This article was first published in the February 2011 China edition of Accounting and Business magazine
There is a gap between the perceived importance of developing financial talent and the willingness of companies to actually do something about it, according to professionals at Talent in 2010: The Foundations for Growth, an ACCA conference held in Shanghai in December.
Delegates agreed companies need to emphasise talent development for financial professionals, particularly as this group takes on increasingly important roles and a new generation of accountants enter the profession.
Following the financial crisis of 2008 and 2009, financial professionals have stepped up to the forefront of management because of their unique ability to identify and prevent risks.
‘The role of accountants is very high profile. They are not just in the background of the business,’ said David Ong, controller for Asia Pacific at Lear Corp, a maker of power-management systems. ‘We have been called by the other leaders in the business to be their partners,’ he added.
At computing systems conglomerate IBM, for example, finance played a key role in developing the company’s roadmap to 2015, said CFO Lily Low.
At Citigroup, finance people are the gatekeepers of profitability, charged with asking the tough questions and producing incisive analysis, according to its CFO, Francesco Sirna.
Swim or sink
General Electric promotes its people quickly with a swim-or-sink approach that empowers them to succeed. ‘There is more accountability in any decision the finance department makes,’ said Amit Sud, financial leadership development and staffing manager for Asia Pacific at GE.
Younger financial professionals may be more able to navigate the difficult business environments that have become the new norm, said Quin SQ Thong, chief operating officer for Greater China at DTZ, a multinational real estate firm, and a former ACCA committee member. At DTZ, for example, executives at the general manager or managing director level tend to be in their late 40s or early 50s. Their younger peers have worked through more turbulent times and they are the ones that will inherit the reins of the company; helping them grow within their roles is imperative to securing the future success of a business. ‘We have to continue developing our finance people so that they can continue moving the business forward,’ said Thong.
Need for responsibility
Developing up-and-coming professionals means giving them more responsibility, a reality that competes with a general unwillingness among companies to increase staff levels. Following the recent downturn, employers remain leery of hiring new staff. Very few have plans to step up hiring, even as profitability returns to pre-crisis levels. ‘In the next 12 months, companies are unlikely to bring in more talent but more likely to develop their own talent,’ said Thong. With hiring generally at a standstill, companies may be forced to focus on developing their in-house talent or face an exodus.
Less than a third of companies are willing to increase their budgets for talent development. Most companies are either focused elsewhere, concerned about the cost or fear that the return on investment of developing staff is simply not worth it. On the surface, most employers agree that it is important to develop staff, according to an ACCA survey of employers completed in March, Talent Management in 2010: Foundations for Growth.
As part of the survey, ACCA polled more than 1,400 employers in 105 countries. The results were contradictory. Yes, companies say nurturing existing staff is important. In fact, 72% of respondents agreed that talent management is necessary to retain staff, supporting organisational change, enable growth strategies and ensure succession planning. However, very few are actually doing it.
A full third of survey respondents, 34%, have no talent management programmes at all. Another third, 33%, have only isolated and sporadic programmes that may or may not be effective across the organisation. Only the rest of the respondents have more significant programmes and only half of these have fully developed programmes that span across an organisation. What’s more, said Thong, only 29% of employers are willing to increase their talent development budgets, with 57% preferring to stay at current levels and 5% actually lowering expenditures.
Surprisingly, there is no shortage of evidence that this approach is fundamentally flawed, said Rhonda Gutenberg, an organisational psychologist and principal and human resources consultant Mercer. One obvious marker, particularly in China, is the high turnover and the willingness of employees to change jobs for a marginally higher salary or a better title. ‘It suggests retention strategies are not working,’ said Gutenberg. Never has it been more important to put more emphasis on talent management, as the difficulties associated with attracting and retaining qualified people grow.
For one, young finance professionals, those with just a few years’ experience or just now entering the workforce, have different attitudes towards employers and their careers than their older colleagues. They are part of Generation Y (see box, left). Fail to provide those, and those future leaders are just as likely to go work for the competition. ‘If your company has a well-known talent management programme, you will attract the very best,’ said DTZ’s Thong.
Finding qualified financial staff is difficult under any circumstance, even among China’s vast workforce. A significant portion of Chinese university graduates lack basic skills and less than 10% are actually qualified to work in multinational companies, said Lear Corp’s Ong. Also in China, the challenge of retaining staff is particularly obvious, much more so than in Lear’s other markets, including India. ‘There is a huge shortage of leadership talent,’ said Ong. As a result, it is sometimes necessary to look further afield to find the right people. ‘Don’t look within your borders. Go beyond. Look for talent where you can find it,’ he said.
For the vast majority of employers, the reality is a combination of a smaller and pickier pool of qualified talent and the increasing importance of financial professionals in most organisations creates a need for more effective talent management programmes, such as mentoring. This has been used by Lear to better develop high-performers.
‘Don’t wait for HR to do something… At the end of the day you need strong finance leaders,’ said Ong.
Alfred Romann, journalist
The how of Generation Y
An increasingly visible shortage of qualified and experienced financial staff is forcing employers to look at the new generation of professional: the group known as Generation Y.
Members of Generation Y were born between 1980 and 1993. They are well informed, comfortable with technology, money-hungry and career oriented. They value their lifestyle and are hands-on, preferring to learn through experience rather than long and abstract courses or even e-learning.
Significantly, they typically plan their career moves well in advance. In China, where finance professionals are typically 10 to 15 years younger than their counterparts in the West, Generation Y is a particularly important source of staff and future leaders.
Organisational psychologist Rhonda Gutenberg, a principal at human resources consultancy Mercer, worked with ACCA to discover the priorities for Generation Y. The results were surprising. Almost all (95%) choose jobs based on career development opportunities and, contrary to common belief, remuneration is the second most important factor (87%). ‘There is a myth that Generation Y doesn’t care about money,’ says Gutenberg. They do, ‘but they are not willing to sacrifice as much’. Ultimately, these professionals ‘want to work for an organisation that reflects their personal values’.