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Over the past year, there has been a power shift in worker and employer relationships, leaving many executives searching for talent solutions. Although employers made more hires in recent months, according to the latest jobs report from the United States’ Bureau of Labor, executives are still climbing out of the labor deficit inflicted by the pandemic in early 2020. The challenges resulting from the pandemic and recent variants have likely forever shifted the way finance executives think about hiring and talent recruitment and retention, from increasing their focus on digital transformation and automation of routine tasks to rethinking salaries, managing “return-to-office” plans, and juggling hybrid teams. Finance executives are likely taking on a more active role in addressing their organization’s talent shortage as the CFO role expands to touch the many areas of business strategy.
Urgent Need for Talent Could Cloud Positive Expectations
Labor shortages caused by the Great Resignation and the pandemic might persist through at least the middle of 2022. A recent Fortune/Deloitte CEO survey found that almost three out of four CEOs believe that a labor and skills shortage will be the top external disruptor of business strategy over the next 12 months. What’s more, nearly half of surveyed CEOs named talent as the biggest challenge they face today. On the whole, CFOs responding to Deloitte’s 4Q21 CFO Signals survey aligned with CEOs in ranking labor and talent as one of the biggest challenges they face today. The survey also revealed that retention and employee morale, burnout, and the challenges associated with return-to-office are all feeding finance executives’ concerns and more than likely driving internal investments toward hiring and wage growth.
In addition, in the 4Q21 CFO Signals survey CFOs raised their growth expectations for domestic hiring and wages to 5.8% and 5.2%, respectively, when predicting their year-over-year growth. However—and perhaps this is one of the most notable stats—responding finance executives simultaneously lowered their growth expectations for revenue to 7.8% from 8.5% in the prior quarter.
These concerns and projections tell us that there could be a need to revisit approaches to recruiting, developing, and retaining talent. So, what are finance executives going to do to address the this? I have three suggestions to consider as the new year further unfolds.
Optimize Investments in Technology
Finance executives may need to invest in digital solutions to address labor shortages and future disruptions. Deloitte’s 2021 Digital Transformation Executive survey highlights that digital transformation can give companies an edge over their less-digitally mature competitors. Companies that invest in digital solutions cultivate greater resilience, such as the shift to hybrid work models. Indeed, the 2Q21 CFO Signals survey found that CFOs are increasing their investments in technology and systems transformation, with 40% of responding executives highlighting these transformations as the most significant change they are undertaking. These investments could make it easier to maintain a thriving hybrid work environment. Investing in technologies that allow staff to continue working in a hybrid model will likely be crucial for companies to maintain a competitive edge in the tight labor market, at least in the near term.
Revisit Your Company’s Compensation and Benefits to Attract and Retain Top Talent
To win the war for talent some companies are increasing wages and salaries. In 4Q21, CFOs raised their growth expectations for domestic wages and salaries to 5.2% from 4.3% in the prior quarter’s survey, demonstrating the importance of compensation in attracting and retaining top talent. Further investments—not only in compensation but also benefits—might be needed as the labor shortage continues and the battle for talent becomes more competitive.
Consider Alternative Approaches to Hiring
Finally, while operational adjustments such as increased digital solutions and better wages can help CFOs maintain competitiveness when it comes to talent, proactively rethinking talent models and the skillsets needed of potential candidates may be just as important. In addition, finance executives have a significant role to play in addressing labor concerns, talent shortages, and diversity, equity, and inclusion as Deloitte’s 2Q21 CFO Signals survey revealed. Deloitte’s Equity Imperative, which challenges companies to address systemic biases, relays steps companies and CFOs can take to drive equity and diversify their talent pipelines. For example, finance executives can advance equity using investment strategies and portfolio management and establishing wage and compensation practices. In the workforce, executives, including CFOs, can invest in a robust talent development pipeline and diversify their talent pool to value skills over degrees and certifications. This could not only help ease talent concerns but increase commitments to ESG initiatives, which is key to attracting millennial and Gen Z talent, according to Deloitte Global’s Millennial and Gen Z survey.
From increasing investment in automation and digital transformation to diversifying talent pipelines and revisiting compensation and benefits, finance executives have at their disposal a number of levers to help set their organizations up for success in 2022.
Steve Gallucci is the leader of Deloitte’s CFO Program.