By John Hintze
How can treasury departments better serve executives in their careers and dissuade them from seeking employmentelsewhere?
As the unemployment rate falls, demand increases for specializedskills such as those prevalent among treasury executives.But even the biggest corporate treasury departments arerelatively small compared to a company’s other units; so how tofurther those executives’ career paths and dissuade them fromseeking that next step forward at another compelling functionwithin the company or worse, a competitor?
Companies have long faced that conundrum. The issuebubbled to the surface at a recent NeuGroup AssistantTreasurers’ Group of Thirty (AT30) meeting, where membersdiscussed how years of acquisitions have made control functionssuch as treasury and audit more complex. In addition,automating and outsourcing the more mundane activities hasalso elevated treasury executives’ strategic importance.
Rotation and development programs have been the traditionalway to broaden and advance employees’ experience, anda poll of executives attending the AT30 meeting in May foundthat 57% reported having such programs, while another 19%reported informal versions. Comments from survey respondents,however, suggested that companies’ formal programsoften don’t include treasury, with many programs targeted atlower level staff and not mandatory.
A major challenge mentioned by meeting attendees wasletting experienced people go. However, treasury staff memberswho enjoy their work and show little interest in moving onalso presented a quandary. The assistant treasurer of a majorindustrial company noted 20-year treasury veterans. “So it’shard to find places for the next generation to go,” he said.
Another said his healthcare company’s slowing growth nolonger provided a “rising tide,” in which treasury expanded withthe company and new senior positions could be created.
Treasury typically expands at a much slower rate than businessunits, especially as companies continue to adopt treasuryworkstations and other automation technology. Indeed, thetrend over the last few years to shrink treasury staff continues,with the treasury executive of an $8 billion consumer productscompany noting his department’s voracious appetite fortechnology has shrunk the staff to three.
That may be an extreme example, but even large treasuries,perhaps numbering as many as 50 employees at headquartersand another 50 stationed overseas, provide only rare opportunitiesfor advancement compared to much larger business units.Nevertheless, treasury employees still need a path forward.
Tim Hird, executive director of Robert Half ManagementResources, noted the “deep, technical expertise” required intreasury, similar to other control functions such as accountingand risk, and that unless companies proactively support careerprogression programs, such specialists can get pigeonholed.On the flip side, he added, those skills are in high demand in themarketplace. Offering such programs, he said, is critical tohiring talented executives and retaining them, and the planmust be discussed regularly and frequently, through formaland informal channels.
“What do people want and what are their priorities? Andwhat gaps do they have in their skill sets that they need to fill toget ready for that next move?” Mr. Hird said, adding that suchdiscussions don’t have to be formal. “As long as career paths aretalked about regularly, and managers can show staff how otheremployees have progressed, that’s often enough to getstarted,” he said.
Such progression may not necessarily involve climbing tothe next rung of the treasury ladder. Some increase in monetarycompensation is typically included, but broadening treasuryexecutives’ roles as strategists in the company and increasingtheir soft skills and influence can also be effective incentives.
“One of the great opportunities for organizations is toidentify special projects and initiatives that they’re running, andencourage people to work outside their technical areas onthose projects,” Mr. Hird said. “I think that’s as impactful asrotating people within treasury, because you’re broadeningtheir exposure to the company.”
Mr. Hird said such projects will vary by industry andcompany, but merger integrations provide opportunities, orbusiness improvement initiatives. Additionally, these outsidetreasuryprojects enable executives to broaden and improvetheir skills sets, which in some cases can substitute forfinancial compensation.
At the AT30 meeting, one member treasurer discussed farmingout treasury staff to other parts of the company, includingbusiness units, an approach that enlightens both departmentsabout each other’s functions. “One challenge we have,” said theassistant treasurer, “is making sure we have the right balancebetween treasury people who really know the function and thepeople we bring in from the outside to train, and who can also bring in new ideas.”
Daniel Carmody, head of treasury consulting firmTreaSolutions and a faculty member at Northwestern University,said these exchanges are a way of expanding executives’knowledge, to provide treasury with a more holistic perspectivewhen they return. Or the executive may discover he or sheis more compatible with another department, such as IT, andprefer to stay there, creating the opportunity for a promotionwithin treasury.
Generally speaking, Mr. Carmody said, senior level treasuryexecutives are the ones to move outside the control functionsto a business unit, since they’re typically moving to providestrategic advice.
Bhushan Sethi, financial services people and organizationpractice lead at PwC, said one of the biggest challenges largeorganizations face is moving people around control functions,given the scarcity of such talent. One option, he said, is to createa “career path” in which several finance related functions areplaced in a group, and staff can move between those functions.Alternatively, organizations can establish “resource pools,” inwhich staff with specialized skills can perform them acrossdifferent functions.
“People who focus on elements of risk or data analytics, orwith regulatory expertise, can be used across functions such astreasury, risk management and even business units,” Mr. Sethisaid. “Because there’s such a scarcity of talent in these specialistareas, it can be a way to retain people as well as leverage scarcetalent in reusable ways across organizations.”
Mr. Sethi noted that he focuses primarily on financialservices firms, which may have greater crossover skills betweendepartments in areas like foreign exchange and risk.Nevertheless, the concepts should be applicable in large corporates,he said, adding that, “It’s really asking, ‘What are the capabilitieswe need to execute certain job roles and how do weaccess people who have those capabilities in many differentfunctions—from finance to risk, risk to compliance, etc.—andhave a career path around that?’”
Programs like this may look good on paper, but top managementmust voice support for them, since department leadersnaturally want to hold on to their best talent. “Unless top executives,meaning the CFOs and CEO, and the heads of compliance,risk, etc., actually buy into it—that we’re going to be thinkingabout this concept of enterprise talent as opposed to finance orrisk talent—then it probably won’t succeed,” Mr. Sethi said.
Whether treasury staff leaves for another department oranother company, the treasury department must thoroughlydocument each staff member’s responsibilities andrequirements, to effectively replace that person.
“Many times there’s a difference between the official jobdescription that human resources might have and whattreasury personnel are doing day in and day out, so makingsure there are no job responsibility gaps can help maintaintreasury structure in an efficient manner,” said Mr. Carmody.
Likewise, having a treasury cross-training program in placecan be beneficial when someone leaves the department, sinceanother staff member, assuming he or she is qualified, can stepin to perform the function. Mr. Hird noted that there’s a long listof nonfinancial incentives that can replace traditional promotions.Broadening skills sets is one, but other employees mayhave a hunger for new technology, improving the companyculture, work-life balance or short commutes.
“Employees will often decide to stay at a company or join anew one based on those nonmonetary components, especiallyif there’s a compensation adjustment but it’s relativelysmall,” Mr. Hird said. “The important thing is that organizationshave these options for employees, and they’re talking aboutthem regularly, both in the hiring process and through regularcareer discussions.”