contract are affecting the existing finance labor model. 
2. Define those roles that represent your strategic professional core, as those will need to be compensation handsomely.
3. Assess the effectiveness and efficiency of current resourcing approaches in terms of their success in supporting and increasing the finance group’s agility. 
4. Evaluate which combination of resourcing approaches – training and reskilling a highly skilled core of full-time staff, temporary staff sourced through long-term relationships with staffing and consulting firms that know the company, the use of contractors, etc. – are best suited to meet the finance organization’s quickly changing and evolving talent needs. 
5. Determine how to hire, develop and manage each of these labor pools in an optimal manner that leverages advanced supporting technology.

A recent Harvard Business Review article called for the creation of a C-level role devoted to reskilling the entire workforce. While that argument may have some merit, CFOs shouldn’t hold their breath waiting for their C-suite to expand. Instead, they should get to work on reskilling their finance organizations and, perhaps even more important, rethinking their underlying labor model.

Want to go deeper? Check out Five Ways Customer-Focused CFOs Thrive or a November 20 webinar Need-toKnow Trends for Finance and Accounting in 2020.