Can the finance function add value to talent?

17th February 2014

The short answer is yes; but some of the long answers are well worth exploring, as they highlight the widening influence of finance and its data-driven approach, as FSN writer Lesley Meall reports

Expectations of the finance function are changing. “What we have seen over the past few years is that the CFO role has expanded beyond traditional finance disciplines to increasingly include a broader business strategy and transformation initiatives,” says John O’Rourke, formerly, vice president of product marketing, Oracle, (now VP marketing at Decisyon) as its study highlights here. Many CFOs are now driving change and fuelling corporate growth, and their direct and indirect influence is adding value to talent not just in the finance function but across the business.

 

 

 

The profession’s data-driven approach and use of analytics is spreading. Software being used ranges from multi-purpose modelling and planning tools such as Anaplan (which focuses on sales, operations and finance), through the workforce analytics capabilities in enterprise tools such as FinancialForce Human Capital Management (which used to be Vana Workforce), to dedicated talent management tools such as those offered by SuccessFactors (an SAP company).

 

How this software is being used to add value to talent varies too. At one end of the spectrum are organisations such as Financial Group Life (FG Life), which is growing the business by using analytics to support its performance-oriented culture; at the other end of the spectrum are organisations such as Black Hills, which is analysing workforce data to unearth insights that will enable it to plan for emerging challenges, where it might otherwise have struggled to survive them.

 

Focusing on intelligence and incentives

Rather than rely on computer-driven predictive analytics for credit scoring, bank FG Life powers its credit scoring with human intelligence. It trains and certifies its sales managers to assign credit scores, then evaluates them based on the effectiveness of their choices. It’s a profitable approach that has enabled the bank to expand, but its bottom-up focus on individual performance has demanded more from its data models than spreadsheet-based budgeting and planning could provide.

 

It opted for a more flexible solution from Anaplan. “Excel limited our planning to territories and office structures,” says Tatiana Vlasova, head of financial management, FG Life. “With Anaplan, models reach down to managers and employees across different versions and dimensions.” Depending on their level of access, employees, managers and executives can check to see how they are performing against individual targets and each other in real time and across a variety of metrics.

“After years of struggling to track our team’s work, Anaplan provides a solution that allows users to zoom in on any aspect of performance,” says Konstantin Malchushkin,  head of strategic development and analysis at FG Life. Access to the metrics has already reinforced the bank’s performance-oriented culture, says Vlasova, and additional applications are being built, such as a sales commission model, that will help the FG Life to bring even more sophistication to its incentivising processes.

Focusing on challenges and solutions

At the other end of the spectrum, wholesale fuels provider Black Hills Corporation is using SuccessFactors Workforce Analytics to gain insights that can improve its decision-making and planning. Like many established companies, Black Hills faces the combined challenges of: an aging workforce, the need for specialized skills, and a long timeline to get employees to the required level of competence – but it took analytics to highlight the scale of the problem and plan the solutions.

 

“Over the next seven years, 24 percent of our workforce will be eligible for retirement,” says chief human resources officer Bob Myers, which will remove an estimated 8,000 years of experience from the workforce. The company has used analytics to model various employee turnover scenarios, to quantify the potential impact, and then it has used this knowledge to proactively address the issues. “The analytics has enabled us to quantify and document the need for talent management strategies,” says Myers.

 

Black Hills used the software to calculate how many employees will retire each year, the types of workers needed to replace them, and where those recruits are most likely to come from, and to then develop, categorise and prioritise 89 action plans to address the potential talent shortage. Myers says: “With the information revealed from the SuccessFactors analytics tool, we are now armed with the knowledge we need to address this issue − before it can impact our business and service levels.”

 

What ifs and maybes

The answer to the question “Can finance can add value to talent seems to be “Yes”, though how it does this seems to depend on many factors: from the software being used, through how it is wielded, to whether the data-driven approach to decision-making is due to the direct or indirect influence of CFOs. But as Oracle’s O’Rourke observes: “There is still scope to expand their influence within the business and further utilize their unique skill set,” and “technology can play an important part”.

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