As the requirements facing finance and accounting departments continue to expand, having access to current benchmarking data can help leaders evaluate their teams’ performance and identify opportunities to improve.
FEI Daily spoke with Paul McDonald, senior executive director at Robert Half, to discuss the results of the Benchmarking the Accounting and Finance Function 2016 survey produced by the Financial Executives Research Foundation (FERF) and Robert Half.
FEI Daily: Can you provide an overview of the survey and your goals in putting it out?
Paul McDonald: As the name says, it’s a benchmarking report for the finance and accounting function. We surveyed nearly 1,700 CFOs and interviewed individuals to augment the data and to get color commentary on how they’re actually using technology.
Robert Half and FERF are in the seventh year of producing this report because individuals in the finance field always want to know what their peers are doing, and how they stack up. It could be questions like who’s outsourcing which functions, or what size organization spends so much on compensation? What’s the technology usage? How much is cloud-based?
The survey helps CFOs and finance professionals manage their organizations. As they head into budget season, which typically starts around June, July or August, this is a great way to set up some metrics.
FEI Daily: If you look specifically at the 2016 survey, what were some of the themes that emerged?
Paul McDonald: One of the biggest trends we’re seeing is companies spending more in recent months on recruiting and hiring professionals, and that goes into the war on talent. We’re seeing lower unemployment rates in the United States and Canada, but the cost-per-hire has increased.
Median employment-related costs, as a percentage of revenue, remained steady at 2 percent among respondents overall, but increased to 5 percent among companies with revenue of $5 billion or more. Many of the executives attribute employment-related cost increases to a tight labor market.
The demand is outstripping the supply of candidates in today’s market. The Job Openings and Labor Turnover Survey from the Bureau of Labor Statistics tells us many opportunities are being advertised and employees are voluntarily leaving their current roles for more enticing opportunities. During the interview process, employers need to put their best foot forward quickly because many candidates may be exploring two or three opportunities and may receive multiple offers. Companies should review their interview process to make sure it’s thorough and efficient, without skipping necessary steps like background and reference checks.
FEI Daily: When you look at that talent challenge, what are some of the skills companies are finding difficulty in filling?
Paul McDonald: There’s a talent gap, and candidates have to be tech savvy. Any area in the professional sector now requires technology. We’re seeing a merging of skill sets between finance and technology, accounting and technology in areas such as data analytics, cyber security or cyber defense. Finance and accounting individuals with a working knowledge of those areas are very much sought after.
Another skill gap we’re seeing is in the compliance arena: someone that knows SEC compliance, health care regulation compliance or tax compliance. The survey results showed CFOs can’t find these people, because the unemployment rate in the United States for compliance professionals is somewhere around 1 percent. What do you have to do to entice these people?
FEI Daily: How are companies reacting to these shortages?
Paul McDonald: That’s a challenge for many companies. How do you solve the war for talent? How do you fill your requisitions? You need to have great connectivity with your HR department, because they’re going to help you feed the pipeline. You have to collaborate with them because the process moves quickly for good candidates.
Say you have someone with three years of experience in public accounting, and two years experience in industry, such as financial services. They know Dodd-Frank, they know CCAR, they know in-demand regulatory areas. The shelf life for that person could be a week to three weeks if they poke their head out in the open market.
Recently, we had someone in New York come in with that exact background. They came in on Wednesday, and they had three offers by Friday night. How are employers doing this? Skype for the first entry, then multiple interviews when they do meet the person. Then they make an offer pending the background check, and the reference checks.
The speed-to-market is compressed using technology. A lot of people are interacting on their lunch hour. They’re going to a private area, off the work site, could be in their car, and they’re doing FaceTime from the front seat with a future employer. That’s a great way to turbo-charge your hiring process. You’ve got to be flexible.
FEI Daily: Are companies also addressing that talent gap with more interim or project-based workers?
Paul McDonald: They’re turbo-charging the hiring process through the methods I talked about, but the interim person fills the gap. The interim is a project professional who has the skills to do the job today. They’re not necessarily the person you want permanently in that role. This could be a former controller, and you’re going to use 20 percent of their skill set to do a defined job for three months.
Those people are very available because as boomers have started to retire, they want the back end of the gig economy because they don’t want to retire fully. They want to use their brain, they want to be challenged, they want to be engaged, and this is a great way to solve the problems today. Now, not all project professionals are boomers. Some of them are millennials making a lifestyle choice, and they’re okay going four months at a time with a three-week break between assignments. That’s what they desire to do.
FEI Daily: Are we seeing more use of cloud technologies?
Paul McDonald: Cloud technology is certainly at the top of many CFOs’ minds, with 42 percent saying they’re using cloud technology, 20 percent said they’re planning to do so, and just over a third saying they have no plans to adopt the technology. Usage rates and interests are somewhat lower among Canadian respondents; only 27 percent said they’re using the cloud.
The thing that came through was that people are worried about security, they’re really concerned about cyber defense, as I call it, or cyber security. That seems to be the roadblock. Compared to previous years they’re definitely moving to the cloud.
FEI Daily: Have you seen any difference among company size in cloud adoption?
Paul McDonald: On-premises ERP systems are most prevalent in the larger companies and cloud is more of a middle market and small company phenomena. Which makes sense, because the money companies have to invest to get an on-premises ERP system is a large capital outlay. You can get into a cloud platform on a subscription-based basis. If you’re a $100 million company you can get into an ERP-type cloud-based system for purchasing seats and pay monthly if you like.
FEI Daily: Are companies showing a similar interest in the use of data and analytics?
Paul McDonald: From the mid-part of the last decade, the investment in technology was great in most corporations in the United States and Canada. Even as they were downsizing staff, they knew they had to stay current or try and move the ball forward in the technology space. We’ve spent the better part of 10 years collecting a lot of data, and now CFOs and CEOs are asking how they can better understand the data. Some companies have started to analyze their data and say “How can we use this to predict our customers’ behavior, predict future needs, and forecast future revenue streams?”
Marketing groups, finance groups, and other departments are starting to collaborate on using data more effectively. I think it really comes down to the creativity and curiosity that’s coming out of the world of data and analytics, and with the business units looking to use and understand that data. I see companies marrying up their finance, operations and marketing data, and coming together and collaborating to chart the course of the organization.•