The CFO’s ever-expanding role is moving into the arena of talent management. Even though salaries, wages and benefits can typically encompass between 40%-70% of a businesses operating expenses, until recently, CFO’s have not had a strong presence in the human resource department.
Times are changing. With increased competition to find top talent and business’ focus on increasing profits while controlling margins, CFO’s – and CEO’s - are taking a hard look at how their business handles talent management. According to KPMG’s A View From the Top, 97% of CEO’s say that talent management is the most or equally important factor in improving the finance function, yet only 33% percent give their CFO’s a passing grade in talent management. For some CFO’s, there is room for improvement.
Effective talent management directly impacts the whole business. When SME’s hire top talent, train and mentor their employees to work in partnership with each other; and set expectations that help to provide support and direction for the business, a level of business synergy is reached. As the CFO of your organization, your involvement in developing a highly capable, talented work force can help businesses reach financial goals. Here’s how:
- Visibility – by taking an active role in your company’s talent management function, your access to and influence on employee salaries, benefits and professional training can demonstrate the company’s return on investment (ROI) for all labor costs. This provides a clear picture of how and why company dollars are being used to retain top talent.
- Strategic Insight – talent management provides insight into the strategy used to hire and fire within the business, allowing for clear communication and direction on management decisions and how they affect the financial health of the organization. In addition, long-term decisions can be made when talent management and strategic insight are combined.
- Positive Work Environment - employees that are happy at work are 12% more productive than those that do not enjoy their work environment, according to a recent study from the University of Warwick. Effectively managing the talent of your business improves overall employee productivity and in turn, reduces costs for the organization.
As this new era of the expanded role of the CFO, including talent management, unfolds, how can you provide strategic direction to improve this function within your organization? In turn, how can these improvements advance profits, reduce costs and increase productivity?
1. Invest in professional training for staff
The value of professional training for staff cannot be underestimated. Highly skilled employees are more satisfied, benefit professionally and therefore offer additional strategic insight and direction for your company.
Including training for your finance staff, as well as additional company staff can strengthen communication, help with negotiation techniques and team building and increase overall collaboration in developing successful department or business goals.
In addition, if your budget doesn’t allow for the hiring of top-tier, expensive talent, investing in professional training can move employees into a higher level of performance. This improvement increases overall talent management ROI by reducing talent acquisition expenses.
2. Prioritize the relationship with your human resource director
The relationship with your human resource executive is becoming more and more critical as CEO’s look to you to maximize talent management within the organization. In a survey from Robert Half Management Resources, 19% of CFO’s surveyed said they had become increasingly involved in human resource operations.
Increasing regulatory requirements and overall budget management, makes it critical to work closely with HR on talent management to provide financial insight and strategic direction, while at the same time understanding employee well-being and happiness. Participating in the decision to hire top performing, yet very expensive employee will bring overall strategic insight to the business and increase predictability for future budgeting.
3. Create metrics for talent management
It’s important to work closely with your human resource director to develop and place value on the cost and benefit of acquiring and retaining top talent. Depending on business goals, dollars may need to be spent on recruiting expensive employees who, in turn, will significantly impact the bottom line.
The hiring of a competent, highly skilled travel manager is a perfect example. The travel and entertainment line item of businesses is the second largest controllable cost in an organization. Top travel managers provide strategic direction for the overall management of your business’ corporate travel program through benchmarking, leveraging technology and the merging of travel goals with overall business goals. This person supports employees through the whole travel process, thereby increasing their overall productivity. Finally, an exceptional travel manager reduces expenses through negotiated supplier contracts and implementing travel policy best practices.
This example shows a clear ROI, based on metrics that include cost savings and increased compliance. Communicating and improving on these results can provide a solid plan for continued talent improvement, which can help with expense management and predictability in future budgeting and planning.
4. Ensure your high-performing; travelling employees are in line with travel policies
At times, the highest performing, most expensive talents are the same employees who bump up the corporate travel budget. It’s important to be sure that this top talent is satisfied at your organization; at the same time, work closely to manage this select group of road warriors, and ensure their adherence to travel policy to help control expenses and keep them compliant.
Investing in top-tier talent, an increase in professional training or talent management systems and software can reduce overall business expenses, increase compliance and allow for a more efficiently performing company. According to the Bersin & Associates Talent Management Maturity Model, companies with a level 4 talent program (defined as fully integrated processes and systems used to make business decisions; talent management is business-driven) generate 26% greater revenue per employee than their peers.
As the role of the CFO changes and becomes inherently more complicated and challenging, CEO’s are actively relying on CFO leadership to strategically manage and grow business. Through effective talent management, successful businesses will realize a decrease in expenses, increased control and visibility over budgets and overall improved employee performance and productivity. Let us know how we can help in the comments below and be sure to check out the 5 Key Strategies for CFOs to Take Control of T&E Management to learn how to control your travel expenses to ensure that your travelers are satisfied.