“Survive until 2025” was a phrase that started in Hollywood and was then borrowed by finance people when inflation took off in the U.S. and they pinned their hopes on tighter monetary policy.
Now that it’s almost 2025, it may be time to change the battle cry. With inflation nearing the Federal Reserve’s target rate and the U.S. economy largely resilient, StrategicCFO360’s CFO Confidence Index shows CFOs ready to take a more bullish stance.
The CFO Confidence Index, measured post-election, found about half of finance chiefs set to increase capital expenditures (the highest percentage since Q1 of 2022) and raise headcount in the next 12 months. However, mixed in with all that optimism is the recognition by 73 percent of the CFOs that, once again, operating expenses will be higher, too.
Success will hinge on how well CFOs manage three familiar areas: talent, operational efficiencies and risk. To dive deeper into the smartest approaches to next year’s challenges, we spoke to two managing directors at Protiviti: Shawn Seasongood, a leader in the finance and performance management segment, and Fran Maxwell, global lead of the firm’s people advisory and organizational change segment.
The ability to attract, develop and retain top talent, manage shifts in employee expectations and address succession challenges is still high on the agenda for finance. What do you view as the drivers of that continuing challenge?
Fran Maxwell: There are a couple of drivers—first, there are more jobs—i.e., demand—than there are people—supply—to fill those jobs. It has become exponentially more challenging for organizations to find people with high-demand skill sets.
Second, organizations are going up against traditional and nontraditional competitors for talent. The concept of a nine-to-five job is increasingly unappealing to some people, especially the younger generations. They can support themselves financially through nontraditional means, such as revenue from a YouTube channel or other social media outlet, or with a gig job, like driving for Lyft or Uber. Those jobs are more flexible.
How are you working with CFOs to counteract workforce talent gaps?
Maxwell: Our approach starts with understanding what skills they already have within their organizations. Regardless of the function, most leaders aren’t fully aware of their teams’ skills and experiences. We then identify the skills they may need to meet short- and mid-term business objectives.
Finally, we determine the most efficient and effective way to obtain that talent. We also help organizations develop a compelling reason for talent to join their organization. No longer can organizations use “competitive pay and benefits” as a differentiator. They need a well-thought-out, unique employee value proposition.
How can CFOs leverage emerging technologies to automate more tasks and reduce staff hours spent on unrewarding work?
Shawn Seasongood: CFOs are exploring many new technologies—AI, RPA, cloud computing and blockchain, among others. One under-explored area is maximizing existing investment in a company’s ERP platform.
Sometimes overlooked, an ERP platform can help organizations unlock automation opportunities within finance processes. There are many benefits to integrating an ERP with other systems or using advanced ERP systems to integrate various financial processes into a single platform. The benefits include reducing the need for manual data transfers and improving data accuracy.
For emerging technologies, we have worked through assessments on how to deploy new software tools effectively. The use cases within finance are strong and very compelling.
RPA can handle repetitive and rule-based tasks such as data entry, invoice processing and reconciliation, reducing manual workloads and minimizing errors. AI-powered tools, when deployed correctly and with the proper controls, can generate reports and insights automatically, reducing the time spent on manual preparation and analysis.
Finally, blockchain has the potential to provide a secure and transparent way to record transactions, reducing the time spent on audits and compliance checks.
The geopolitical, economic, political and social risk environments are shifting. How do CFOs adapt?
Seasongood: In times of uncertainty, CFOs tend to strengthen their capital position and focus on liquidity. Cash is still ” king,” and maintaining strong liquidity mitigates the effects of economic and market volatility. We feel that uncertainty will likely persist in the near term, so we are working with CFOs to implement stringent cost-control measures emphasizing continuous monitoring and operational efficiency improvements.
We advise clients not to be event-driven; instead, their focus should be continuous operational fitness—more representative of the new norm. Leading CFOs conduct scenario-planning exercises to anticipate potential disruptions and develop contingency plans.
As part of an organization’s governance, we encourage CFOs to regularly update risk management frameworks to include geopolitical, economic and social risks. They need to actively strengthen cybersecurity measures to protect against increasing threats linked to geopolitical tensions.
Finally, beyond the traditional focus of financial reporting, capital management and forecasting, CFOs are now executive stewards of keeping the organization focused on the customer experience. That includes deploying data analytics to gain deeper insights into customer behavior and preferences, enabling agile responses to market changes.
