Stephen Koss | 9 November 2022
Stephen Koss, EY Asia-Pacific Workforce Advisory Leader.
“Few organizations have 100% of the skills they need. But they are paying for 100% of the skills they have. This is why the CFO must take a bigger role in talent management strategy,” says EY Asia-Pacific Workforce Advisory Leader Stephen Koss.
People are the driving force behind productivity and financial performance, and in most organizations they are the largest single component of operating costs. And yet few chief financial officers take an active role in talent management. This must change.
Most companies are struggling to source the right skills. Advancing technology and automation had exposed huge skills gaps pre-COVID-19. But the pandemic put the pedal to the metal, accelerating demand for tech skills, recalibrating the world of work, and fueling the Great Resignation. Unsurprisingly, 70% of respondents to EY 2022 Tech Horizon report told us the pandemic has increased the competition for skilled workers. The World Economic Forum estimates that 150 million new technology jobs will be created over the next five years. By 2030, 77% of jobs will require digital skills.
The post-pandemic global scramble for talent is now reshaping how businesses structure their day-to-day operations. Everything from where work gets done to who does it is on the table for discussion – and the CFO must be central to that discussion.
It is easy to see why some CFOs have been reluctant to step into the skills space. It’s understandable that number crunchers, accustomed with dealing with black and white facts, like to leave the subtle nuances of people management to the HR department.
But today’s CFO fulfills more than a finance function. The best CFOs are forward-looking leaders who understand the business big picture as well as the day-to-day operating detail. A strong grasp of the talent domain mission hence becomes critical.
The Talent Ecosystem Emerges
A new kind of worker has emerged from the pandemic with a crystal-clear view of their career aspirations, and where and how they want to work. EY 2021 Work Reimagined Employee Survey found that 54% of employees would consider quitting if not allowed a flexible working environment, for instance.
Gig working, contracting and hybrid work environments can be a competitive advantage in the war for talent. When combined with automation, upskilling and managed services, a talent ecosystem approach can create a ‘mosaic’ of employment types that matches skills and aspirations to work environments.
Instead of one-size fits all, a talent ecosystem can create previously unimagined levels of flexibility. But that comes with complexity that cannot be untangled without multiple business leaders working together.
Take one inspiring example from an Australian company which undertook talent mapping analysis to uncover untapped talent. The process found software engineers were drawn to the lifestyle location of the Gold Coast. In response, a new Gold Coast tech hub was established within easy reach of six universities to draw in recent graduates and experienced engineers looking for lifestyle. The solution depended on seamless collaboration between leaders across the business, especially the finance and human resources teams.
Shift To Skills-based Hiring
The rise of remote work, the emergence of platform companies and the gig economy have also driven a shift to skills-based hiring. Skills are the currency we use to understand the value that people bring to an organization. When that organization doesn’t have the right skills, it is not extracting the full value from the workforce – and people aren’t able to live up to their potential. Today’s CFO is on the hunt to eliminate that value gap.
But do you have the insight you need to make informed decisions? What are the critical skills clusters for your business? What skills are best for vertical or lateral moves? What skills could catapult people into new roles? These questions aren’t just for the HR department.
New diagnostic and data analytics tools are emerging to help CFOs answer these questions. EY teams have developed an AI-powered solution called Skills Foundry to support this process. The Skills Foundry features a live heat map to help business decision-makers understand the supply and demand dynamics of skills in their organization. There’s a content aggregator to train teams at speed and scale, as well as a secure digital record of employees’ skills and experiences so the right person can be deployed to the right opportunity.
Real financial value can be realized by gaining visibility of your current skills. However, most businesses do not have an accurate and up-to-date inventory of their people skills. This is like running a full warehouse of mystery stock. The number of financial analysts in your department is not as important as whether those people have the skills to tackle the tasks on the horizon. With an understanding of the skills on the books and those that are missing, as well as the hot skills that will be hard to reach and those declining in demand, your business can develop a fully funded targeted talent strategy based on data, not guess work.
It may sound like a contradiction when we are diving deep into the world of digital and data, automation and artificial intelligence, but humans must be at the center of every business transformation. In fact, EY teams’ recent research collaboration with the University of Oxford’s Saïd Business School has found that focusing on human factors can increase the likelihood of transformation success by 2.6 times. CFOs are ultimately responsible for securing the funds for any talent acquisition strategy. It therefore makes sense for the CFO to be attuned to the vast array of human capital management challenges, from talent pipeline to productivity tools, office location to offshoring.
But ultimately the role of every CFO is to measure and manage value. People are every organization’s biggest asset and value generator. If human capital is at the heart of your enterprise then you, as CFO, must take a lead role in talent management to uncover new value.
The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organization or its member firms.