It's tempting to think of finance directors (FDs) and human resource directors (HRDs) as polar opposites. One looks after the numbers; the other looks after the people. One deals with facts and certainties; the other with human beings and behaviours.
But talking to FDs about their key leadership challenges shatters that false divide: few point to the "traditional" elements of the finance role. Instead, given the tension of being accountable for balancing the books, without having control over the main drivers of cost and profitability, they talk about issues more commonly associated with their HR colleagues.
For this reason, people are central to the FD's role. This is especially the case for FDs in the public sector and labour intensive industries like retail and the service sector. And, for that reason, focusing on the "people" priorities is among the most important work the modern-day FD can do. To do that successfully, there are three people areas FDs can't afford to ignore:
Workforce planning
The nature of the workforce is changing – making it difficult to plan too far ahead. Deloitte's survey of millennials showed that businesses, particularly in developed markets, will need to make significant changes to attract and retain tomorrow's workers. Just 28% of our respondents said their current organisation was making use of their skills and only 35% said they would move to a large business if they changed job.
When you combine this with recent data from the Office for National Statistics (ONS), showing that private sector jobs are expanding and real incomes are rising at their fastest rate for six years, it's clear that a workforce pinch point is on the horizon.
To combat this challenge, FDs and HR professionals should work together on a joint strategy for workforce planning. This will help them avoid any nasty surprises, such as dramatic spikes in the use of expensive contractors to cover unplanned skills gaps. It also gives finance a much clearer view of the medium- and long-term costs of their workforce.
Commercial skills
FDs also have an educational role to play. Across many different sectors, commercial skills are becoming increasingly important throughout organisations – it's no longer considered the sole preserve of the finance function. Leading FDs should see this as an opportunity to use their expertise and influence in developing financial and commercial skills in every part of their businesses.
There will always be a role for deep technical expertise in finance: in many cases that's the right place for the specialist knowledge. But making financial literacy and commercial acumen a core capability across an organisation will only enhance the importance and effectiveness of the finance function – it doesn't need to be seen as a threat.
Leadership at all levels
The best finance leaders are continually re-inventing their organisations to meet changing demands. Most leading finance functions have moved to a shared services and business partnering model, and in many cases this is working well.
The challenge for FDs is to build a pipeline of talent by developing functional leadership at all levels. Not only does this offer a career path for their best people, but it provides the business with a set of future leaders equipped with the necessary skills, expertise and experience.
As the finance function specialises, there is a risk is that finance people in non-business partnering roles become disconnected from the company. But by strengthening the bond between finance and the wider business, it enhances the credibility and value of the function and encourages the highest performers to build their careers there.
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