The CFO Role in Digital Transformation: Leader of the Pack
Flexible Teams, On-Demand Talent, and the Future of Your Workforce
You know what your organization and people have been through the last few months. Maybe it wasn't quite as smooth as you would have hoped, but you made it through relatively unscathed. Sure, you have a few bumps and bruises to show for it but, looking back, things could have gone a lot worse.
Under any other circumstances, that last sentence wouldn't exactly be a point of pride. However, between a sudden immersion in remote working, teams scattered in the wind, video conferencing, and all of the other hallmarks of working during the COVID-19 crisis, your enterprise showed its meddle. But that leaves you with much bigger questions going forward:
- Where do you go from here?
- What will your workforce look like a year from now? Or five years from now?
- What role will on-demand talent/consultants play in your enterprise's new normal?
While no two companies are exactly alike, the coronavirus pandemic has exacted a far-reaching toll on organizations, particularly when it comes to the workforce. And that's what we're going to narrow our focus on – what should you be thinking about and planning for as you assemble a long-term game plan for your people.
Preparing for the Unexpected
It's not like a pandemic is a frequent occurrence. In fact, it's been a bit more than a century since the world had to address something like the coronavirus crisis. But, as we all know, just because something is unlikely to occur doesn't mean it won't or can't occur.
And that's really what it comes down to when planning for any aspect of your future operations, labor obviously included. We simply don't know what the road ahead looks like, and, given the complicated state of the world, a global pandemic isn't the only possible source of massive disruption and distress.
But that's why flexibility is at such a premium now. And since your workforce's future might not necessarily be very similar to its past, perhaps the best way to look at things is as if you were starting your company today. In other words, if you were building your organization from the ground up right now, how would you design your workforce given everything recent events just taught you?
Granted, the work-from-home movement isn't exactly new, and definitely isn't exclusive to COVID-19. From coworking spaces to many different components of the ever-growing gig economy, a flexible workforce was already a significant part of labor-management for many companies. But the pandemic hit the gas pedal and accelerated those trends, where, for instance, the marketplace can expect to see a fourfold increase in work-from-home days from pre-COVID levels, rising from 5% to 20% of total work days. Naturally, these dynamics leave leadership with critical questions to answer regarding the path forward.
The fact of the matter is, while the sky might have seemed like it was falling at times, it didn't actually plummet to the ground. Now, with the initial wave of uncertainty behind most companies, leaders realize that there are many aspects of a highly flexible, nimble workforce that they probably should have been taking advantage of years before. And that conversation begins with finding the right balance between full-time, part-time, and contract employees, as well as the benefits of using outside specialists.
A Plug-and-Play Approach to Talent
Obviously, you'll always need to fill certain positions through an in-house capacity. But as many companies sort through the repercussions of laid off or furloughed employees, they're realizing that many of those positions didn't warrant full-time salaries in the first place. Therefore, a crucial first step is weighing the pros and cons of replacing that talent on a permanent basis or, alternatively, using outside specialists to fill those needs.
Aside from the labor costs involved with in-house employees, you might also be rethinking the different systems and tools you use for your operations. Try to look at things from a bigger picture perspective, looking at your talent through the prism of concepts like digital transformation or other initiatives you're thinking about undertaking in the near future. Is your workforce, at least in the traditional sense of the term, well-suited for transformed systems, policies, and procedures? Or do you foresee a flexible, agile approach to talent as a more efficient and cost-effective strategy?
That's exactly why so many companies are adopting a plug-in-play mentality to their labor management, understanding that particular in-house needs will always be a constant, but the "old ways" don't necessarily make sense for their new normal. For those companies that can redefine themselves for a more efficient and streamlined future, they realize the benefits of using specialists to help them move faster on their key imperatives and achieve critical objectives.
All of this occurs without the weight of the associated labor costs squeezing their top and bottom lines, creating a competitive advantage that can easily extend to profitability, market share, and other essential metrics. Think about the expenses involved with every full-time employee (FTE) – salary, benefits, equity awards, insurance and legal costs, education, recruiter costs, severance, and all the perks to attract and retain talent. Needless to say, all of that adds up quickly.
And If we’re to break out the crystal ball for a moment, the coronavirus pandemic will continue to drive reduced needs for corporate real estate as labor management – and the market itself – continues to change at a rapid clip. Combine those notions with ever-increasing educational costs and the escalating expenses around hiring and laying off employees and, what are you left with? An environment that makes it less attractive to retain full-time talent every day. To state the obvious, eliminating unnecessary exposure to costs associated with FTEs is the kind of thing that makes your stakeholders want to take you out for a lovely dinner. Or at least send you a really nice gift basket.
Maximizing Flexibility in Your Workforce
So let's fast-forward a bit and assume that, after some intense soul-searching, you've determined that your traditional approach to labor-management isn't the best one for your company's future. But where do you start overhauling your workforce? Well, you begin by determining which functions need to stay in-house versus others that are best suited for on-demand talent.
Using On-Demand Specialists/Consultants
For example, are you better off outsourcing your Internal Audit? What about other functions within your accounting and finance operations? Maybe the age-old practice of offshoring transactional, low-risk areas like AP, AR, and GL?
And don’t forget that it’s not just about outsourcing entire functions. Every organization has special initiatives and one-off projects that can greatly benefit from bringing in outside experts in a specific area. The vast majority of the time, it would be extremely difficult – and very expensive – to attain that level of expertise with in-house personnel. To rub just a bit more salt in the wound, even if you were able to upskill your people sufficiently, you’re still taking them away from the many other responsibilities on their plates.
Now, as emphatic as we’ve been in describing the reality of maintaining FTEs thus far, we're not here to say which route is best for your organization because that's for you to determine on your own. However, depending on your answers to the questions and scenarios we’ve presented, the next step is to figure out who and where to turn to.
As we've said before, that's why it's so important to establish and maintain relationships with key outside parties. Whether you call them on-demand talent, consultants, or third-party superstars, the right outside specialists can help you quickly address issues and initiatives without the overhead and drawn-out process of identifying and hiring new talent.
Of course, the downside occurs when you don't have an existing relationship with an on-demand talent group that you've worked with before and trust with your most important projects. That's not to say, however, that if you've haven't previously worked with consultants, contractors, or temporary talent, then it's a lost cause and you're stuck in the talent management mud. It just makes life an awful lot easier when you can pick up the phone and reach out to an outside team that you know will get the job done right the first time.
Perceived Drawbacks of Working With Outsiders
Naturally, we at Embark are very familiar with the perceived drawbacks of working with outsiders. Many companies still assume that the cost of hiring consultants is an inherent budget buster. Now, we're not going to sugarcoat things by neglecting to say that some firms are very expensive. But “some” is very different than all, so it's important to find a consulting group that not only fits within your budget, but also brings genuine value to the relationship.
Also, try not to look at the cost of outside specialists in a vacuum. Compare those expenses to what you would spend in bringing on a full-time employee to fulfill the same role. Odds are, you would spend a lot more money and get less expertise by filling the position in-house.
Another common misconception is that consultants can never understand what it's truly like to be part of your team, and therefore, will always seem like outsiders there to overcharge you at every opportunity. This isn’t as straightforward of an issue as it might seem, though. Yes, consultants won’t initially understand your culture, systems, and processes from the moment they step through the door, so you will have to pay them a small amount of time to bring them up to speed.
However, if you’re bringing in consultants because they have expertise in a particular area that your team lacks, then try weighing those consultant “learning” costs against expenses you would incur in upskilling your team to fill the same role. Also, this is yet another reason why vetting your third parties to ensure they fit within your culture and vision – not to mention experience in your industry – is critical for success. The less “learning” a consultant has to go through to understand your organization and needs, the less you’ll have to pay them to ramp-up.
Our advice is to ask around before signing on the dotted line with a consulting group. Pick up the phone or write an email to some of their current and former clients and ask what the experience was like. The right group of outside, on-demand talent will fit your team like a glove and, just as importantly, bring new expertise and fresh perspectives that will help you accomplish goals, innovate, and grow.
Remember, the better consulting firms will bring their scalable, hands-on experience from dozens, sometimes hundreds of different companies. That allows you to leverage finely tuned tips and tricks that they've cultivated over the years. Without that outside perspective, it's unlikely that you would ever benefit from what are essentially crowdsourced best practices from multiple clients and industries.
The internet has permanently changed the definition of work for many people and companies. In some respects, the thought of a 9-to-5 job in a cozy office complex is just as foreign a concept as walking on the moon to some. Even before the coronavirus hit, a significant portion of the workforce was already working independently and, to the chagrin of the traditionalists, showing just as much productivity – if not more – than their office-tethered brethren.
Yes, if you're still somewhat new to remote working, then there are definitely important considerations to keep in mind regarding employee engagement, company culture, and communication. But as we've discussed elsewhere, there are many ways to address such potential hurdles without skipping a beat. For many organizations – perhaps even most – the pros of integrating some semblance of a remote working model will outweigh the cons.
First and foremost, you are no longer relegated to identifying talent within your immediate area or people willing to relocate. Suddenly, you can choose the best people for your open positions, whether they live in Singapore, Sydney, or Switzerland, and often for less money. Many people will accept lower salaries if it means they can work from home.
Further, remote working lets you tap into a multigenerational workforce with varying commitment levels. Maybe you have your eye on someone with children at home that can only work 30 hours per week from home. A traditional workforce and workplace automatically exclude that person from your team, but telecommuting opens virtually everyone up to you, especially younger generations like millennials and Gen Z that largely already prefer working from home. Therefore, remote working could very well be a critical perk that helps you attract top talent.
Simply put, the 9-to-5 model isn't always effective or efficient for a modern organization. The very definition of work has changed in recent years, and as charming as a row of identical cubicles can be in a suburban office setting, people are motivated by different drivers than they were just a decade or two ago. Thanks to technology, the right remote worker can accomplish just as much in four hours as a traditional employee could achieve in an entire workday.
Putting It All Together
If all of this is a relatively new way of looking at things for you, your head might be spinning a bit at this moment. And that's okay. Change isn't always easy, but, as recent events have taught us, it is necessary if you don't want to end up on the endangered species list.
But where, exactly, should you start all of this? Let's put it like this – have you ever been in a situation where you felt your accounting and finance functions were overstaffed? Probably not. There's always something coming just down the pike, whether it's critical changes to rev rec and lease accounting, a furious bout of hypergrowth, or something else that's equally absorbing.
That's why it's in your best interest to identify a core group of positions that you need to maintain in-house. Likewise, you’ll want to identify which in-house skills you’re lacking today, what you’ll need tomorrow, and align those skill gaps with an evolving, transforming finance function. From there, you can determine the best way to source those needs.
That identification and alignment process will change from company to company, depending on your priorities and needs. But, to use something like ASC 606 as an example, changes to rev rec don't necessarily mean that you should have gone out and hired your own internal specialist. Instead, assuming you knew a dynamite team of outside technical accounting gurus, you could have relied on the right group of consultants to review and improve your systems and processes.
The same premise holds for finance transformation itself or virtually any initiative you might undertake. There's simply no substitute for the value that expertise and experience can bring to a project. And when you factor in the cost of employee salaries, benefits, training, and ramp-up times, the choice between full-time employees and on-demand talent suddenly becomes much clearer.
The point is, many organizations are pulling CFOs and their teams in numerous directions at once. And as nice as it might seem to be able to put out simultaneous fires, drive new strategies, and keep stakeholders happy purely with an in-house group, the numbers usually just don't work out. Labor costs take off like a rocket ship and HR starts looking at you with a judgmental eye thanks to the new recruiting and hiring projects now suddenly coming across their desks.
Instead, preserve your cash at a time when it's a critical concern – even more so than usual – identify key talent that you need to keep in-house, and use an experienced and knowledgeable outside firm as the utility player that every successful team needs. This plug-and-play approach keeps you lean and mean, flexible enough to pivot to virtually any situation and environment. It also allows you to take advantage of experts in treasury, FP&A, technical accounting, new systems and transformations, or darn near anything else you might throw their way.
And what's the best news of all? You already know of the ideal team of outside specialists that will fit your budget, culture, goals, and vision. Now, how's that for serendipity?