What is in this article?:
- How to Grow Your Next Generation of Finance Leaders
- Anticipate What You Need: The Familiar and the New
- Assess What You Have
- Develop What You Need: Leadership Development in Action
The talent wars are back. Many companies are experiencing shortages in their leadership pipelines. A recent survey reported business leaders anticipating shortages in executive leadership in the coming year, with one of four executives anticipating severe shortages of senior and emerging leaders. This is certainly true for finance organizations, especially as the technical skill set required of finance executives continues to expand to meet the business challenges of increased globalization and financial regulation.
Developing and growing finance talent is likely to become even more critical in the coming years. A Deloitte survey of finance executives completed during the fourth quarter of last year reveals that the demand for skilled finance talent is outstripping the supply. While 43% of the executives surveyed are actively recruiting new talent, 37% report they can't find leaders with the skills required.
Additionally, the usual complications of organizational assimilation apply. By some estimates, new hires lose a third of their potential value in their first year due to their lack of familiarity with the culture and relationships within the new company. Not only is it difficult for finance organizations to find and assimilate qualified talent, it's difficult to develop and retain qualified talent.
Developing leaders internally offers important advantages over recruiting. A major benefit is risk reduction: rather than be dependent on what's available, organizations can focus on their own ability to attract, develop, and keep financial professionals with the skills they require at each level. Another important benefit is cost savings: the average cost to replace an employee is one and a half times average salary; recruiting costs average $1,415 for every $10,000 of compensation; and retaining and developing existing employees can save a company between three and ten times the cost of replacing employees. Companies with strategies for developing and keeping finance leaders within their organization have a distinct advantage over those that don't.
Here, in broad strokes, are the three important steps to developing a program for growing finance leaders.