The great resignation: How to keep your finance team intact
The responsibilities of CFOs continue to evolve. Pre-pandemic, the finance function had already evolved into the role of a strategic, forward-looking business partner and during the pandemic, CEOs relied heavily on CFOs to weather the storm and minimise financial fallout. Today, the "Great Resignation" is threatening the finance function in many organisations.
In this article, we discuss the changing role of the CFO, the risks of high turnover, and how you can minimise those risks.
The "Great Resignation" and the finance function
By now, you've likely heard the term the "Great Resignation", it's an ongoing economic trend in which employees are quitting at historic rates around the world. Catalysed by the pandemic, people are reconsidering where and how they want to work for reasons ranging from burnout to poor work-life balance to toxic culture to an unpredictable virus.
Although high turnover rates and labour shortages are creating risks for all sectors, it's having a particular impact on the finance function. Turnover in the CFO role or other senior finance roles can disrupt audit cycles, audit quality, financial reporting, and governance requirements - all posing serious risks for an organisation.
The role of the modern CFO
Even prior to the pandemic, the role of the CFO had already changed dramatically, and it will continue to do so.
In the past, finance was mainly tasked with recording and reporting historical financial information in accordance with fiduciary responsibilities to stakeholders. Today, the CFO role has evolved to include being a strategic business partner, with the expectation that they challenge and influence business practices. In the future, finance will be more focused on collecting big data and using predictive analytics to create forward-looking financial information.
How has the finance function been impacted?
Hybrid and remote work
Priorities have shifted and CFOs can no longer expect to work the same way they did pre-pandemic. CFOs need to be prepared to manage remote and hybrid teams. They need to learn how to communicate effectively with people who may not be in the same office and build relationships with people who don't have decades of experience under their belts.
People want autonomy and the flexibility to be able to continue working remotely in a post-pandemic environment, but they also want more connectedness. Leaders need to build relationships with their team and foster a culture where open communication is encouraged beyond transactional matters.
In addition, many CFOs themselves are anxious about going back into the office. As a leader, they need to comply with the company policy. But they are feeling the same things their staff are feeling.
The CFO role is often a lonely one, requiring them to handle a great deal of responsibility and pressure. In recent years, particularly during the pandemic, many CFOs played an important financial leadership role, putting them under even more pressure than normal.
Many CFOs helped their companies survive or in other cases helped them thrive because the business benefitted from the pandemic. In both scenarios, finance leaders have been in the spotlight.
To manage burnout as the role becomes increasingly demanding, we recommend CFOs get together regularly to network and share their successes and challenges. Being part of a like-minded community helps you keep things in perspective and feel less isolated.
What are the risks of resignations and turnover in the CFO role?
The risks are high. If a CFO leaves, it can take months to find an experienced replacement. In addition, turnover of other finance staff can result in lost productivity due to new staff taking time to become familiar with their new roles.
Here are some of the main risks for organisations to consider:
Vacant roles – Create added pressure on remaining employees to pick up the slack. Adding to burnout and dissatisfaction with their work, motivating even more staff to leave
Exhaustion and burnout – Lead to employees cutting corners with internal controls. Or, worse, rationalising defrauding their employer for the added stress
Expediting the hiring process – To get the candidate onboarded as quickly as possible, hiring teams are not doing proper due diligence and they are sacrificing security and quality for speed
Disrupting financials – An organisation's internal controls could be compromised and its ability to produce reliable financial statements undermined.
How can businesses manage these risks?
1. Improve corporate culture
A toxic work culture can include disrespect, unethical behaviour, failure to promote diversity, equity, and inclusion - and will drive your employees out the door.
It's imperative to create a culture of integrity, where employees can report fraud and misconduct without fear of retaliation. Employees want a culture that values them and their contribution, invests in their professional development, and supports work-life balance. This positive work environment will attract and retain top talent, increase employee engagement, and boost your bottom line
2. Enlist CFO and finance support
If you can’t get the financial support you need in-house, there’s always the option of hiring a virtual CFO. This is a hired, external CFO who can combine director and financial accounting skills that you can scale up or down depending on the size and needs of your business, without having to employ full time staff.
These skilled individuals can resolve situations before they become issues, or speedily work on problems that business owners or management simply don’t have the capacity to solve.
For more on the above, please contact your local BDO representative.
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