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A report prepared by CFO Europe Research Services in collaboration with Microsoft

CFOs and the talent gap:Does finance have the right people?

MAY 2008 © 2008 CFO PUBLISHING CORP.

CFOs and the talent gap: Does finance have the right people? is published by CFO Europe Research Services, 26 RedLion Square, London WC1R 4HQ. Please direct enquiries to Jason Sumner at +44 (0)207 576 8000 [email protected].

CFO Europe Research Services is part of CFO Publishing Corporation, which produces CFO Europe magazine, and CFO titlesin the United States, Asia, China, India and Russia. CFO Publishing is part of The Economist Group.

May 2008

Copyright © 2008 CFO Publishing Corp., which is solely responsible for its content. All rights reserved. No part of this reportmay be reproduced, stored in a retrieval system, or transmitted in any form, by any means, without written permission.

CFOs and the talent gap:Does finance have the right people? 1

© 2008 CFO PUBLISHING CORP. MAY 2008

Contents

About this report 2

Executive summary and key findings 2

Section 1 — The vital centre 4

Aspin Group: 5Laying the foundation

Section 2 — The great communicators? 6

FD Group: 9People business

Citigroup: 13The personal touch

Section 3 — Money isn’t everything 14

Conclusion 17

Study methodology 18

Sponsor’s perspective 19

2 CFOs and the talent gap:Does finance have the right people?


Executive SummaryThe “war for talent”, a familiar theme of corporate lifefor at least a decade, is set for an escalation. Increas-ingly, business leaders see the competition for talent asthe most significant global trend facing their compa-nies. Skilled-labour shortages in emerging markets,meeting the work-life demands of a new generation ofgraduates, and the continuing challenge of extractingfull value from knowledge workers are three of the rea-sons why the demand – and the price – for finding andkeeping talent will rise.

Corporate finance, with its highly specialised technicaland analytical requirements, is on the front line in today’swar for talent. Indeed, the cost and availability of talent-ed recruits are European CFOs’ biggest concerns, accord-ing to a recent poll by CFO Europe magazine and TilburgUniversity. Although the talent shortage is a challengecommon to all senior executives, there are at least threepressures unique to finance departments.

First, as globalisation continues apace, transactions aregetting more complex. With companies managing vastnetworks of suppliers across borders and in differentcurrencies, CFOs must continually review new servicemodels, such as outsourcing or supply chain financing,in order to cut costs and manage risk. Second, tradition-al financial reporting is expanding in scope, to encom-pass critical non-financial operational data. Thisrequires finance to build bridges to the rest of the com-pany, through the use of technology, but also the “softskills” of communication and persuasion. The third isrelated to the second – as finance becomes the hub forall company data, financial and non-financial, boardsand management teams look to finance to provide theforward-looking analysis and insight to help make deci-sions for the business.

All three of these pressures require a finance staff that iscomfortable with complexity, open to change and ready tobuild ties with the rest of the business. This research askshow close European finance chiefs have come to reachingthese ideals. The report addresses the following questions:

� What skills do CFOs most value today, and how willthis change in the future?

� How do finance skills shortages affect companies’current performance and future prospects?

� Where are skills most lacking among potentialfinance recruits?

� How are CFOs attracting the best new recruits,retaining existing talent, and improving skills andexpertise inside their organisations?

� How can finance improve talent managementstrategies?

>> AAbboouutt tthhiiss rreeppoorrtt

In January 2008, CFO Europe Research Services, a unit ofCFO Publishing and part of the Economist Group, conduct-ed a sponsored research project with Microsoft, askingsenior finance executives for their opinions about talentmanagement in finance.

The report is based on the results of an online survey ofmore than 200 European senior finance executives, and in-depth interviews conducted with CFOs of the followingcompanies:

• Aspin Group• Citigroup• Financial Dynamics• Ineos• Stoke Park• Tadashii

CFO Europe Research Services and Microsoft developedthe scope of the research jointly. Microsoft funded theresearch and publication of our findings, and we would liketo acknowledge the Microsoft team for its input and sup-port. At CFO Europe Research Services, Scott Payton wrotethe report. Cesar Bacani conducted interviews and con-tributed case studies. Jason Sumner managed the projectand edited the report.

Thanks as well to the finance executives who took the timeto share their views with us.

Overview of Key FindingsTalent management is CFOs’ top priority

More than 80% of CFOs said that talent management ismore important than other finance priorities. And the rea-son, according to our survey? The ability of finance to helpthe business make the right decisions and adapt to futurechallenges depends on attracting and retaining high-quality people.

Basic qualifications are not enough

CFOs take it as a given that potential new recruits haveaccounting and finance qualifications. They are reallylooking for people who can bring insight and analysis tothe finance function. But are they finding them? Theresearch suggests this is where the real “talent gap” liesfor finance.

Analytical skills are most highly prized –

communication skills rising in importance

Forty-six percent of survey respondents said that ana-lytical skills were more important to their firm than tech-nical, technological or communication skills – with a fur-ther 36% of CFOs saying analysis was the second-mostimportant skill. Yet 42% of respondents expect commu-nication to be the most important skill in five years’ time– up from 28% today. CFOs will be particularly interest-ed in recruits who are adept at building relationshipswith non-finance staff in the rest of the company.

Competition for key skills is intense

Sixty percent or more CFOs said that it was difficult tohire people with sufficient expertise in financial instru-ments, risk management, communication, and analysis.Young potential recruits have poorer communication andanalytical skills than their older counterparts – but com-munication skills needs improving across all age groups,say CFOs.

Investment in communication and

analytical training is set to rise

More than half of CFOs plan to increase investment inimproving finance employees’ analytical and communi-cations skills during the next year. CFOs favour shortcourses and in-house tuition over longer training pro-grammes and the use of consultants.

Companies could do more to attract

and retain talented finance professionals

The interesting variety of work and opportunities forcross-departmental responsibility are the best sellingpoints of a career in finance, say CFOs. Improvedcareer planning is the key to retaining top talent.While appraisals are the most widely used HR tool byCFOs, many other tools, such as mentoring and e-learning, are rarer but highly rated by those who douse them.

Three case studies further explore the

issues raised by these survey findings:

� Aspin Group: We focus on CFO Stephen Lee’ssearch for people with the communication andanalytical skills needed to help the constructionfirm expand into new services and markets.

� Citigroup: How this company’s CFO for the EMEAregion blends structured training with regular face-to-face meetings to bring out the best in her 350-strong team.

� FD Group: Why communication is king in this consul-tancy’s finance function.

3


The finance department’s ability to helpthe business make the right decisionsand adapt to future challenges dependson attracting and retaining high-qualitypeople.



SECTION 1 —The vital centre

Overview: • Talent management is top of more than80 % of CFOs’ agendas. • The ability of the companyto make good decisions hinges on the quality of financestaff. • Basic skills are taken as a given by CFOs lookingfor new recruits: they are really looking for people whocan bring insight and analysis to their role.

Top priority

The overwhelming majority of CFOs say that talentmanagement is at the top of their agenda. In our sur-vey, 81% said that “attracting and retaining high-quali-ty people, and getting the most out of current employ-ees” was more important than other finance priorities.Indeed, more than 30% of CFOs believe that talentmanagement is “a lot more important” thanother priorities.

The finance function may be traditionally focused onmanaging tangible assets, yet this survey demonstratesthat its success or failure depends on the decidedly intan-gible assets of skills and expertise. It’s clear CFOs see tal-ent as the basis for success in all that they do, and hence,rate it as one of the highest – if not the highest – priority.

“Frankly, without the right people you cannot achievemost finance priorities, especially if you are consideringmajor improvements in financial reporting, accountabil-ity and sustainability,” said one CFO.

Internal and external benefits

Why do CFOs place such high importance on talent man-agement? In particular, our respondents believe thatattracting, nurturing and retaining talent is crucial to thefinance department’s ability to improve cross-depart-mental relationships and adapt to future challenges. Ifthe finance department is unable to employ and retainthe right people, it “may not be able to connect withother parts of the business … and impact the decisionsnecessary to drive the business forward,” said onerespondent. Neither will the finance function be able to“move to more value-adding and business-partneringactivities,” said another.

According to one CFO, talent management failures wouldalso prevent their company from remaining “competitivein our financial reporting and other finance requirementscompared to competitors.” Another pointed out that poortalent management will prevent the finance function frombeing flexible and “open to new things”.

Most importantly, however, CFOs believe that high-qual-ity finance talent is crucial to decision-making processes.If finance has the right people, therefore, the businessmakes better choices. One respondent made the cruciallink between information and decision-making:

“Without the right information it is impossible to makethe right decisions. Without the right people it is impos-sible to get the right information and so the wrong deci-sions are made. Every time there is a handover to a newmember of staff there is a risk of knowledge loss; thehigher the turnover of staff the more knowledge is losteach time.”

Of course talent is important across the business, butfinance collates, supplies and, increasingly, interprets theinformation which helps all of these functions under-stand what is achievable and what is not.

> Chart 1: In general, how would you rate the importance

of finance talent management (e.g. attracting and

retaining high-quality people, and getting the most out of

current employees) in comparison with other finance

department priorities?

A lot more important than other finance prioritiesSomewhat more important than other finance prioritiesAbout the same importance as other finance prioritiesSomewhat less important than other finance priorities

31%

49%

18%

2%

5


The bottom line: effective talent management in thefinance department is the bedrock of a successfulbusiness. “Not having the right finance people inplace poses a risk to the whole company,” said oneCFO. “It isn't only the financial processes; it is alsothe service that is provided to the organisation. If thecompany is not in the situation to work with reliabledata, wrong decisions are made, [which] endangerprofitability.”

Beyond the basics

It is clear to our respondents that attracting and retain-ing high-quality finance talent is not just about findingpeople with the right finance and accounting qualifica-tions: the basic skills are taken as a given.

Justin Elliott, owner of training firm Tadashii and former

finance director of Unilever’s food operations in Spain,likens finance and accounting qualifications to passing adriving test. “You must pass a driving test to go on theroad. But just because you have passed your driving testdoesn’t make you a Formula One champion,” he says. Inparticular, CFOs are looking for people who can bringinsight and analysis to the company. “It appears thereare few individuals who can complete a variance analysisand apply some brain power,” lamented one respondent.

It is during a crisis, noted one CFO, that the importanceof talented employees really stands out: “If everythingis ideal, you can manage with mediocre people. But assoon as the situation changes, those people cannot reactproperly and are not able to [make] appropriate deci-sions. The talented are braver and can react in a shortertime with very good results.”

Before he became finance director of UK construction firmAspin Group in 2007, Stephen Lee was a divisional financechief in the tram division of aerospace and transportation con-glomerate Bombardier. “It’s a different challenge,” he says ofthe finance function at Aspin, which is currently staffed by justthree people. Lee was attracted by the chance to be part of arapidly growing enterprise, as Aspin leverages its design andconsulting expertise in foundations to railway superstructuresinto other areas of construction in the UK and elsewhere.

Talent management in a small but growing company is differ-ent from talent management in an international conglomer-ate, but it is no less important. Finance management at Aspinis growing beyond technical accounting, balance sheet man-agement, reporting and compliance. “The role we’re carvingout now is also the strategic side, as well as analysing what isgoing on in the market,” says Lee. The plan is to double thenumber of finance staff in 18 months, so he is in the process ofdrafting an overall strategy for talent management in thefinance function.

There are three components: hard skills, soft skills and compa-ny vision. “The heart of the blueprint is identifying the skillsmatrix for each of the types of role that we’re looking to bringin – an understanding of the rudiments of accounting throughtaxation, treasury management, and then business planning,”Lee explains. “That’s the hard core of what finance is, that’sthe foundation, if you like. Then there’s the soft side, the per-sonal touch, the awareness of the culture of the business. Andthen there’s the company vision, which is the top of that pyra-mid, the strategic vision that feed into the other two.”

Lee plans to build the finance function around existing staff,who he says have strong accounting skills and an excellentattitude, but do not yet have the analytical and communica-tion skills to support Aspin’s expansion into new services andmarkets and its eventual flotation – a listing on London’s

Alternative Investment Market is the ambition in the nearfuture. “Primarily transactional and basic accounting skills,these are the core competencies of the current staff,” says Lee.“I’ll be looking to bring younger talent in, as well as nurturethe people already here.”

To start off, he plans to recruit two new employees. “One, whois young, we would be teaching on the ‘Dear Aunt Sally’approach, sitting by and getting experience,” says Lee. “Notnecessarily apprenticeship, but a take them to the board roomat a young age approach to get the experience of what thebusiness is about. Alongside that young person, we will bringin a professional.” The more experienced recruit should pos-sess the analytical and communications skills that Leebelieves is important for Aspin.

He anticipates difficulties in hiring the all-around talent hewants. “I haven’t had much experience recruiting with thiscompany,” says Lee. “What I can draw on is from previousjobs, where I found it extremely difficult to get that level ofcompetence that understands the business and can actuallyspeak to and command the respect of project managers andprocurement professionals. It’s incredibly difficult to find peo-ple that have got the ability to apply the personal touch andthe awareness that finance goes beyond the paper.”

Once he has hired them, Lee is determined to keep them. Thetalent management strategy includes training, upgrades ofthe IT financial management system, and a fair and objectiveappraisal system linked to the grant of bonuses, salary incre-ments and promotions. “But at the end of the day, a large partof it is confidence in the company’s vision,” Lee concludes.“Ultimately you will live or die by that vision, and if peopledon’t like it, then they will go.” He is betting that Aspin’svision of becoming a design, consultancy and constructionenterprise with operations across Europe will resonate withthe finance function.

>> CCaassee ssttuuddyy –– AAssppiinn GGrroouupp:: LLaayyiinngg tthhee ffoouunnddaattiioonnTTaalleenntt mmaannaaggeemmeenntt iinn aa ssmmaallll bbuutt aammbbiittiioouuss ffiinnaannccee ffuunnccttiioonn



SECTION 2 —The great communicators?

Overview: • Forty-six percent of CFOs say that analyti-cal skills are most important to their business. • Forty-two percent believe that communications skills will bemost important in five years’ time – up from 28% today.• Half of respondents predict that building internal rela-tionships with non-finance staff will be the most impor-tant communication skill during the next five years. • Sixty percent of CFOs find it difficult to hire people withsufficient communication and analytical skills.• Skills shortfalls are worst among younger finance can-didates. • CFOs plan to invest in communication andanalytical training to address this problem.

Analytical skills are most in demand

now – but communication skills are

rising in importance.

What finance skills do CFOs believe are most valuable totheir company? We asked our survey respondents to sep-arately rate the importance of technical, analytical, tech-nological and communication skills.

Analytical skills – including forecasting, budgeting andplanning – emerged as the most valuable by far. Indeed,

46% of respondents said that these skills were mostimportant, with a further 36% saying they were the sec-ond-most valuable set of skills. “Analytics is important invirtually every job we have,” says Susan Dean, CFO of Citigroup’s EMEA operations (see case study on page 13).

Why is analysis so valuable? Because it is an essentialingredient in turning the financial data and, especially,non-financial data, for which finance is increasinglyresponsible, into good decisions: according to respon-dents it is the difference between stagnation, and a busi-ness that learns, adapts and grows.

Communication, defined in our survey as “presentingand preparing results in a simple fashion, and the abili-ty to work within a complex organisational structure,” isthe second most-valuable set of skills, with 60% of CFOsciting it as their first or second priority.

Justin Elliott, who spent 18 years in finance roles at Unileverbefore founding his training firm, says that the high valueplaced on analysis and communication reflects the increas-ingly dynamic role of the finance function in general: “Thefinance role gets more and more demanding. It’s nowtaken for granted that you make the financial systems workand produce the reports right. All these you must do before

> Chart 2 – In general, what finance skills are currently most valuable to your company?

Technical skills (accounting, double-entry book-keeping, preparing financial statements)Analytical skills (forecasting, budgeting, planning)Technological skills (ability to use financial planning software)Communication skills (presenting, preparing results in simple fashion, ability to work within a complex organisational structure)

0 4020 6010 5030 80 90

Top priority

Second priority

Third priority

Fourth priority

20% 45% 7% 28%

20% 36% 12% 32%

31% 13% 31% 25%

29% 5% 50% 16%

70

7


breakfast, because during the day you must be analysingnumbers, persuading the chairman to do the right thingand making sure the company hits its target.”

Looking ahead, CFOs believe that communication skillswill become even more important in their company.When asked what finance skills they think will be mostvaluable to their firm in five years’ time, 42% said com-munication would top the list – compared to 28% whofelt it was currently the most valuable set of skills.Analytical skills will remain important, however: 35%

believe it will still be the most valuable set of skills in fiveyears’ time, with a further 41% predicting that it will bethe second-most important skill-set.

Communication already tops Justin Elliott’s priority list.“I think that a key issue at the moment is analysis, buteven more than that it’s communication,” he says.

“What I mean by communication is not that you canwrite a nice report. What I mean by communication isreally influencing, persuading, and making the numberscome alive.”

Finance needs to build relationships

The predicted rise in the importance of communicationcomes at a time when the role of the finance departmentis changing. Reporting requirements, for example, arebeing reformed on both a national and European level.New legislation such as the UK Business Review is forc-ing finance departments to incorporate non-financialinformation into reporting material, and to explain thebusiness implications of financial results more clearly,and in more detail, than ever before.

However, CFOs in our survey believe that the increasingimportance of communication skills is largely due togrowing internal, rather than external, requirements.

Indeed, when asked which specific communicationskills will be most important for their finance depart-ment during the next five years, half of CFOs cited“building relationships with non-finance staff in therest of the company.”

> Chart 3 – Looking ahead, what finance skills do you think will be most valuable to your company in five years’ time?

Technical skills (accounting, double-entry book-keeping, preparing financial statements)Analytical skills (forecasting, budgeting, planning)Technological skills (ability to use financial planning software)Communication skills (presenting, preparing results in simple fashion, ability to work within a complex organisational structure)

Top priority

Second priority

Third priority

Fourth priority

15% 35% 8% 42%

11% 41% 20% 28%

36% 18% 30% 16%

38% 6% 42% 14%

When asked what skills they think will bemost valuable to their firm in five years’time, 42% said communication would topthe list - compared to 28% who felt it wascurrently the most valuable.

0 4020 6010 5030 80 9070



A further 26% of respondents expected that “sharingfinance expertise around the company” will be the mostcrucial communication skill. Justin Elliott agrees. “A goodanalyst can see the financial consequences. But a goodcommunicator can find a way to make the salesman seethe consequences,” he says.

Communication may be rising up CFOs’ agendas, butwhen it comes to looking for specific talents in newrecruits during the next 12 months, analytical skillsremain the top priority. Out of 11 choices of skills (seechart 7), 45% of respondents cited analysis as the num-ber-one priority. Indeed, 79% of CFOs cited analysis asone of their top three choices.

Communication will be the second-most sought-afterset of skills during the next year, with 44% of respon-dents citing it in their top three priorities. Indeed, thethird-most important skill for new recruits – financialreporting – is also, in part at least, a communicationdiscipline.

Competition is fierce for key skills How easy is it for CFOs to find people with the skillsthey require? A majority of respondents found it diffi-cult to locate eight out of the 11 skills covered in oursurvey.

> Chart 5 – Over the next year, what skills will you be looking for most in new recruits?

Financial consolidationFinancial reportingAnalysis (e.g., forecasting, budgeting, planning)

Risk managementCompliance expertise

Financial accountancy

Financial instruments expertise

Top trend

Second trend

Third trend

> Chart 4 – Thinking specifically about communication

skills, which of the following will be most important for

your finance department during the next five years?

Building relationships with non-finance staff in the rest of the companyMaking presentations to investorsMaking presentations to the management teamSharing finance expertise around the companyNegotiating skills in setting targets with non-finance staff during in-person meetingsOther (please specify)

50%

5%11%

26%

7%

1%

Basic accountancy skills were easiest tocome by, though almost a quarter ofCFOs said even these were difficult tofind.

Expertise in financial technologyTaxTreasuryCommunication skills

11% 9% 45% 2%3% 1% 9% 4% 15%1%

7% 15% 23% 4% 8% 7% 9% 10% 14%1%

7% 17% 11% 2% 10% 5% 12% 4% 15%7%

2%

10%

0 4020 6010 5030 80 9070

9


Expertise in the specialist disciplines of financial instru-ments and risk management is the toughest to trackdown, with more than 70% of respondents saying thatthese skills were “difficult” or “very difficult” to find.

More alarming, perhaps, is the fact that the two mostvaluable skills – analysis and communication – were alsothe joint-third hardest for CFOs to find. Sixty percent ofCFOs surveyed said that these skills were difficult or verydifficult to locate.

Basic accountancy skills were easiest to come by –though almost a quarter of CFOs found even these diffi-cult to locate.

“There is talent out there, but it’s a competitive market-place,” says Citigroup’s Susan Dean. She adds thatunlike some other departments in her company, the

finance function is competing to attract talent withorganisations across all sectors:

“If you’re an equity research person, you’re really goingto work primarily in the financial services industry. But ifyou are a good finance person with good analytical skills,all the things that everyone’s looking for in terms of com-munication skills, numeracy, analytical ability, you’re notjust competing against your peers in the financial servic-es industry. You’re also competing against top corpo-rates in other sectors.”

For Stephen Lee, finance director of UK constructionfirm Aspin Group, the biggest recruitment challenge isfinding people with the ability and inclination to put thefinance function into the context of overall businessobjectives: “It is incredibly difficult to find them,” hesays (See case study, this page).

He may be CFO, but Sanjay Jawa regards communication asfar more important in the finance function than cost issues.“The CFO of tomorrow has to be a people person. Our financefunction is very much involved with the business day-to-day,so it’s critical that we communicate properly with what isessentially our clients [consultants and FD Group executives]and provide first class service to them,” he says. “So talentmanagement is critical to the finance function, and it’s clearlyimportant as you go up the ladder.”

That focus is informed by the FD Group’s business: it is a 700-strong consultancy with 23 offices worldwide that advises cor-porate clients on strategic decisions regarding their communi-cation with investors, employees and stakeholders. “We are apeople business, so we spend a lot of time and money on tal-ent development, and that is true of the finance function,”says Jawa. “We are able to use a lot of the technology thataffects the people at the front of the office and also the peoplein the finance function.”

Also chief operating officer and member of the board, Jawaworks with 18 finance staff in the UK and another 27 aroundthe world. The finance function recruits people with experi-ence rather than new graduates. “We always look for someonewith the proper qualifications, either chartered accountants orcertified accountants or chartered management accountants,”says Jawa. Applicants for the more senior posts must demon-strate communication skills “because our senior folks spend alot of time explaining to our managing director what’s drivingtheir business or where the profits are coming from.” They alsoneed to be culturally aware because they will be taking reportsfrom people all over the world.

The FD Group holds three sessions a year of what is known asthe Leadership Academy, which brings together the compa-

ny’s best younger people around the world in training coursesin London, Brussels and New York. Manager-level staff in thefinance function are taught negotiating skills, presentationskills, people management skills and other soft skills designedto make them well-rounded executives, not just proficient inaccounting. What about those lower down the ladder? “Wemake sure everyone has access to training, irrespective of theirlevel,” says Jawa. “We all started somewhere, and the empha-sis here is on gaining experience alongside personaldevelopment.”

“We don’t have too much difficulty attracting staff,” the CFOadds. “We’re lucky in London in that we are a market leader inwhat we do, so we are well-known.” It all seems to work, sincestaff in the finance function have been with the company forfive or six years, on average. “If we give them a nice environ-ment to work in, which I think we do, if we give them a busi-ness that is successful, which it is, that actually is half the chal-lenge,” says Jawa. “Like all finance departments, there is day-to-day work that has to be done, but working in a close teamwhich communicates well means people like to stay.”

Finance staff receive competitive salaries, a benefit packagethat includes life and disability insurance and private healthcare for themselves and their family, and bonuses that are tiedto the results of the appraisal process, which is done every sixmonths. Then there are lunches and staff parties – the compa-ny spent £200,000 on these celebrations in London alone,which comes up to nearly £1,000 per employee. External valida-tion for the FD Group’s talent management may come inMarch. For the first time, the company joined the SundayTimes’ Best Companies to Work For annual survey. “We werenamed ‘one to watch’,” says Jawa, “It’s our first try and we aredelighted with the result. For us it’s a means of comparing ourbusiness to other companies.”

>> CCaassee ssttuuddyy –– FFDD GGrroouupp:: PPeeooppllee bbuussiinneessssCCoommmmuunniiccaattiioonn iiss kkiinngg aatt tthhiiss gglloobbaall ccoonnssuullttaannccyy



Recent graduates lack analytical and

communication skills

Sanjay Jawa, CFO of communication consultancy FDGroup, believes that while technology skills of newrecruits have improved, technical financial skills haveslipped. “Job seekers should focus on enhancing their ITand people skills as well as technical ones,” he says.

Meanwhile, our survey sample highlighted deeperweaknesses in recent graduates. When asked to rate theskills of 21- to 25-year-old finance candidates, only 4%of CFOs said their communications skills were good,with just 9% rating their analytical skills as good.Indeed, almost half of respondents thought this agegroup’s analytical skills were downright poor, with 64%feeling the same way about their communication skills.

Aspin Group’s Stephen Lee has other criticisms aboutrecent graduates. In particular, he believes that the UKeducation system encourages graduates to have “toohigh an expectation” of the responsibilities they will be

given in their first job. “Not necessarily that they’re goingto walk into the boardroom, but some think they’regoing to walk into a management meeting and take con-trol. That’s just not going to happen,” he says. “So I thinkthere’s probably an over-expectation, and probably notthe willingness to get their hands as dirty as they mighthave [had] in the past.”

A number of other CFOs in our survey echoed this view.“All new qualifieds want to become a controller or a CFOwithout the experience,” said one respondent.

The complaints about the so-called Generation Y crop ofgraduates, seems to cut across geography. In a series ofinterviews for CFO magazine, US finance executivesechoed this view, and lamented the lack of loyalty andwillingness to jump ship at the slightest provocation.One, Melissa Morales, CFO of an Arizona-based realestate firm, said she is almost constantly recruiting forher 15-strong team, as junior staff leave for what theyperceive as better opportunities elsewhere. She says,many young new recruits need “thatta boys and thattagirls”—“you don’t need to be recognised for everythingyou do.”

CFOs are far more complimentary about older financecandidates’ skills. The vast majority of respondentsbelieve that among those aged between 26 and 35, skillsare adequate or good in all four broad areas covered inour survey: technical skills, analytical skills, technologi-cal skills and communication. However, CFOs think thatthere is still plenty of room for improvement in commu-nication skills: just 14% believe they are “good” in thisage group.

In a clear sign that experience counts for CFOs, it isfinance candidates aged over 35 who impress them most– at least in terms of technical, analytical and communi-cation skills. Yet when it comes to technological skills, itis a very different story: just 15% of CFOs think that theseskills are good in this age group, compared to 24% for

[Recent graduates] don’t necessarily think they’re going to walk into the boardroom,but some think they’re going to walk into a management meeting and take control.

> Chart 6 – Percentage of respondents saying it’s difficult

or very difficult to hire people with the specific skill:

Financial instruments:

Risk management:

Communication skills:

Analysis:

Financial technology:

Financial consolidation:

Compliance:

Tax:

Treasury:

Financial reporting:

Financial accountancy:

0

73%

72%

60%

60%

59%

56%

55%

53%

47%

38%

4020 60

23%

11


>> CChhaarrtt 77 –– AAggeess 2211 ttoo 2255

Poor Adequate Good

Technical skills (accounting, double-entry book-keeping, preparing financial statements)

Analytical skills (forecasting, budgeting, planning)

Technological skills (ability to use financial planning software)

Communication skills (presenting, preparing results in simple fashion, ability to work within a complex organisational structure)

22% 58% 20%

48% 43% 9%

22% 54% 24%

64% 32% 4%

>> CChhaarrtt 88 –– AAggeess 2266 ttoo 3355





4% 54% 42%

6% 59% 35%

7% 71% 22%

14% 72% 14%

0 4020 6010 5030 80 9070

0 4020 6010 5030 80 9070





1% 42% 57%

4% 44% 52%

21% 64% 15%

6% 54% 40%

Comparing skills among age groups in the workforce

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Poor Adequate Good

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0 4020 6010 5030 80 9070Poor Adequate Good

candidates aged between 21 and 25, confirming anecdot-al evidence that Generation Y graduates are more tech-nologically adept than their older counterparts.

It’s worth noting that the technical prowess of freshfinance graduates means that their perceptions of whata finance role entails have changed. “Their expectationsare that [they’ll have] some nice wizardly system whenthey come in, because that’s what people have hadaccess to at university or at home,” says Susan Dean atCitigroup. “They have grown up with computers and theinternet and everything else that allows them to do moreinteresting things.”

Dean’s experience is echoed by our survey respondents,71% of whom agreed or strongly agreed that “New can-didates between the ages of 21 and 25 expect to havemore access to communication technology than previ-ous generations.”

This expectation is not always a good thing, addsStephen Lee at Aspin Group: “The expectation [is] thatthe machinery will do it all for you. But with the best sys-tems and the best will in the world, you still would needto do some donkey work,” he says.



> Chart 11 – What type of training is your finance depart-

ment most likely to invest in during the next year?

Short courses (one day or less)Long courses (more than one day)Consultant trainersIn-house training conducted by member of finance staffMentoringShadowingOther

35%

18%5%

8%

29%

4%

1%

“Their expectations are that [they’llhave] some nice wizardly system whenthey come in, because that’s what peoplehave at university or at home.”

> Chart 10 – During the next year do you plan to increase or decrease investment in training for finance staff in the follow-

ing areas?

IncreaseDecreaseStay the same





37% 6% 57%

52% 5% 43%

40% 12% 48%

51% 10% 39%

0 4020 6010 5030 80 9070

13


Aside from a weakness in technology skills among theover-35s, it is communications skills that are in mostneed of improvement across all age groups, say CFOs.Even in this older age group, communications skills are“adequate” at best among 59% of finance candidates.

Training investments to increase in key

areas of analysis and communication

CFOs’ concerns over the shortfalls in communication andanalytical skills are reflected in their plans for investmentin training. Half of respondents will increase trainingbudgets for these skills over the next 12 months. In con-trast, less than 40% of CFOs plan to increase investmentin technical and technological training.

How will this training manifest itself? Short courses ofone day or less, with tutoring conducted in-house, are by

far the most favoured formats among CFOs.

According to Uwe Braun, CFO of the Hampshire-basedOlefins-Division of chemicals firm INEOS, exposure tothe operational side of the company is a key element totraining finance staff. “Understanding the business isfundamental and training needs to include it,” he says.

Looking back on his early days at Unilever, JustinElliott agrees that operational experience is crucial forgetting new financial recruits engaged in the busi-ness. “We spent one week working in the factory, justworking on the line, putting liquids in bottles. Wespent a week with sales out on the road, just goingand calling on shops and selling products. Very earlyon, that’s very useful,” he says.

Once a month, Susan Dean hosts breakfast for 20 or so financestaff from various levels, who were selected from the 350-strongfinance function in Citigroup’s London offices. “No agenda, wejust talk for an hour and a half,” says the CFO for Europe, MiddleEast and Africa. “I just want to know as many of them as I can.”Every quarter, she also holds a town hall meeting with the entirefinance function, spending one hour talking to people andanswering questions. Dean also makes a point of meeting peo-ple in their offices, not her own, so she can walk the floor as well.

Talent management at Citigroup does not stop with the per-sonal touch. Indeed, there is a very structured programmethat binds together recruitment, training, appraisal, promo-tion and incentives. The finance function’s approach is “togrow our own,” says Dean, which means most recruits comestraight from university. The successful applicants must notonly numerate, but also display enthusiasm, communicationskills, analytical ability, leadership and innovative thinking.

Citigroup underwrites employee expenses in connection withhis or her pursuit of an accounting qualification with CIMA,the Chartered Institute of Management Accountants, withwhich Citigroup has a partnership. “Not every graduate thatjoins does or needs CIMA, but we encourage it, because Ithink you need strong underpinning accounting knowledgeand skills to be successful in the finance function,” says Dean.

Separately, finance has developed, in conjunction with humanresources, a structured training curriculum that defines thecore competencies required at each level in the finance func-tion, from entry right through to managing director. There is astructured series of courses, some of which are building blocksfor further courses in the next level. On top of that, there isspecific technical training for each department in the financefunction. Somebody in derivative product control, for example,will need to master different technical skills to someone incash management.

Training is delivered in a combination of ways. “Some coursesare classroom-based, some are web-based, some are on thejob, others are seminars,” says Dean. “It depends on what theparticular topic is.” Human resources organises the trainingand tracks attendance, but it is finance that identifies thetraining needs of the finance staff. Not everyone needs everysingle thing on the curriculum. “Basically, we work with anindividual as part of their personal development plan and theappraisal process,” Dean explains. “We identify theirstrengths and development areas, and we look at the trainingcurriculum and see if there is something that can help there.”

The majority of the finance staff works in financial control –closing the books, doing financial statements, and reportingto New York for consolidation and filing. The smaller strategyand planning group takes the forward view, doing quarterlyforecasting and taking charge of the planning process, andfocuses on analytics rather than technical accounting. Buteveryone is expected to hone their analytical, communicationand other soft skills. “Clearly, in order to be successful in theirjobs, there are certain nuances of technical skills that are dif-ferent,” says Dean, “but the overall soft skills are the same. Ihave the same expectation for everybody.”

Having well-rounded skills helps finance staff win promotionwithin and outside the finance function. “It’s part of our cul-ture to promote internal mobility,” says Dean. “We are glob-al, and we are big, and that gives a lot of opportunity withinmany functions, particularly finance. We’ve got peoplewho’ve gone from London to numerous countries around theglobe.” She calls it “good turnover,” even though financethen has to recruit and train more new graduates. It’s betterthan “regretted turnover,” when an employee joins anotherfirm. “That’s really why we focus so much on training anddevelopment,” says Dean. “I’d rather lose someone toanother part of the organisation than lose a good personoutside of the company.”

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SECTION 3 —Money isn’t everything

Overview: • More than a third of CFOs do not think thattheir firm effectively sells the benefits of working infinance to potential recruits. • Time pressures preventmany CFOs from focusing sufficiently on talent manage-ment. • Recruitment drives should highlight the varietyof work offered by finance to potential candidates. • CFOs should adopt mentoring, e-learning and otherHR tools to nurture talent more effectively. • Bettercareer development planning and performance-linkedincentive schemes could improve staff retention rates.

Still work to do in selling the benefits of

working in the finance department

Competition for talent may be fierce and crucial skillsscarce, but how effective are today’s finance depart-ments at selling themselves to the brightest and best?Just over half of respondents felt that their firms effec-tively sold the benefits of working in the finance depart-ment to potential new employees.

However, this leaves a significant minority of CFOs – 37%– who feel that their firm falls down in this area. As wellas hampering the finance function’s ability to attractskilled recruits from outside the company, this is also a

potential hurdle in the internal war for talent. After all, ifa company isn’t selling the benefits of the financedepartment, the rising stars of the business are likely toend up in other functions.

Meanwhile, a large number of survey respondentsbelieve that time pressures prevent the head of financefrom giving talent management the attention itdeserves: 37% of respondents disagreed with the state-ment: “The leader of the finance department has enoughtime to give proper attention to talent management.”

CFOs are not alone in their struggle to dedicate enoughtime to talent management. The problem was identifiedas the biggest obstacle to good talent management bybusiness executives in general by McKinsey researchcited in the management consultancy firm’s January2008 article “Making talent a strategic priority”.



> Chart 12 – Do you feel your company effectively sells the

benefits of working in the finance department to potential

new employees?

YesNoDon’t know

56%37%

7%

> Chart 13 – In your view, what is the biggest selling point

of working in the finance department in your company?

SalaryInteresting variety of workGood career moveOpportunity to learn new skillsOther

10%

48%17%

8%

17%

Just over half of respondents felt thattheir firms effectively sold the benefits ofworking in the finance department topotential new employees.

15


Recruitment campaigns should focus on

the variety and cross-departmental

responsibilities of the finance function.

What do CFOs believe are the attractions of working intheir department? The “interesting variety of work” is byfar the biggest plus, say respondents, and far moreimportant than the salary, skills opportunities or theimpact of the role on the candidates’ career prospects.

We asked CFOs what their company could be doing bet-ter to sell the benefits of working in the finance departmentto potential new employees. A large number of respondentsbelieve that their firm should do more to explain that thefinance function is tightly integrated into the rest of the busi-ness and crucial to its overall success. As one respondentput it: “Focus more on the fact that finance supports all[parts of the business] as a partner and does not just con-sist of book-keeping”. Another CFO called for their firm to“showcase how finance matters to success in business.”

Some CFOs also believe that companies should do moreto explain that finance is an excellent springboard for avariety of senior management positions. “Finance is agood stepping stone to other functions if desired,” saidone respondent.

In addition, a number of CFOs felt that their companymust first do more to promote internal appreciation ofthe value of finance before it can become better atattracting external talent. “HR must improve its under-standing of finance,” said one.

In the case of Uwe Braun at INEOS Olefins, which is head-quartered in the middle of the UK’s New Forest, the key toattracting talented finance recruits is to raise awarenessof the company as a whole in the local area. “We’re a verybig player in the chemicals world, but we’re obviously not

known to the consumer, and so very few people know us.Candidates are reluctant to relocate or consider a longcommute for an employer they haven’t heard of. So we’retrying to do a big job to get ourselves known in the area,such as at local universities, so people would be willingto work for us. I think we have a great workplace, but foran outsider, that’s sometimes hard to evaluate.”

Finance can learn from its peers on

successful HR processes

What’s in CFOs’ training and performance evaluationtoolbox? The four most widely used processes are:� Line manager appraisals� Further education and qualifications� Succession planning � Coaching

More than three-quarters of all CFOs surveyed said thatthe above processes were in place at their company –with a significant majority saying that these initiativesare effective. Line manager appraisals are by far the mostubiquitous and useful HR tools, with 92% of CFOs usingthem and 94% finding them effective.

Justin Elliott, founder of Tadashii, agrees that appraisalsare a vital performance evaluation tool, but adds thatthey are not enough on their own. “Sometimes the bestsort of appraisal is a quick conversation after a meeting,”he says. “It’s short and it’s sharp, but it really makes animpact and it’s much more powerful than waiting untilthe end of the year [to] talk.”

Many other HR processes are less widely used by financedepartments – but highly rated among those who do usethem. Take “executive shadowing”: only 30% of CFOsemploy this tool, yet 81% of those who do say it iseffective.

Similarly, among the 61% of finance functions thatemploy “360-degree feedback”, 86% say it is effective.Meanwhile, more than four out of five of the 63% offinance departments running job rotation programmessay that they, too, are effective.

“Sometimes the best sort of appraisal is aquick conversation after a meeting.”

These findings send a clear message to CFOs who havenot yet embraced a variety of training and performanceevaluation processes: learn from your peers and imple-ment them. The finance department can’t work alone ondeveloping these processes, and will need to build rela-tionships with the HR department, which may alreadyhave the frameworks in place to introduce these kinds ofprogrammes at less expense or upheaval.

What can companies do to ensure that their top financetalent does not wander elsewhere? Better career devel-opment plans come top of the list for around a third ofrespondents. “Formalise the career planning processand ensure finance people are given a chance to spendsome time in the operations,” added one respondent.

Unilever is one company that gets this right, saysJustin Elliott, former finance director of the firm’s foodoperations in Spain. “Its view of finance people wasvery much as people who are integrated into the busi-ness, rather than the scorekeepers who would sitbehind the computer system and just add up numbers.My speciality was finance, but right from the day I

joined, I was [treated as] a manager alongside othermanagers. I would go and talk to the sales guys andmarketers as an equal.”

Meanwhile, bonuses and other incentives were the sec-ond most frequently cited factor that would improvecompanies’ ability to retain top financial talent. In par-ticular, CFOs suggested that tighter alignment betweenperformance and bonuses would help firms to keep tal-ented staff. “Organise the incentive and reward schemeso that it better rewards talent,” suggested one CFO.“Actually pay them based on their ability and value tothe company and not based on industry standards thatencourage them to leave at the first incentive offered byanother company,” said another.

Other popular suggestions for retaining talented staffincluded higher salaries, varied job rotation programmesand offering people a more strategic role in the business.“Create a platform that would allow the finance team toliaise with outside departments,” suggested one CFO.“Being more business-minded will increase job diversityand satisfaction.”



Executive shadowing

Competence frameworks

Mentoring

Job rotation

E-learning

360-degree feedback

Coaching

Further education & qualifi cations

Line manager appraisals

0 20 40 60 80 100

Line manager appraisals

Further education and qualifications

Coaching

360-degree feedback

E-learning

Job rotation

Mentoring

Competence frameworks

Executive shadowing

% saying the practice is effective% of finance departments deploying the practice

0 4020 6010 5030 80 9070

> Chart 14 Talent management in finance departments

80%30%

78%

74%

55%

82%

70%

63%

62%

86%

90%77%

61%

60%

88%88%

94%92%

17


ConclusionEuropean CFOs are largely united in their views abouttalent management: its importance is paramount,because the future of the finance function – and the com-pany as a whole – depends on its ability to attract thebrightest and best.

Our survey respondents are also clear about the skillsthey most value: analysis and, increasingly, communication.

The most worrying findings in our survey are the difficul-ty that CFOs face in finding people with these essentialskills – and the low estimation that CFOs have of recentgraduates’ analytical and communication expertise. Thisis an important message for organisations providingeducation and training to the finance professionals oftomorrow.

The good news is that the majority of CFOs are takingpractical steps to address skills shortfalls by increasinginvestment in analytical and communication training.

There is evidence in this survey, however, that manyfinance departments could do more to nurture talent, bydeploying more HR tools such as e-learning, mentoringand 360-degree feedback. While relatively few CFOs usesuch techniques today, those who do find them veryeffective.

Meanwhile, HR departments and companies as a wholecan do more to help CFOs attract and retain the bright-est and best by better explaining the crucial role thatfinance plays in over-arching business strategy, and byimproving the career development support and perform-ance-linked incentives that they offer to financeprofessionals.

The most worrying findings in our survey are the difficulty that CFOs face infinding people with these essential skills– and the low estimation that CFOs haveof recent graduates’ analytical and communication expertise.



Study methodologyCFO Europe Research Services surveyed 212 seniorfinance executives for this study through an online sur-vey. Responses came from a cross-section of all major

industries. About half came from the UK, with theremainder split between countries in western Europe.The following is further demographic information aboutthe respondents.

> Chart 15 – Job title

2%

2%

46%

27%

13%

1%

9%

CEO, president, or managing director

Chief financial officer or finance director

Controller

VP of finance

Treasurer

Chief accountant

Other finance title

> Chart 16 – Revenues

28%7%

9%

11%

15%

6%

24%

less than £250m

£250-500m

£500-1bn£1-5bn

£5-10bn

£10-20bn

£20bn+


19


Sponsor’s perspective

Microsoft has been looking at the issue of people in busi-ness and the changing workforce demographic throughits own work on “The New World of Work and the Peo-ple-Ready Business”. Microsoft recognizes that there isa sea change happening in business where employeeattraction and retention is rapidly becoming a hindranceto company growth.

This research from CFO Europe Research Services isenlightening on the effect of the “talent gap” on thefinance function and the impact that can have on thestrategic contribution of accountants. Particularly inter-esting are the findings that show that FDs are looking formore communication and analytical skills from theiremployees. After all, the modern finance department isnot just there to audit the business; good finance peopleshould be forward-focused in terms of forecasting andhelping the business predict the outcome of strategicdecisions, rather than being locked into the backward-looking world of financial reporting. As the research says,if finance has the right people, the business ultimatelymakes better choices

The problem is finding people who exhibit these skills.The research shows that 70% of CFOs say that peoplewith communication and analytical skills are difficult orvery difficult to find. There are, of course, many factorsthat can affect your ability as a business to attract talent.A general shortage of people in the market is one, butsome thought-leading businesses in the UK are changing

the way they operate in order to attract the lion's shareof good people that are available. They have realised thatif you change your processes and systems to meet thedemands for flexibility and autonomy that new recruitsdemand, then you stand a better chance of being a placewhere people actively want to work and stay.

Salary alone is not an overriding reason why peopleactively choose work in a particular company - it's oftenmore compelling to feel that you are making a differenceand have a voice. In the finance department that meansthe ability to share financial information and expertisethroughout the company to be seen as a value-addingand strategic function rather than a department of costcutters and number crunchers.

That is why Microsoft believes that it is not only employ-ee skills, but the tools you give finance departments tocommunicate and share information, that will ensure thesuccess of your business.

Salary alone is not an overriding reasonwhy people actively choose to work in aparticular company. It’s often more com-pelling to feel that you are making a dif-ference and have a voice.

CFO Europe Research Services:CFO Europe Research Services is a sponsored research group within CFO Publishing Corporation, which producesCFO Europe magazine, and CFO titles in the United States, Asia, China, India and Russia. CFO Publishing is partof The Economist Group.

Microsoft - the People-Ready BusinessA people-ready business is one where people can apply their unique skills, insights and experience to createnew products and services, work responsively with customers and partners, and drive operational excellencein every aspect of the business. People-ready businesses support people with knowledge, practices and toolsso that they can add the extra value that helps differentiate successful organisations in a competitive, fast-moving global economy. www.microsoft.com/uk/peopleready

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