CFO Chapter 9: Talent Acquisition and Retention
Despite growth never coming about without change, an aspect of stability is always useful to have. This holds true in both financial terms and when applied to the personnel found within a team. As someone who is responsible for both the finances of a company and the people within it, CFOs must therefore be mindful of this balance at all times. This is especially true at this time of year when plans for the coming year are in full swing and individuals often begin to consider where they wish to be working in the future.
With this in mind, for the penultimate CFO Chapter of 2023, let's explore what financial leaders need to consider when impacting a company’s talent strategy.
Why does talent matter to CFOs?
A CFO might hold ultimate responsibility over a company’s finances; however, the actions of everyone within it all contribute to whether a business receives returns or losses. As a result, just like how company culture starts from the top, a company’s attitude to money trickles down from the actions of its CFO. This includes whether people adhere to budgets and if their purchases are informed or frivolous. Most importantly, it also relates to people understanding that due to their salaries, their time is money.
Financial leaders certainly recognise this and as such should make sure that they influence the hiring of individuals who will deliver the greatest return. Ultimately, although personnel can significantly average between 50% and 60% of company spending, it should also be the power behind making it a success.
What costs more – retention or recruitment?
Another reason why CFOs should be proactive in nurturing the right talent is because attracting it is by no means an easy feat. In fact, the average employer in the UK takes 27.5 days and spends £3,000 to hire a new worker. Plus, PWC has estimated that having to rehire a wrong fit can cost an organisation on average between 50% - 150% of the hire’s salary. In contrast, increasing employee engagement boosts profitability by up to 23%.
Evidently, getting talent acquisition right the first time is in the best interests of CFOs.
How is AI impacting hiring?
Driving money into talent acquisition therefore seems like a wise investment for CFOs who have the funds to do so. After all, attaining the services of an individual of merit means that they will be benefiting your company instead of competitors. However, AI entering the workplace and becoming accessible to the general public has introduced a new factor to complicate this seemingly simple equation.
On paper – including those of sci-fi novels – AI has the ability to drastically reduce expenditure on salaries by replacing workers. Given the financial aspect of this dilemma, it is extremely relevant to CFOs. Now, financial leaders must be mindful of whether spending funds on recruitment and salaries is strictly necessary in certain instances.
In addition, AI can screen job applications. CVs might typically only be two pages long but with 118 applicants on average per opening, reviewing all of them is an extremely time-consuming task for HR and hiring managers. However, AI is not always the knight in shining armour that it is perceived to be. Despite having great time-saving abilities, those who deploy AI for this purpose have already witnessed the opposing downsides of this technology. For example, in 2015 Amazon discovered that their self-developed AI recruitment tool was biased towards male hires. In addition, 14 months after a lawsuit was filed against ITutorGroup for discriminating against applicants through the training of their AI recruitment tool, in August 2023 the tutoring company agreed to pay a settlement. The case was founded upon them deliberately training their AI recruitment software to reject women aged over 55 and men aged over 60. This will cost them over $73 million.
Unfortunately, despite its potential to ameliorate some repetitive tasks, AI must therefore come with a warning that its short-term gains could lead to costly court cases and even the expense of inadvertently missing out on overlooked yet exceptional talent. Ultimately, whilst AI is disrupting hiring, related financial ramifications are omnipresent. Senior financial staff must therefore think wisely about how they see AI being an influence in their hiring processes.
Who should CFOs be looking to hire?
Even if CFOs choose to limit AI’s influence over hiring processes, it is impossible to imagine them excluding it entirely from their own department. Finance teams are no strangers to having to deal with time-consuming tasks and high volumes of extremely complex data which can regularly create errors. As a result, over the last few years, automation and AI have been welcomed into this department to relieve staff of these common pains.
With these technologies reaching new heights in terms of sophistication, over the coming years, CFOs will have much to consider when it comes to hiring within their own departments. Automated reconciliation, invoice management and more will all mean that once lengthy, manual tasks can instead be done in seconds by technology.
Whilst this will make financial personnel largely redundant from these activities, it does not mean that they have to be completely subject to requirements within the finance department. In fact, AI and automation offer the opportunity for finance professionals to exercise their skillset in a grander measure. If this materialises, will depend upon the decisions of CFOs. Will they cease hiring to swap people out for AI and save money, or will they use freed-up funds to create new positions which have the inclination to combine their finance skills with strategic thinking?
Hiring the future of finance
The likes of automation and AI can certainly result in savings but no matter what economic climate businesses might find themselves in, CFOs know that growth must always be the long-term aim. As a result, the future of hiring within finance will be about attaining talent with strategic skills.
CFOs themselves have already seen their responsibilities reflect this change due to organisations finding value in them offering widespread input across other departments. Now, they should be looking to embolden this type of additional value by developing and hiring similar skills within their financial departments. A strategic CFO, flanked by finance professionals with a versatile skillset, will do more than just drive the finance function forward, collectively they will also help many other areas of a business through improved forecasting, informing marketing campaigns, and even optimising talent recruitment.
The next chapter
The CFO Chapters for 2023 culminate in the board room to share how the learnings of the previous chapters from across the year can be best communicated where it matters most. Preview the final chapter of 2023 here.