Futureproofing your finance team

With increasing automation, how can firms attract and retain the best?


Company finance teams face not so much the winds of change as a gale – and the resulting turbulence throws up significant challenges for those charged with decisions on organisational structure and recruitment.

What sort of people will be needed in the years to come and how should they be organised? Once on board, how can they be persuaded to stay? And where should the balance between flexible generalists on one hand, and specialists with deep knowledge of their subjects on the other, be struck?

Above all, what are the big changes that will be wrought by accelerating technology?

Let’s start by noting the paradoxical position in which many finance teams currently find themselves. A good proportion of their most loyal and dedicated members are probably not the sort of people for whom they will have a major requirement in future, while the talent they need to attract is increasingly to be found among young people with an aversion to working for large organisations.

Bridging the generational divide

There is a generational divide between the Nintendo generation and their forebears. Their differences go some way beyond the obvious point that pre-Nintendos are comfortable with smartphones, but not necessarily with everything that comes with the latest communications technology, while the Nintendo generation has been acclimatised from birth to a landscape of mobile apps and social media. It is a divide seen in the divergent skills and attitudes that these different generations bring to the world of work.

To take one example, more established finance team members are likely to have progressed in their careers at a time when legacy IT systems – accumulated in overlapping layers over the decades – needed to be managed in order to make the system work. This gives them (albeit subconsciously) an interest in maintaining the status quo and in creating obstacles to replacing the legacy systems with completely new and fully compatible IT.

‘Adhocracy is a much more flexible approach where teams combine and recombine to switch rapidly from one task to another’

They may point out that the value of the corporate brand is of such importance that serious reputational damage could result should the new systems not work properly, whereas the legacy systems are tried and tested. Such IT people could (and often do) argue for a gradual rather than an abrupt transition from legacy to new systems.

In some cases they may be right to do so, but their ongoing professional stake in the status quo surely creates at least a potential conflict of interest.

Such a mindset is anathema to the Nintendo generation. They find large companies too slow and cumbersome at the best of times and are horrified at the idea that finance team members may be slowing the advance of technology for what could be narrow personal reasons.

Younger people – of the type that is essential for the future-proofing of finance teams – have a start-up mentality. This translates into a workplace that is shorn of committees, rigid departmental boundaries and large numbers of compliance staff.

The good news here is that large businesses are adapting to make themselves more appealing to the brightest and the best potential team members.

For example, in the past, talented graduate recruits would spend their first year on mundane duties such as photocopying. Now the number of such jobs has been reduced and they can be given more challenging tasks. This is all to the good, as younger people are used to solving problems quickly and feeling good about the achievement afterwards.

And, as time goes on, they will increasingly need to work in a culture that welcomes these traits and encourages them. Google’s HQ in London provides something of a model in this regard. People dress informally and have a great deal of freedom to choose where to sit and work. There is a gym and table-tennis and the food is free.

This Silicon Valley culture is very different from a New York or Chicago business culture and, while it may not always be appropriate for it to be adopted wholesale, I would suggest that more and more large organisations will offer their finance teams a blend of the two.

Youth is no protection

However, the future domain of finance teams does not belong exclusively to the young and it is not just traditional team members whose prospects are cloudy. Youngsters are also being challenged by technological change.

Consider the “pitch books” put together by banks and others in financial services that in effect tell potential business clients, “We can raise the money you are looking for without spoiling your credit rating.” Traditionally, younger staff members would work on these pitch books, trawling through data about the company in question and looking at its debt profile and its credit rankings.

Today, however, automated systems have largely dispensed with the need for this analyst generation of 22, 23 and 24 year olds. By contrast, senior people are still in demand because they operate at the relationship level. Moreover, senior people are more likely to be able to undertake aspects of the spectrum of non-traditional tasks that finance teams are increasingly being asked to perform, ranging from measuring corporate performance to identifying new sources of value creation. Quite simply, junior recruits will not have the necessary experience to carry out these roles, while older recruits from other companies may bring these abilities with them. That said, they may still need to go back to business school for reskilling, being sure to work out in advance which skills are relevant for their business.

Across the age range, retraining and reskilling will have an important role to play for finance team members facing not only technological disruption but changing expectations of what they can and should deliver. However, in their enthusiasm for re-equipping people to face the future, managers should remember the adage that it is difficult to teach an old dog new tricks.

This was evidenced when the London International Financial Futures and Options Exchange switched from floor trading to dealing via computer screens. Established traders, whose skills lay in face-to-face trading, making split-second judgments of other traders by gauging their expressions, were often quite unable to make the change to the very different world of screen trading.

Automation and adhocracy

Nonetheless, much good will come out of what will be a relentless process of automation. Repetitive, low-value-added, low-creativity work will increasingly be automated. Think in terms of a sous chef and a head chef. The former’s work in terms of chopping and processing food may be automated, but it is much harder to automate the latter’s role in delivering the final outcome. Who, given the choice, would not prefer to be a head chef rather than a line cook?

Allied with this will be a reduction in bureaucracy and an increasing emphasis on “adhocracy”, a much more flexible approach where teams combine and recombine to switch rapidly from one task to another.

It may be objected that these nimble footed operators will lack the deep knowledge of specific business areas that is built up by more traditional, dedicated specialists within the finance team. But this need not be the case – and, indeed, it should be possible to enjoy the best of both worlds.

Part of the deep knowledge – the objective rather than subjective aspects of it – can be built into the organisational structure, allowing all team members to make use of it. For this process to be successful, teams will need a conceptual framework to work in.

With regard to the more subjective aspects of deep knowledge, it should be possible to employ specialists at a lower level, whose expertise can be drawn on. Senior management’s job will be to combine these different people in such a way as to provide solutions. In its recent report New technology, new rules: Reimagining the modern finance workforce, McKinsey suggested that future finance teams should comprise four types of professional: core transaction people, supported by automated processes; specialists in particular areas, such as reporting and data engineering; “value leaders” to handle challenges and opportunities across the company; and “problem-solvers”, who would be assigned to specific challenges across the business at short notice.

The logic is valid but I would suggest there should be three and a half rather than four categories, because problem solvers and value creators are linked, not separate. All these categories of people are needed and it makes perfect sense that they be integrated.

Elsewhere, there have been suggestions that the entire notion of a “finance team” may become redundant and that alternative forms should be sought. To end on a heartening note for team members, I suggest that, despite the huge changes underway, their functions will always need to be delivered, one way or another.

In light of that, why call your finance team anything else?

Comments (1)

Prof.Salam Al Shereida 3 years, 10 months and 1 days ago

Thank you Narayan. This is awesome! You're awesome! Way to go! I have got a feeling this is only the beginning of even more great things to come for you! Well done,well deserved.