Last week we spoke about how the role of finance is going through a major evolution and began our blog series on ‘7 emerging trends that are changing finance’ and looked specifically at the Evolving CFO Role. In week 2 of the series we look at the Changing Workforce.
2. Changing Workforce
The workforce is changing. The recession has caused many older employees to delay retirement or go back to work.
At the same time, a new generation of Millennial employees are making their own stamp on the workforce. This highly motivated, highly educated, and tech savvy group of young professionals are forcing many businesses to redefine the work environment.
Yet even with the growing number of workers, this dichotomy of aging employees, many of whom struggle to adapt to the new fast-paced, techheavy business environments of today, and young Millennials, many of whom are still getting their feet wet in the “real world,” has left many business leaders struggling to obtain the talent they need to successfully run their organisations.
The rise of the Millennial workforce
Millennials are already having a huge impact on todays work environment, and their influence is on the rise.
Millennials are extremely well educated, tech savvy, entrepreneurial and diverse. Easy transportation and digital connectivity has made Millennials the first global generation. In fact, they’re the world’s most diverse and globally minded generation in history. Not only do they want to explore the world, Millennials want to make it better. Seventy-nine percent of Millennials said they want to work for a company who positively impacts society, with 44% stating they’d actively pursue such companies.
Millennials bring many different and new values to the workforce. Millennials are incredibly entrepreneurial minded; twenty-seven percent of Millennials are self-employed. They also place greater value on flexibility and work-life balance. Eighty-nine percent of Millennials would prefer to choose when and where they work instead of having a traditional 9-to-5 job, and 45% said they would choose workplace flexibility over pay. In a survey by Millennial Branding, 60% of Millennials reported leaving their jobs in less than three years, with the primary reason cited for staying at a job was if it was a “good cultural fit.”
Additionally, Millennials are incredibly well educated, more likely to have a college degree than Boomers and Gen-Xers — 27% and 15% more likely, respectively. The opportunity with Millennials is great; however, to get the most out of this emerging generation, business leaders need to adapt their way of operating, including how they think about pay, benefits, and the work environment.
The mobile workforce
Technology has enabled a massive revolution in how we work. Between smartphones, near ubiquitous internet connectivity, and ever-shrinking laptops, work no longer happens just at work; work happens wherever the worker is. This could mean a home office, sending emails from a coffee shop, or taking phone calls on the bus. Upwards of 71% of office employees work remotely at times, an 80% increase since 2005. This type of mobility enables a more responsive workforce while providing employees greater flexibility to control their work schedule.
But along with the benefits of a mobile workforce, including greater productivity, efficiency, and agility, there are risks that businesses need to acknowledge as well. When employees take their work laptops and smartphones out of the office, the chances of loss and theft increases significantly. While the cost of simply replacing devices is certainly a concern, the threat of lost data and IP is particularly dangerous. Apple saw this fear come to fruition when an employee lost a prototype of their upcoming iPhone at a bar in the Bay Area (twice). This risk is compounded by the fact that employees remain incredibly relaxed about password protection on their devices. A 2013 Trend Micro study reported that 63% of respondents had no password protection on their phone.
Beyond theft and losses, employees working remotely are vulnerable to attacks if they use unsecured Wi-Fi networks. Employees replying to emails from their local coffee shop may be inadvertently connected to the Internet via a cloned Wi-Fi network. In other words, someone creates a public network called “Starbucks Free Wi-Fi” and is able to collect any data that is passed through. To give you a sense of just how easy this is to do, consider that there are dozens of free, publicly available apps that can do this. Whether in a hotel, airport, or coffee shop, employees should be prudent about only using secured private networks, especially if they are
handling confidential information.
Lastly, employees working in public places face the threat of old-fashioned eavesdropping. This ranges from a bystander passively overhearing a phone conversation on a bus to someone actively snooping over their shoulder in a hotel lobby. And while the intention may not always be malicious, like a bystander casually repeating information that they overheard, the potential consequences are real, from lost IP to breaking compliance laws.
Another effect of the mobile workforce has been the blurred line between work and personal devices. Employees are increasingly using their personal devices to access work email, documents, and data, what has become known as BYOD (bring your own device). In a 2015 study by the Ponemon Institute, 68% of corporate IT managers said their greatest security concern stemmed from employees using personal devices to connect to the corporate network. This creates an enormous security risk as employers have little to no control over the security measures (such as password requirements and malware protection) in use on personal devices than they do on work issued devices.
Conversely, these blurred lines also extend to employees using work devices for personal uses. As more employees are taking work devices home, businesses have much less control over what employees are doing with their devices. Also, personal web browsing while at work, like visiting social networks on company time, is becoming more accepted, or at least more tolerated. Employees may feel empowered to download unsanctioned software and files onto their devices, such as a favourite productivity app or personal music collection, and while many of these may be harmless, it could lead to employees inadvertently downloading malware or a piece of software than creates a vulnerability in the network. Finance learners need to find a way to balance security with the flexibility that many employees now expect with regards to personalising their devices.
Managing a growing skills gap
Perhaps one of the more under-represented responsibilities of the CFO is to develop talent within their organisation. In IBM’s 2013 Global C-Suite study, nearly 90% of CFOs listed talent development as an important part of their job.
But this task may be more daunting than it sounds. There appears to be a large talent gap developing as many academic finance programs remain heavily focused on traditional financial tasks and not enough on the new responsibilities of corporate finance, like managing technology and operations. In Deloitte’s 2013 Global Finance Talent survey, 39% of finance executives felt they were “barely able” or “unable” to procure the talent needed to successfully run their organisation. In a survey commissioned by Bentley University, 58% of respondents, including business decision makers, recruiters, and students, gave recent college graduates a letter grade of “C” or lower on their preparedness for their first jobs, with nearly two-thirds of respondents calling the lack of preparedness among Millennials a “real problem.” Sixty-four percent of corporate respondents remarked that the lack of preparation of new hires harms the productivity of their day to-day business, while 74% said the lack of preparedness has an impact on the economic challenges facing us today.
Beyond poorly prepared graduates, the skills gap is compounded by rapidly changing compliance standards and regulations, which requires ongoing employee training. The most recent example is the new Revenue Recognition Standards by FASB and IASB.
Succession planning has also become a more complicated task for CFOs as their roles have become much more diversified. The path to CFO no longer entails climbing the ladder through the finance department, but frequently follows more operations-focused and business leadership roles. On their way up, many CFOs are given the responsibility of managing key business units or customer segments in conjunction with their finance responsibilities. The CFO position is no longer just a functional role but a business-leadership role.
Today, most CFOs are recruited internally, with 69 percent of Fortune 100 CFOs having been promoted from within their organisation. Of those 69 internally promoted CFOs, 70% spent more than 11 years at the company beforehand and 41% were there for more than 20 years.