Why does year-end budgeting sometimes feel like a recipe for disaster?
Put multiple stakeholders in the room. Mix in conflicting ideas about everything from sales quotas to capital allocations. Bake with ironclad deadlines, end-of-year fatigue and no margin for error.
Anecdotally, at any rate, that’s how it can play out. And if you’ve been there, you know it’s a scenario where institutional knowledge — for example, the kind of collaboration, communication and alignment that depends on and is lubricated by strong relationships — can be the difference between success and failure. But what if that could be proved?
Let’s start there, unpacking the latest research around FP&A employee tenure. Next, we’ll pivot to look at how organizational leaders are responding — and how they can further tip the scales in their favor down the line.
connecting the dots: FP&A employee tenure and business performance
Unprecedented talent mobility. Zoom towns. The Great Resignation. If you’re an organizational leader these days, you’d have to be either arrogant or clueless not to regard recent human capital trends like these with at least a tinge of worry.
Of course, worrying can be a way to forestall action — and what’s more, few studies have attempted to quantify the connection between retention and business performance specifically in the context of FP&A. Lacking any convincing empirical data, the business case is going to be DOA.
But that’s why this recently released research is noteworthy. The study analyzed the link between FP&A employee tenure and business performance at companies across the board.
What, exactly, is the nature of that link? A quick summary of the findings:
- Organizations that rank in the top quartile for performance have FP&A teams with impressively long tenures: eight years on average.
- But as business performance dips, so does the average length of tenure (although the correlation may well move in the opposite direction). Among FP&A employees at companies clustered around the median for performance, average tenure drops to six years.
- By the time you reach companies in the bottom quartile, the average FP&A employee’s tenure is only four years.
In other words, the average tenure of FP&A employees at top-quartile companies is exactly double that of their bottom-quartile counterparts. That’s a pretty big difference.
How should organizational leaders act on these findings? What can they do to effectively rectify lackluster FP&A retention rates — and see bottom-line improvements in turn? These are vital questions. Yet at many organizations, the current approach does not necessarily inspire confidence, as we’ll see next.
ambivalence in action: FP&A retention in focus
Looking at a recent Gartner survey, there seems to be some ambivalence — if not an outright contradiction — at play in how organizational leaders are looking to bolster employee retention on FP&A teams.
On the one hand, controllers and heads of FP&A appear deeply committed to increasing engagement and reducing attrition among FP&A employees. For example, the overwhelming majority of controllers and heads of FP&A (97%) say they’re much more focused this year on employee engagement and retention than they were in the past. That’s the good news.
On the other hand, in light of ongoing uncertainty and the possibility of business disruption, these same leaders are being asked to engineer wide-ranging reductions in operating costs in order to fund growth. And where will those cost reductions be captured? Out of all areas across the operation, the HR function was identified as the number-two target for budget reductions.
That’s the bad news. And the plan, in a nutshell, seems to be to somehow do more with less. How well that’s going to work out is anyone’s guess.
inside a changing FP&A workforce
Pandemic-inflected budgeting isn’t the only high-level factor likely to impact FP&A hiring outcomes going forward. There’s also the changing composition of the available talent pool to think about.
Notably, at the same time that skilled FP&A talent is hard to come by, the overall FP&A workforce is changing in two distinct ways:
- It continues to get smaller — and is expected to shrink by as much as 43 percent by 2028.
- It’s aging, too. Among the American Institute of Certified Public Accountants’ membership, for example, an estimated three out of four are now eligible for retirement.
- Equally bad, young professionals who do work in FP&A roles right now are eight percent less likely than their peers in other fields to remain in them over the long haul.
Barring dramatic change, therefore, it stands to reason that whatever FP&A hiring pain points companies are experiencing at present, they’re only going to intensify down the road. After all, fewer viable candidates inevitably means increased competition from other employers, so any long-term solution to existing retention challenges is going to require more than simple tactical adjustments like proactively pipelining more candidates.
That just isn’t going to cut it.
looking ahead: tips for tipping the scales
A demonstrated connection between tenure and performance. Planned budget cuts to HR teams. An FP&A workforce that is itself shrinking and aging. All of these factors point to the increased importance of identifying strategic partners capable of supplying highly skilled FP&A professionals who will stick around for the long haul — or augment an organization’s existing FP&A teams with on-demand talent in a pinch.
And that’s where Tatum can contribute measurable bottom-line value.
Especially with budgeting season now upon us, traditionally the busiest time of year for many FP&A professionals, the risks associated with attrition are higher than ever — and could have far-reaching business impact. It’s imperative for organizations to take appropriate action, and plan accordingly, before it’s too late.
Contact Tatum to find out how we can solve for all your FP&A talent pain points today.