By Ted Howard and Julie Zawacki-Lucci
Sure, technology can make treasuries more efficient. But don’t forget the people involved: They must be happy and know they have a future.
The task of making treasury more efficient over the past few years has been assigned to technology but according to feedback from NeuGroup peer groups, culture is a surprisingly potent factor when it comes to making treasury run smoothly. Add to this a solid structure, and things go even smoother. But the people you have on the team matter, whether it’s a team of two or 200. Therefore, if you have two or 200 unhappy treasury team members, chances are your process will have a lot of hiccups and it could be stunting the outlook. The Peter Drucker maxim that “Culture eats strategy for breakfast” hasn’t resonated for many years for nothing. It’s quite true.
Recent presentations at NeuGroup meetings bear this out. Two such presentations, by a large treasury and a very small one, both revealed the importance of managing people in order to build efficiency and effectiveness, and drive innovation in line with their companies’ shifting business objectives. This included helping foster the development of skills in project management, leadership, communication and presentation, along with technology, data science and application building, in order to enrich the culture or their treasury teams.
Meeting discussions also showed that while there are many different ways to structure a treasury organization, making that structure fit with the number of FTEs and the attitude of the team was important. This means adjusting to whether you have generalists or specialists or have low turnover or high turnover.
Culture drives strategy and mission
One member’s recent presentation takes the Drucker maxim as gospel. This company builds empowerment in treasury by treating it as a strategic business partner, which in turn has created a very strong treasury culture. And this has been especially top of mind as this company shifts its business goals. What is strengthening treasury’s culture is that it is included in the evolution of the company. And it helps advance this treasury’s mission to be the world’s best treasury organization; one that delivers outstanding shareholder value through innovative management of financial assets, has unquestioned experts who partner effectively with the business, and protects company assets through efficient and effective risk management.
At a recent Assistant Treasurers’ Group of Thirty meeting, one member detailed how the assistant treasurers in the department are responsible for different pieces of the operation, i.e., trading and investments, corporate finance, treasury operations, and risk and strategy, each with its main goal aligned with treasury’s overall mission: serve the parent company’s business and finance teams; optimize the parent’s balance sheet; and protect the company’s financial assets.
The pursuit of happiness
What can also make treasury run smoothly as a culture is happiness, as one member of the Tech20 outlined. The way this treasury sees it, there is happiness knowing you’re moving toward your potential. So the goal has been to build a happy workplace, which means providing challenging and exciting career opportunities, embracing diversity and inclusion, and rewarding superb execution and breakthrough thinking.
To foster a happy organization, leadership must measure the team’s organizational health, which this treasury does with quarterly surveys of its staff worldwide. The results are aggregated into a happiness index that treasury monitors closely. Questions on satisfaction and potential advancement can then help in creating the optimal treasury structure or adjust it if it is undergoing structural change.
There will be structural change
It’s been all over the news that cities like San Francisco and Seattle are chafing under the tech-money-driven boom in real estate prices. Thus, companies must prepare for the transition to remote workers. Costs in the Bay Area, Seattle and other areas where tech companies are based continue to increase exponentially, which is forcing companies to search further afield for cheaper real estate and talent. For example, in 2016 Apple started moving some of its engineering division to Austin, Texas, specifically in search of cheaper digs and more talent. Therefore, all treasurers should prepare for more remote employees who will be working in teams outside of HQ or even from home in remote locations.
This will result in a change in management approach and a greater effort to maintain team cohesion and culture, according to discussions at several meetings. As pressure builds to put treasury staff outside of HQ, treasurers have to consider the minimum team size needs for remote locations. Also, since often the best treasury talent is located by the treasurer through their network, how should treasurers find talent in places where they don’t have a network? Another member noted that she has built-in communication tools (including Slack) and web conferencing and planned regular on-site HQ visits by remote workers to promote team collaboration and shared culture.
The push for remote team-building and collaboration should not preclude those locations situated offshore. Going forward treasury will have to blend with the rest of the organization as it expands globally and not be afraid to let treasury people offshore move up from lower-tier jobs. Treasury leaders must be comfortable allowing someone in India to do some FX, for example. Alternatively, leaders can rotate people, even temporarily, to allow those who like to travel to swap jobs and locations for a month. This helps along processes and cross-fertilizes best practices globally. “This generates a huge ROI,” one member says, “and it makes people happy.” If treasury has effective processes, policies and controls, it can earn the trust to change its organization to what works best.
Lean treasuries need support
The dark side of structural change is that it could be a result of budget. Treasury at most companies is already a fairly lean operation, so as those lean teams prepare for major transformations, they should push the CFO for some leeway on those across-the-board cuts in staffing or budgets that happen, sometimes too frequently.
They also may need a new appreciation for the ROI on treasury staff, since most of the value treasury adds is below the line (or doesn’t exactly match up on the P&L, such as effective FX hedges). One of the biggest challenges for a lean treasury is finding time for special projects outside of a staff member’s regular daily work. Examples include managing the implementation of a new treasury management system or starting a new commercial paper program. These provide valuable experience to the employees, but at some point, they reach a breaking point. In addition, there is a concern that there will be no time for staff to pursue development opportunities to get better at the areas they need to work on, such as change management, innovation and leadership.
The digital age and its fallout
Beyond structure, the digital age is influencing treasury’s recalibration of the relative value of personnel with wide-ranging expertise and those who are specialists in discrete finance disciplines like FX or cash management. This adjustment is taking place amid more rapid turnover in the treasurer role than in decades past. There is some consensus that becoming more of a high-performing generalist than a narrow specialist is the smart way to fashion a career: Not only will robotic process automation (RPA) and artificial intelligence take mundane, transactional duties out of the hands of humans, but machines will also learn to analyze data and suggest or perform actions with increasing intelligence and could start to outperform treasury specialists. Rotations through treasury will become more important as the need for people with strategic skills and instincts increases.
In the end, while treasuries are trying to foster ever more efficiency within the function, they cannot lose sight of the culture and the need to make it one of learning, evolving, and happiness. Nor can they ignore that it all must tie back to digitalization.