“Survive until 2025'' is a phrase that originated in Hollywood and was later borrowed by financial leaders who hoped for monetary tightening as inflation rose in the United States.
As 2025 approaches, it may be time to change our battle cry. With inflation approaching the Federal Reserve's target interest rate and the U.S. economy largely recovering, the StrategicCFO360 CFO Confidence Index shows CFOs are ready to take a more bullish stance.
The CFO Confidence Index, measured after the election, found that around half of finance leaders plan to increase capital spending (the highest percentage since Q1 2022) and increase headcount over the next 12 months. However, despite this optimism, 73% of CFOs also acknowledge that operating expenses will also be higher.
Success depends on how well CFOs manage three familiar areas: people, operational efficiency, and risk. To dig deeper into the smartest approaches to next year's challenges, we spoke with two of Protiviti's managing directors, Sean Seasongood, head of finance and performance management, and the company's human resources advisor and organizational transformation leader. We spoke to Fran Maxwell, the division's global leader.
The ability to attract, develop, and retain top talent, manage changing employee expectations, and address succession issues remain key challenges in finance. What do you think is the driving force behind this continued challenge?
Fran Maxwell: There are several driving factors. First, there are more jobs, or demand, to fill those jobs than there is a supply of people. It has become exponentially more difficult for organizations to find talent with in-demand skill sets.
Second, organizations are competing against traditional and non-traditional competitors for talent. The concept of a 9-to-5 job is becoming less and less appealing to some people, especially the younger generation. They can support themselves financially through non-traditional means, such as income from YouTube channels and other social media, or gig jobs such as driving for Lyft or Uber. Those jobs are more flexible.
How are you working with CFOs to address workforce shortages?
maxwell: Our approach starts with understanding what skills they already have within the organization. Regardless of department, most leaders don't fully recognize the skills and experience of their teams. Next, identify the skills you need to achieve your short- and medium-term business goals.
Finally, determine the most efficient and effective way to acquire that talent. We also help organizations create compelling reasons for talent to join the organization. Organizations can no longer use “competitive pay and benefits” as a differentiator. They need a well-thought-out and unique employee value proposition.
How can CFOs leverage new technology to automate more tasks and reduce staff time spent on boring tasks?
sean season good: CFOs are considering many new technologies, including AI, RPA, cloud computing, and blockchain. One area that has not been adequately considered is making the most of a company's existing investment in an ERP platform.
Often overlooked, ERP platforms can help organizations unlock automation opportunities within their financial processes. There are many benefits to integrating ERP with other systems and using advanced ERP systems to consolidate various financial processes into a single platform. Benefits include reduced need for manual data transfer and improved data accuracy.
Regarding new technology, we have been evaluating how to effectively implement new software tools. The use case in finance is strong and very convincing.
RPA can handle repetitive, rules-based tasks such as data entry, invoice processing, and reconciliation, reducing manual workload and minimizing errors. When properly deployed and controlled, AI-powered tools can automatically generate reports and insights, reducing time spent on manual preparation and analysis.
Finally, blockchain has the potential to provide a secure and transparent way to record transactions, reducing time spent on audits and compliance checks.
The geopolitical, economic, political, and social risk environment is changing. How will CFOs adapt?
good season: In times of uncertainty, CFOs tend to strengthen their capital base and emphasize liquidity. Cash remains “king” and maintaining strong liquidity reduces the impact of economic and market fluctuations. As we expect uncertainty to continue for the foreseeable future, we are working with our CFO to implement rigorous cost control measures with a focus on continuous monitoring and improving operational efficiency.
We advise our clients not to be event-driven. Instead, the focus should be on continued operational suitability, which better represents the new standard. Leading CFOs conduct scenario planning exercises to anticipate potential disruptions and develop contingency plans.
We recommend that CFOs regularly update their risk management frameworks to include geopolitical, economic, and social risks as part of their organization's governance. Cybersecurity measures must be proactively strengthened to protect against the growing threats associated with geopolitical tensions.
Finally, CFOs have moved beyond their traditional focus on financial reporting, capital management, and forecasting to become stewards who keep their organizations focused on customer experience. This includes deploying data analytics to gain deeper insights into customer behavior and preferences, allowing you to respond nimbly to market changes.
