Organisational transformation to better support strategic goals or improve operational efficiencies is not a new concept or practice. Since 2019, finance transformation has shifted from the occasional sweeping change to a continuous cycle of adjustments.
Goals for transforming tend to no longer be aggressive cost-cutting measures, such as outsourcing or extensively reducing staff. Rather, transformation goals tend to focus on efficiency gains, improved staff capabilities, continuous-learning mindsets, and workplace culture. Additionally, customer experience has been elevated to a prime focus for transformation.
The Finance Transformation — Revisiting the Human Perspective report highlights data from finance and HR leaders in the UK and US. Notably, 65% of respondents — nearly three times higher than in 2019 — indicated that customer experience is now their chief area of focus for finance transformation.
Across businesses and industries, the momentum for transformation continues.
Seventy-six percent of respondents reported that their finance functions are transforming or planning a transformation within the next three years. Twenty-five percent of the leaders who reported they are currently undergoing a transformation had also implemented an initiative within the previous three years.
Transformations — once viewed as a ‘reset’ —appear to now be a cyclical process to foster business sustainability.
Finance transformation initiatives have tended to focus on streamlining processes or enhancing service delivery by adjusting operating models or incorporating new technology.
But to meet the cyclical nature of transformation and accomplish key objectives, such as enhanced efficiency, strengthened staff competencies, and improved workplace culture and external customer experience, it is essential for leaders to invest in their teams. Human-centric finance transformation is much more likely to be successful (see How to lead transformation with a human centric approach)
Tech investments appear to be outpacing staff’s ability to effectively use AI.
When leaders focus on fine-tuning processes and implementing new tech more than on their teams’ capabilities, organisational efficiency suffers.
Incorporation of generative AI (gen AI) and automation can be a boon to finance teams’ productivity — automating mundane responsibilities allows finance and accounting professionals to focus on other important tasks that require critical thinking, judgment, and analysis.
Purchasing technology and implementing tech command one-third of transformation budgets, per data in Finance Transformation — Revisiting the Human Perspective; however, only 46% of survey respondents consider data management and data analytics to be crucial budget expense for staff development. Underinvesting in such foundational skills raises the risk potential, as AI’s output mustn’t be overly relied upon and must be critically reviewed.
As gen AI and automation become integral to daily business operations, the ability to scrutinize data with attention to detail and a healthy degree of scepticism is increasingly important.
Staff development versus staff recruitment: Which is better?
Because transformations might not succeed if insufficient attention is given to essential continuing professional development (CPD), some leaders — 71% in the US and 55% in the UK — prefer hiring new talent to developing existing teams, known as ‘buy over build’.
Only 36% of respondents prefer to focus on internal staff development to address skills gaps, which is a marked shift from the 2019 results, where current staff were prioritised over new hires. Additionally, 61% of US leaders and 50% of UK leaders reported limited investment in hiring, onboarding, and skills development.
Underfunding development of existing staff contradicts the top two critical success factors for finance transformation: growth mindset and workplace culture. And a tech-centric focus during strategic planning and budgeting can overshadow the imperative to prioritise staff training and CPD.
When asked about investment in skills development, leaders reported that developing digital skills is top priority; technical finance skills is the second highest; and business acumen, essential for effective finance business partnering, is the third highest.
Paul Young, CPA, CGMA, MBA, who is senior executive vice president & CFO at Liberty Bank, noted, “I inherited a team of legacy employees when I joined in 2019, and I quickly found there were a lot of gaps, not just in skill sets but in the functions that we were able to perform. I saw the CGMA apprenticeship as an opportunity for teammates to be able to do a mini MBA in accounting and finance and get a professional certification. Now, when I have openings at higher levels, I can promote from within and backfill with apprentices. (Refer to U.S. Registered Apprenticeship Program for Accounting and Finance Associates)
Human-centred transformation includes professional development.
Deprioritising staff development presents a risk for business leaders who seek to retain talent and build a work culture of continuous learning — 47% of leaders stated that mindset and motivation are the two most critical factors for transformation success.
Strategic planning and executive decision-making are strengthened by data-driven insights provided by finance business partners, and with transformations becoming business as usual, skills gaps in critical thinking and technical ability can jeopardise progress.
A workplace culture that facilitates growth and supports a continuous-learning mindset will require investing in employees — dedicated staff who are keen to learn will increase the likelihood of a successful finance transformation, this time and next.
Additional resources:
Future of Finance 2.0: Re-defining finance for a sustainable world (report)
Reshaping Finance (podcast)