The quality of our consultants at Directed Action is top notch. It’s a result of the culture we created from the beginning of starting the company. We have kids, parents, pets, hobbies, Church, interests, and philanthropy. In short, we have a life outside of work and we understand our employees do as well. In fact, one employee told us this summer, as we onboarded new staff, that Directed Action had saved his marriage and his family. He went from spending 90 hours a week on the road to being able to be there for soccer games and family weddings.
That’s why we were surprised when this same employee, let’s call him “A” gave me his resignation recently.
Why would a high performing team member who loved his work and the flexibility our company offers quit his job? He didn’t leave for higher pay or a better title, or even another job at all.
In an effort to unpack his motivations, I realized that I had to look at the larger trends that are affecting the workforce as we enter this next phase of pandemic life. I hesitate to even call it a “new normal.” Because while it may be new, it doesn’t resemble the “normal” workplace we knew before COVID upended work as we know it.
The implications, especially for the strategic areas of the business like accounting and finance, are wide-ranging.
Workforce trends
You do not have to be someone who oversees a human capital management division to know that the headlines dominating the news cycle refer to The Great Resignation, the She-cession, The Great Realization or The Great Reshuffle.
Workforce experts may debate the nuances of what recruiters, hiring managers, and workers in general are seeing in their teams. They do agree that 1) a seismic shift is happening in the workforce 2) it is related to how people see work and their personal lives in relation to each other and 3) this shift will have an impact for this generation – and the next generation – of workers and the organizations that need them.
Is it true that no one wants to work anymore?
What has become clear from the pandemic is not that people don’t want to work anymore but that they don’t value work over other aspects in their lives. Over the course of the pandemic and the lightning fast shift to remote work, many workers realized that some accepted parts of work culture – commutes, time away from home and family, rigid work schedules – are not something they are willing to go back to.
Child care and health concerns also top the list of why workers are more choosy about taking a new job or going back into the office. Caregiving was in the spotlight when schools, camps, and daycares closed. Globally caregiving and the demands of work found themselves on a collision course with the companies that provided flexibility and understanding being able to retain more staff.
For those that speculated about how much their organization cared about them as people, they can now cite data from how they were treated during the pandemic. Organizations have to rethink flexibility means to employees, and whether they offer flexibility from work as flexibility at work, which is more complex than just working remotely.
What does this mean for employers?
As employers navigate the trends in the workplace they need to balance the needs of their people with the needs of this business. This means an overhaul of the business’s standard operating model.
In our pre-COVID workforce, it was understood that employees were motivated by incentives, recognition, perks, and salary increases. While the days of spending 25-30 years at a company were already no longer the norm, employers could count on a solid benefits package and opportunities to advance up the corporate ladder to bring people in and keep them for an average of 5 years. Now that figure is about 1.8 years, and younger people tend to move around more.
For a company with strategic plans and goals the cost of turnover is high and taking a renewed look at the operating model can mitigate these costs. Some effects of turnover include:
- The cost of hiring, onboarding, and training new staff can cost 1.5 to 2x the annual salary of that person.
- Within the accounting and finance departments of organizations, the loss of historical knowledge, processes and procedures can cost even more.
- The increased workload on employees during transition times can lead to burnout and thus, more turnover.
How can the operating model change to make it easy to do this work?
Articles upon articles have come out about how managers can curb turnover and retain staff. They mention engaging employees frequently about their goals and how they are doing. Showing empathy for personal as well as professional challenges. And finally, creating an environment where people want to spend their time.
These are all elements of a fantastic culture, where people feel part of a team and part of a solution. Where their unique talents are recognized, rewarded and they are made to feel integral to a larger whole.
But what if that isn’t enough? How can a job compete with personal fulfillment?
The short answer is – it can’t. When A told me about why he was leaving the company, it wasn’t the result of culture or lack of empathy. It was because he wants to train more competitively for the sport he’s involved in. And he wants to take time to mentor youth through community organizations where he lives. Leaving was a tough decision for him because he didn’t feel burned out or unappreciated. It’s just that the time we all spent during the pandemic, facing mortality, spending much more time with or without our families, reshuffled our priorities.
Compared to personal and spiritual fulfillment, a job will not be able to compete. Our new business operating models need to take that into account. Employers need to focus not just on how to slow turnover, but how to create a model where turnover is built in and mitigate the costs. We need to be talking not about how to retain talent but how to work in an environment where retention doesn’t happen.
Solutions to Focus on Finance Transformation
In our Human Capital Management services we approach building a strategic operating model with the following solutions:
- Outsource – For processes and procedures that are not core to the business, outsource that to focus on what your company is best at.
- Rent – For project based work this can look like hiring a temporary staff person. For manufacturing, it may mean leasing equipment or storage.
- Buy – Acquire another organization or resource that you can integrate into your company. This is also the typical mode for employees
- Consultants – Bring on a high end resource that can offer higher level work, analysis and guidance for a period of time particularly if they are high value.
For example, I’m familiar with an artist who worked for a large consulting firm. During the pandemic, she found herself having much more time with her canvas and, as a result, she had several openings and shows to the point where she felt she had to choose between her art and her day job.
She considered keeping her day job part-time but ultimately realized that she could be a high value resource for particular projects and time limited engagements. While she was able to charge more, she also forgoes benefits and title advancement so she can have that time and space to work on her art.
Employers faced with this arrangement will the need to know not only the cost of hiring a potentially expensive resource but also the value of this employees historical knowledge and skills to make a strategic decision. Especially if the alternative is an empty work space.
What resources are needed to make this shift in the business model?
In order to adapt and transform their operating model employers need a strong handle on their strategic financial outlook.
Your finance department should be able to answer questions that make your decision making process easier. Does it make more sense to outsource this process or bring it in house? Can we afford a consultant or do we invest in new staff for this project?
The question is not just about cash flow or dollars and cents but what makes the most strategic sense to achieve the organization’s goals. Businesses need their accounting and finance departments to be able to provide data and analysis that will drive business decisions. But accounting and finance departments are affected by the same factors leading to high turnover and turning to personal fulfillment over professional advancement.
What do employers need to do to get a handle on these new business realities?
To make decisions about outsourcing, renting, buying, or contracting talent employers need to think strategically. If it’s a struggle to get that information from accounting and finance, there’s a few things they can do.
Accounting and Finance department provide the following roles:
- They process transactions. This is the straightforward and often repeatable processes like accounts payable and receivable.
- They perform the accounting work. This involves the bookkeeping and accounting work that keeps the finances in order for reporting to management and the IRS.
- They provide the data and analysis that gives a strategic direction to the business. They can inform human capital management decisions and other strategic business decisions. What separates this role is that it is forward thinking. In these roles, your accounting and finance people are looking to what’s next, not what already happened.
Looking at the human capital management strategy, you can take the following actions to streamline your accounting and finance while focusing on the future:
- Outsource transactional work. Use another firm or automate to cut streamline operations.
- Make a decision to outsource accounting or bring it in house. This will depend on the size of your company and what your strategic goals are.
- Commit to forward thinking finance departments. Give the C-Suite the data they need to make strategic decisions.
The accounting and finance department is foundational to strategic forecasting and the overall success of the business. Often leaders think of accounting and finance as black and white, non-negotiable. And regarding the transactional and accounting work they’d be right – for the most part. What your operational model needs now, is flexibility in that department to reshuffle priorities as the workplace also undergoes a great reshuffling.
In my conversation with A, I wished him all the best in pursuing his hopes and dreams outside of our professional work together. He provides a good reminder to me, too.
As we work with clients to stabilize their resources, the organizations that will survive in this next normal will certainly have adapted to the changes that the new workplace demands.
The ones that thrive will have embedded that adaptability into their business processes.