The Talent Challenge

By Ted Howard

A broad theme for NeuGroups in 2018 has been talent: fostering, cultivating, recognizing and most importantly, retaining it. 

Managing talent at multinationals has been a popular topic across NeuGroups over the last several years, and 2018 has been no different. However, with the unemployment rate creeping lower, the pressure to retain top talent will likely increase. Better pay, retention bonuses, promises of a brighter future, rotations, sabbaticals, unofficial vacation days and free lunch have rarely prevented people—or the good people you want—from leaving eventually.

As a result, talent management is growing in importance as companies realize that talent is critical to a successful organization. A recent cross-group poll showed the topic has risen in importance over the last year—surpassing cash management, hedging, supply chain and other notable treasury topics. Yet, as a recent Deloitte white paper points out, “few large companies have cultures of internal mobility that can help meet skill shortages, prepare the next generation of leaders, and fuel a virtuous talent cycle.”

So at the moment, it’s an unfortunate fact that the type of talent capable of taking treasury to the next level is scarce and competition to attract it remains tough. Add to this the fact that treasury must also keep costs constant (or reduce them), forcing organizational changes like relocating certain functions to lower-cost areas.

No one is throwing up their hands just yet, however. One member of NeuGroup’s Tech20 Treasurers’ Peer Group recently shared with other members that his company has formed a subcommittee that is surveying roles and responsibilities in treasury and finance to better assess how to scale capabilities to support growth and ongoing globalization.

Rotating people through treasury to achieve a cross-fertilization of skills and develop a solid depth chart has also been a popular strategy, which carries through to rotating high-potential employees to cultivate deeper experience for senior finance leadership. Another peer group member noted that the first 10 minutes of every CFO staff meeting focuses on talent. This includes reviews of who is excelling at what, who needs to build skills in what area and where people might be moved next. Another member said her group emphasizes identifying talent to develop among those working under the person currently in that position and also works with its banks to help identify talent and talent deficits.

In NeuGroup’s AsiaCFO group, two-thirds of respondents in the group’s H1 pre-meeting survey said they have created a structured succession planning program, while more than half actively practice structured mentoring and offer so-called “career maps and compasses.” These are HR resources to guide employees on the roles, jobs and competencies they need to achieve their desired job level in a three- to five-year time horizon. A structured succession planning program taken together with career maps will enable managers and employees to actively develop their careers. Structured mentoring programs are likely to boost team spirit, while creating a winning team culture.

But this can backfire so managers must be careful. As Deloitte points out in its white paper, many managers will “hoard” talent, which eventually leads to an exit. “[T]he reality is that a culture of talent hoarding can lead to a culture of talent loss: When you block people from moving up within an organization, they often simply go elsewhere. This problem persists at all levels, and the risk of losing high-potential workers is acute with today’s youngest workers.”

As an example, Deloitte points to its own 2016 millennial survey, where slightly less than one-third of millennials “believed their organization was making the most of their skills and experience—a stunning failure to leverage talent given the relationship between workers, strategic execution, and financial performance.” Another Deloitte survey in 2017 found that 38% of millennials “said they plan to leave their organization within the next two years.”

In young companies, inexperience is an issue. In a NeuGroup H1 pre-meeting survey, one member said 50% of the employees at his company had been there two years or less. He added that a very flexible rotation policy meant treasury can lose anyone with 30 days’ notice.

Another feature of young companies with young talent: Employees are very eager and ambitious and at some companies, expect a promotion or to be moved to another department within 12 months. At more mature companies, the expectations are more in the 18- to 24-months range for lower positions and 24 months-plus for managers and above.

As one member of NeuGroup’s Internal Audit Peer Group pointed out, young employees at her company have very high expectations for advancement even while lacking the high level of experience needed. This member said she suggests to younger employees that they can become future leaders if they “learn, do, innovate and improve.” And then, before becoming a leader, they need to effectively answer the question: What have you changed to make the business better?

In the end, it’s important that organizations have options for employees—young, old and in between—and that they’re talking about them, and more importantly to them regularly, both in the hiring process and through regular career discussions.