Markets are rocky, recession talk is in the air and large layoffs are hitting the headlines — but hiring remains strong, unemployment near record lows and employees open to new opportunities. Are CFOs stuck between a rock and a hard place? How can you keep your business healthy and your employees…well, employed by you?
Here are 5 ways CFOs can make a difference.
1. Hiring: plan versus reality
In many companies, CFOs act as COOs and run HR and recruiting teams. The effectiveness of recruiting process for candidates can be the difference between landing or losing top candidates, so keep a close eye on it.
One potential problem spot: your hiring budget is based on out of date comps that don’t account for recent wage inflation. Work closely with hiring managers and department leaders to stay realistic and work through tradeoffs, so you can move fast when it’s time to negotiate offers.
A solid headcount forecasting framework is also essential for CFOs to ground strategic discussions with the C-Suite in financial reality and a complete understanding of tradeoffs.
2. Location strategy
Many companies are weighing the future of remote work. CFOs can bring good data and modeling to such debates by building frameworks to evaluate questions like:
- Should we move away from a central office and embrace permanent work-from-anywhere?
- What are the tradeoffs between a positive office culture and remote work benefits?
- Should we adjust salaries by location?
- How should we handle folks who move from high- to low-cost geographies, compared to those we hire in a low-cost geography?
- Should we offer new benefits to support remote workers, like catered lunch delivery, office setup or phone/internet?
In our article, Best Practices for Planning a Cost-Effective Hybrid Workforce, we built a workforce planning model to answer these questions and show the effect on salary expenses, benefits costs and taxes.
3. Retrenchment strategies
With interest rates spiking and a brief inversion of the yield curve in March this year, many analysts are now flashing warning signs of a potential recession. CFOs must have contingency plans if revenues fall short of targets, including weighing key workforce-related tradeoffs.
There are different cost reduction approaches: layoffs, salary reductions or bonus program cuts. Each can have a different effect on retention in a strong labor market. Tread carefully and thoroughly model ‘what-if’ scenarios to uncover any potential negative effects.
4. Listen to employees
If you’re wondering why so many people would quit their job, the answer is simple: the pandemic caused people to reevaluate their values and priorities and a strong labor market means they can act on their desires. A recent Future Forum study discovered that 76% of those surveyed wanted flexibility on where they work, 93% wanted flexibility on when they work, 56% were open to new job opportunities that may provide them more flexibility and 21% were likely to jump ship in order to get that flexibility.
To find out what your employees think – from their career prospects, to whether they have adequate management assistance to accomplish their jobs properly – simply ask them what they think the company might do better or differently.
As a record-high number of employees are ready to jump ship and go elsewhere, cultivating good communication practices is vital. The more transparent a company is, the easier it is for employees to plan their future accordingly.
The CFO’s leadership can be considered critical in company guidance. With a strategic approach to financial analysis and projections, they can assume an impactful role - driving the business forward with thoughtful planning and clear direction. Many of the CFO’s decisions can shape a company’s entire workflow: from policies on employee work locations and office space, the systems they use to do their jobs, compensation, to different aspects of company culture. This, in turn, directly influences employee satisfaction and retention rates.
CFOs' abilities and duties extend far ahead of just managing the company's finances. In a time of uncertainty, CFOs can make a difference in retaining employees directly and indirectly. Executives who don't pay attention to the happiness and engagement of managers, in particular, may find themselves in a much more difficult staffing situation than they are now. Leaving managers without the tools they need to attract and retain employees will almost certainly lead to problems sooner or later - the only question is when.