Anyone who has been involved in the business budgeting process knows that it can be a daunting undertaking. Without good collaboration and communication, this process can easily turn into a long exercise in which participants fight over strategic elements such as sales objectives, capital investments, hiring and compensation. When it gets bad enough, it can even escalate into arguments with department heads over budgeted expenses for insignificant items like office supplies and coffee flavors in the company cafeteria.
An FP&A team of more experienced employees can help mitigate some of the contentious conversations and financial battles that arise in the annual budgeting process. FP&A professionals with several years of experience under their belt are more likely to have relationships with business leaders across the company and a deep understanding of business operations. This relational experience and business expertise can facilitate the communication process when it comes time to have difficult conversations with operational management.
In a competitive job market like the one we have today, great organizations stand out for their ability to retain finance employees longer than their peers. Based on data from our Management accounting planning and performance evaluation, APQC finds that organizations at the 75th percentile have employees with eight years of tenure, twice as many years as organizations at the 25th percentile.
Long-time FP&A professionals bring benefits to the process that go beyond communication and relationship-building skills. These employees are often a critical success factor in reducing budget preparation cycle time due to their experience with the process. They can also serve as mentors to new colleagues to ensure that best practices and effective approaches continue even when they eventually leave or change roles in the company. Simply put, the hard skills, soft skills, and hands-on process experience that these employees possess will always be an advantage for the planning and budgeting processes.
New employees also benefit from the process
Organizations without long-time FP&A employees aren’t automatically destined for a choppy or difficult budget cycle. The reality of a tight labor market is that turnover in all areas of an organization can be unavoidable.
FP&A teams with newer or short-lived staff can use this dynamic as an opportunity. These employees can approach the budgeting process with fresh eyes and offer their ideas for new approaches to a process that may have become stale and status quo. For example, an FP&A leader who is new to the business, in their effort to learn the organization, may ask probing questions that have never been asked before and lead the organization to different strategic decisions. These new questions and ideas definitely add value to the process.
Given the benefits that both established and newer FP&A employees bring to the budgeting process, the ideal team should be a mix of the two. But retention is a challenge for many organizations, especially right now. What can you do to increase employee satisfaction and ensure FP&A team members stay longer?
A good first step is to ask how FP&A employees spend their time. Are they busy acting as strategic business partners and providing insights that can help you make better decisions? Or do they spend much of their time collecting data and doing tedious, repetitive tasks?
Our FP&A research found that the latter is more likely to be true in many organizations. Specifically, we found that the average FP&A employee spends 75% of their time collecting data and administering the process, leaving only 25% to provide value-added analysis to the business. If this sounds like your FP&A team, you should seriously consider investing in automation tools that are proven to free up time for finance to do more valuable and engaging work.
It’s also important to provide your team with ongoing opportunities to develop new talent and keep more established talent engaged. Opportunities such as job rotations and cross-functional assignments help new hires build relationships and develop their expertise in the company. More established FP&A employees benefit from opportunities to act as mentors for new hires, refresh their knowledge of best practices, and network with peers in other organizations. We’ve even seen more informal development practices like book clubs or luncheons used with great success to engage FP&A talent. All of these activities help to hone a team’s technical and soft skills, which will pay big dividends when it comes to an activity like budgeting.
Experienced FP&A employees often have in-depth knowledge of business operations, relationships with business leaders, and the know-how to complete budgeting faster and more efficiently. Without new talent, however, organizations risk becoming complacent and can fall into routines that are no longer effective. Freeing up space for your FP&A team to perform value-added work and providing them with opportunities to continue developing their skills helps ensure that all of your employees are more engaged and satisfied with the work they do. Therefore, they’ll be more likely to stick around and continue to add value to your budgeting process.
Perry D. Wiggins, CPA, is Chief Financial Officer, Secretary and Treasurer of APQCa nonprofit benchmarking and best practices research organization based in Houston, Texas.