Anyone who has been involved in the business budgeting process knows that it can be a daunting task. Without good collaboration and communication, this process can easily turn into a long exercise in which participants struggle over strategic elements such as sales goals, capital investments, hiring and compensation. When it gets bad enough, it can even escalate into arguments with department heads over budgeted expenses for trivial items like office supplies and coffee aromas in the company cafeteria.
An FP&A team of more experienced employees can help alleviate some of the controversial 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 the company’s business leaders and a deep understanding of business operations. This relationship experience and business expertise can ease the communication process when it is time to have difficult conversations with operational management.
In a competitive job market like the one we see today, leading organizations stand out for their ability to retain finance employees longer than their peers. Based on data from our Performance evaluation of planning and management accounting, The APQC finds that 75th percentile organizations have employees with eight years of seniority, twice as many years as 25th percentile organizations.
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 because of their experience of 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 technical skills, soft skills, and hands-on process experience these employees have will always be an advantage for planning and budgeting processes.
New hires also benefit from the process
Organizations without long-standing FP&A employees don’t automatically have a hectic or difficult budgeting cycle. The reality of a tight job market is that staff turnover in all areas of an organization can be inevitable.
FP&A teams with newer or shorter staff can use this dynamic as an opportunity. These employees can approach the budgeting process with fresh eyes and come up with 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, can ask probing questions that have never been asked before and lead the organization to various strategic decisions. These new questions and ideas definitely add value to the process.
Considering the benefits that established and new 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 at this time. 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 formulating analysis that can help you make better decisions? Or do they spend a lot of time collecting data and performing 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 think about investing in automation tools that have been proven to help free up time for finance to do more valuable, engaging work.
It’s also important to provide your team with ongoing opportunities to develop new talent and retain more established talent. Opportunities such as job rotations and extended cross-functional assignments help new hires build relationships and expertise within the company. More established FP&A employees benefit from opportunities to act as mentors to new employees, refresh their knowledge of best practices, and network with their peers in other organizations. We have even seen more informal development practices such as book clubs or lunch and learns used with great success to engage FP&A talent. All of these activities help sharpen the technical and soft skills of a team, which will pay off a lot 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 budget 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 do value-added work and provide them with opportunities to further develop their skills helps ensure that all of your employees are more engaged and satisfied with the work they do. As a result, 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 APQC, a nonprofit benchmarking and best practice research organization based in Houston, Texas.