Category Archives: Talent Pipelines

Modern finance team makeovers: Controllers

Posted on by • Posted in Artificial Intelligence, Chief Accounting Officer (CAO), Controller, Controllership Function, Digital Transformation, Finance Department, Financial Close, Generally Accepted Accounting Principles (GAAP), Sarbanes Oxley Act (SOX), Talent Imperative, Talent Management, Talent Pipelines, Trusted Advisor • Leave a comment

https://www.cfodive.com/news/controllers-unsung-finance-heroes/704643

As finance departments undergo seismic tech-driven changes, controllers are poised to play a crucial role as the CFOs’ right hand.

Today’s finance chiefs are making strategic decisions and driving digital transformation, but to execute their changing roles successfully, they need to be supported by an equally resilient, adaptive team.

New technologies, ways of working and shifting business needs are impacting the day-to-day roles not just of the CFO, but of other crucial financial executives as “at the highest level, the entire finance organization is [undergoing] a seismic shift in ways that they haven’t seen ever,” said Sanjay Sehgal, advisory head of markets for Big Four accounting firm KPMG.

Taking a look at the evolving new responsibilities that controllers — as well as other staff in finance departments  — must embrace will be crucial for finance chiefs who must build modern finance teams capable of tackling the upcoming challenges of 2024.

Trusted advisor

The controller “is really becoming and has become the trusted advisor to the CFO,” Sehgal said in an interview.

As with many jobs, the role can vary depending on the company. But generally controllers oversee their company’s daily accounting operations, along with payroll and the accounts payable and receivable departments, according to human resource consulting firm Robert Half. It can also entail preparing internal and external records, handling the firm’s general ledger and taxes as well as reconciling accounts, coordinating audits and managing budgets. 

Already, the importance of the controller position is reflected in compensation trends: the role ranks among the most well-paid members of the finance team, with corporate controllers in the 75th percentile — meaning they take home salaries greater than three-quarter of financial professionals — in compensation earning annual average salaries around $210,750, according to data from human resource consulting firm Robert Half.

Controllers rank among top paid financial professionals

Starting salaries for corporate accounting executives in the 75th percentile

Central to the role too is the responsibility controllers take for their company’s close activities, ensuring the business is “producing information in a controlled fashion, to report to the street and to the Securities and Exchange Commission for a public company,” said Kevin McBride, corporate controller and chief accounting officer for software-as-a-service company ServiceNow.

In his capacity as controller for the Santa Clara, California-based SaaS company, McBride oversees global payroll, accounts payable, travel, collections, and credit, he said in an interview. The role of controller and chief accounting officer can also have some overlap, but don’t need to be combined; a CAO can be another name for a principal accounting officer as required under the Sarbanes-Oxley Act, for example, McBride said. A CAO typically focuses on more broad corporate governance, therefore, while a controller’s focus is more narrowly on processes such as the close and ensuring financial statements are compliant with GAAP.

Controllership is “really getting to the numbers and the descriptors and the story behind financial performance and ensuring that process is well-controlled,” McBride said. Joining ServiceNow in November 2021, he previously logged a 21-year tenure at tech giant Intel, where he served in a variety of key financial roles including as its vice president of finance and corporate controller as well as its global accounting and financial services controller. He also spent time at the Financial Accounting Standards Board as an industry fellow before joining Intel.

Opening a path to the touchless close

In recent years, however, controllers have also found themselves branching out from a pure numbers function as part of the ongoing “seismic shift” taking place in the whole of finance — driven partly by the advent of generative AI, machine learning, cloud technologies and other digital tools which have captivated the attention of finance leaders in recent months, Sehgal said.

New technologies such as GenAI could fundamentally change how controllers operate and the purpose of the role — for example, “I can see a future where we have a touchless close process,” Sehgal said.

This would mean the entire financial close process would no longer need routine manual intervention by such people as the controller, according to a 2022 report by Gartner which noted 55% of finance executives were targeting a touchless close by 2025.

Finance teams could inch closer to making such a process a reality in 2024 as companies continue to experiment with the applications of generative AI, something that could rapidly shift where today’s controllers are directing their time and focus.

The new technologies that have filtered into accounting over the past few decades have enabled their own improvements in quality, efficiency and cost, McBride said, allowing business leaders to get the information they need to run the business at a lower cost. When it comes to the controllership, “it also gives us capacity to invest in other ways to help drive business impact,” he said.

However, it’s also important to remember that technology is “nothing new in accounting,” McBride — who started his career working on paper spreadsheets — said and that in “each one of these technology introductions, there’s the hype and then there’s the reality,” he said. Generative AI and the promise it brings remains in its early stages, he said.

As automation seeps into finance, technology opens up more time by removing routine tasks, in turn enabling the controller and the CFO to deepen their relationship. “With the CFO, we’re spending more time talking about strategic matters and how to best position not just the controllership but finance,” McBride said.

The evolution of the relationship comes as CFOs are likewise pivoting to a role more focused on driving strategy and controllers are finding themselves responsible for processes that may previously have been under the remit of the finance chief.

“As the CFO elevates himself or herself, I think the controller plays a bigger role in the organization,” Sehgal said.

Finance chiefs are serving more and more often as the “right hand” of the CEO and spending less time poring over day-to-day numbers, said Claire Bramley, CFO of San Diego, California-based AI cloud analytics and data platform Teradata. The controller and the CFO work closely together to drive an effective, innovative and forward-looking finance function, but that focus on day-to-day operations is what separates the two positions, Bramley said in an interview.

As a finance chief, “you need to make sure that you’ve got the processes in place, you understand what’s going on,” she said. However, the finance chief is now spending more time figuring out how to drive things forward at the company, she said.

Adding free cash flow forecasts 

Bramley pointed to something like free cash flow as an example: because she’s now spending more time conducting strategy transformation work on part of Teradata, she’s now relying on her controller to take on free cash flow management forecasting, she said.

Controllers, critically, still serve as “the owners of the financial data, from a protocols perspective, from a reporting perspective, and the CFO and the executive teams depend on that,” Sehgal said. Indeed, taking responsibility for the numbers is still the core of the controller’s role, McBride agreed.

However, controllers are not immune to the job creep plaguing the financial function amid a lack of qualified accounting talent, emerging technologies and new business needs. As the CFO’s role evolves into a more strategic position, the rest of finance could potentially be pulled along in their wake.  

“It’s very easy for a controller to be kind of put off to one side … and not be pulled into, I’ll say some of the business and strategic decisions,” Bramley said. “But if you decide as a controller that you want to be more involved in that, I think many companies give you the opportunity to build your business acumen, to build your business relationships and to be able to be an important part of managing the business.”

For example, the controller today has a huge opportunity to take point on digital transformation at a business — the controller organization tends to be the biggest team in the finance function, “so if they can drive [digital transformation], and they can be leading edge, then the rest of finance can adopt that moving forward,” Bramley said.

This can also provide a pathway to controllers to the CFO seat — Bramley spent two years serving as the global controller for HP, where she logged a 14-year tenure before making the jump to Teradata.

“The modern-day controller who is involved in strategic decision making, who is helping add business value, who is having an impact from a technology standpoint, I think, is an obvious candidate for a CFO,” she said.

Interim CFO requests skyrocket 46%: BTG

Posted on by • Posted in Certified Public Accountant (CPA), Interim CFO, Interim Controller, Interim Executives, Interim Financial Leadership, Interim Resources, Interim VP Finance, On Demand Talent, Recruiting, Talent Acquisition Strategy, Talent Competition, Talent Imperative, Talent Management, Talent Pipelines • Leave a comment
https://www.cfodive.com/news/interim-cfo-requests-skyrocket-46-percent-btg-accounting-accountants-hr/712730/?utm_source=Sailthru&utm_medium=email&utm_campaign=Issue:%202024-04-16%20CFO%20Dive%20%5Bissue:61108%5D&utm_term=CFO%20Dive

Companies are turning to interim financial leadership more frequently as they struggle to fill widening gaps in their accounting and finance functions.

Dive Brief:

  • Demand for interim financial leadership skyrocketed last year, with requests for interim CFOs jumping by 46%, according to a report by Business Talent Group, a Heidrick & Struggles company.  
  • As well as interim CFO leadership, requests for on-demand talent with skills in key areas of finance also jumped; requests for talent that’s skilled in audit, accounting and financial controls have increased 33%, while those for FP&A and modeling skills increased 28%, the report found.
  • The rise in demand for audit, accounting and similar skills is “a logical consequence of the declining pipeline of accounting majors and CPA candidates,” Jack Castonguay, an assistant professor of accounting at New York’s Hofstra University, said in an email.

Dive Insight:

Competition to nab skilled accounting talent has only become fiercer in recent years amid a worsening shortage of accounting professionals, leaving companies with critical gaps in their financial leadership and function.

In addition to surging demand for interim CFOs, requests for senior vice president or vice president-level financial professionals — such as controllers and the heads of financial planning & analysis — rose by 114%, according to BTG.

When it comes to roles such as the head of FP&A or controllers, for example, “I think as you have shortages on one end, you’re going to have demand with organizations, whether it be full time or on-demand, for talent coming in,” Sunny Ackerman, global managing partner for on-demand talent at Heidrick & Struggles said in an interview. Ackerman does believe there is a link between the shortage in talent and the spike in requests for on-demand employees in these areas, she said. “So I think there is definitely a correlation for that.”

Historically, many companies have looked to fill roles in FP&A, audit, financial reporting and up to the CFO or controller chair with employees that have previously worked for an accounting firm, but dynamics have changed in recent years where many roles in accounting are now outsourced, Castonguay said.

“With accounting firm dynamics, largely insufficient salaries and work-life balance leaving firms struggling to attract people to the profession, the companies needing these people are now logically also struggling,” he said in an email. “You cannot disconnect the two.”

The narrower pipeline of new accounting graduates plus a high rate of retirement in the industry can leave the employees that are left overworked, increasing the likelihood of mistakes, according to a report by Fortune.

“Significant attrition” in the accounting department for retail brand Tupperware contributed to a delay in the company’s ability to file its annual 10-K form on time with the Securities and Exchange Commission, for example, the second consecutive year the brand will be filing late.  

“Fewer grads lead to fewer public accountants which leads to fewer qualified and experienced hires for companies to place in their internal accounting-focused roles,” Castonguay said. “The dynamic makes me wonder how the temporary or outsourced staffing firms are finding candidates at their staffing firms. It’s possible that will be the next shoe to drop.”

On the labor side, changing ways of working may also be impacting how employees want to work; while there may be shortages in certain areas, the company is not necessarily seeing a slowdown of new candidates joining their platform, Ackerman said. 

“So I think, even though there’s shortages in certain areas, I think talent is looking at this way of working differently than they did five years ago, and more companies are engaging with it,” she said. 

Companies may also be more motivated to try out on-demand talent as they look to plug critical skill gaps in their workforces. Ninety-five percent of executives said they anticipate difficulty finding the “ideal combination of skills, capacity and expertise” inside their teams, BTG’s report said.

Today’s companies “now are starting to really open up and look at how they can blend full time talent with more independent talent and tapping into those capabilities at the desired time,” Ackerman said.

That includes how they might be approaching interim leadership; many firms are looking for on-demand talent to help provide critical support for larger-scale projects or initiatives, according to BTG, a category that makes up 27% of all talent requests.

Interim leadership can provide benefits to companies who are in transition or who are undertaking major changes, according to a 2023 CFO Dive report citing BTG data from that year.

An interim controller, for example, could take point on business process optimization for the business to successfully execute such a project; “the CFO or that finance function is quite a bit of a right hand, I would say to the executive suite,” Ackerman said.

Targeting the accounting shortage: 2024 tactics

Posted on by • Posted in Accountant, Accounting, Accounting Talent Shortage, Audit, Certified Public Accountant (CPA), Financial Reporting, Generally Accepted Accounting Principles (GAAP), Recruiting, Talent Competition, Talent Imperative, Talent Management, Talent Pipelines • Leave a comment
https://www.cfodive.com/news/3-tactics-targeting-accounting-shortage-cfo-trends/706071/?utm_source=Sailthru&utm_medium=email&utm_campaign=Issue:%202024-02-01%20CFO%20Dive%20%5Bissue:58721%5D&utm_term=CFO%20Dive

CFOs and finance department recruiters have faced a workforce problem for years now, labor experts say: a shrinking pool of U.S. accounting professionals needed to close the books every quarter, complete audits, and make sure the company’s financials comply with GAAP and other regulations. 

The hits that have chipped away at accounting labor health are myriad and the statistics stark. While the number of practicing accountants and auditors in the U.S. spiked in 2019, across the past decade since 2013 the total declined by about 10% to 1.62 million last year, with roughly 190,000 jobs disappearing from the work rolls, according to the Bureau of Labor Statistics.

Meanwhile, the total number of test takers who passed the CPA Exam fell to 18,847 in 2022 from 19,544 the year earlier, and the lowest level since 2007, according to the latest numbers available from the Association of International Certified Professional Accountants. 

Studies and those analyzing the trend point to a variety of likely culprits: the onerous 150 hours of course credit — equivalent to a fifth year of college — students typically need to become a CPA, generally lower starting salaries compared to other areas of finance, and the demanding hours and rising regulations that lead some practicing accountants to look for the exits once they’re in the field. At the same time, the launch of the generative AI tool ChatGPT in late 2022 led to a new wave of questions about the industry’s future.

Tom Hood, executive vice president of business engagement and growth at the AICPA, is in the optimistic camp of those who believe the pipeline decline is poised to turn around, noting that he has seen other cycles when disruptive shocks such as Microsoft’s Excel in the 1980s damped interest and sparked doomsday talk around the possible “end of accounting.”  

“We’ve had ebbs and flows, we’ve had these shortages before and every time that’s happened we as a profession have rallied together,” said Hood, a CPA, adding that AI will automate certain tasks in accounting but will not replace accountants. “We’ve moved this needle before and I think we’re already starting to see it move now.” 

In 2024 professional associations and lawmakers are working on numerous initiatives as well as legislation to close the cracks that have leaked talent from the field. In the meantime, companies have found ways to get the staff needed to get their finance work done. CFO Dive talked to experts about some notable tactics that are likely to shape the accounting workforce this year. 

States, CPAs and the 150-hour credit question  

Currently state regulatory bodies that set the rules require those who want to to become a Certified Public Accountant to have 150 credit hours of education in accounting or related subjects to become a licensed CPA. But amid the growing shortage, there has been a controversial push by states to create another pathway to licensure which include cutting the college credit hour requirement back to 120 hours.

For example, this year Minnesota lawmakers are expected to consider new legislation introduced in the state’s Senate and House in 2023 that would allow candidates to earn a CPA certificate with only 120 hours of college credit, along with passing the CPA exam and some additional work experience or professional education. This alternative would be in addition to the current system that requires 150 hours and one year of work experience, plus passing the CPA exam.

Geno Fragnito, director of government relations for the Minnesota Society of CPAs that supports the change, notes that the current national shift to the 150 rule gained steam in the 1980s after Florida made the change amid a surplus of accountants due to many wanting to move to the state. Florida started the ball rolling by increasing the credit hour requirement to 150 hours in 1983, according to a Journal of Accountancy report.

But in recent years, the MNCPA’s members have consistently pinpointed the credit requirement as one of the main contributors to the drop in CPAs.

“I don’t think there was a meeting that either our CEO or I attended where it was not brought up organically. It was never on our agenda to discuss but it always came up,” Fragnito said. Looking ahead, Fragnito said that other states that are seeking to tweak the credit hour formula include South Carolina and Washington state. 

A “volatile year” for CPA exam takers 

Two exam-related changes are impacting accounting candidates this year in very different ways. “It’s an exciting time but I think 2024 will be a very volatile year,” Mike Decker, vice president of the CPA Examination & Pipeline Extension for AICPA, said in a recent interview. One of the changes is student-friendly: it’s designed to ease deadline pressures and address pandemic-related delays that might have affected some test takers. In a move announced last spring, the National Association of State Boards of Accountancy extended the window that a candidate has to complete the exam once they pass the first section from 18 months to 30 months. The move grew out of the AICPA’s effort to address the accounting shortage, known as its pipeline acceleration plan. 

Meanwhile, this month marked the launch of a revamped CPA Exam called the CPA Evolution. The test has both new content and structure and a greater focus on technology in an effort to combat research that found that accounting firms were hiring fewer accountants in favor of non-accountants with tech backgrounds, according to a Nov. 7 report by Michael Potenza of Becker. “It’s not that CPA Evolution is meant to be harder than the previous version of the exam, it’s simply meant to better prepare you for the skills and competencies needed in modern accounting,” Potenza, a CPA, wrote. 

Raises and remote work 

Tactics that CFOs themselves are using to meet their staff needs include sweetened offers and going offshore or considering remote workers to gain talent. With most small and medium-size CPA firms unable to find enough qualified U.S. accountants, this summer a study found that over half of firms planned to hike starting salaries by 14%, CFO Dive previously reported. Lisa Simpson, vice president of firm services at AICPA, is hearing about similar approaches taken by firm leaders she’s spoken with. In the past few years, she said, firm leaders indicated they were providing several high percentage salary increases for new hires and existing employees. Last year firms gave raises at rates above inflation as well as continuing bonuses, and business leaders said they expect to continue raises into 2024.

Meanwhile, many firms are outsourcing U.S. accounting work to professionals in India, the Philippines, and Eastern European countries like Poland, according to Matt Wood, head of global FAO Services at Austin, Texas-based Personiv, a global outsourcing provider which serves those needs. While outsourcing to other companies was previously the domain of larger firms, the pandemic has led to more companies being comfortable with remote accounting staff, he said.

The shift to hiring accounting staff outside the U.S. “has been happening for a while now, but it really accelerated in 2020. The accounting talent pool was already shrinking, and businesses were feeling the impact of that pre-pandemic. Then, all of these other pieces fell into place; teams were working remotely and protecting cashflow took priority,” Wood said in an emailed response to questions from CFO Dive.

I’m Glad I’m not a California Hospital or Practice Administrator…

Posted on by • Posted in Competition, Health System, Hospital, Hospital Industry, Law, Non-Compete Agreements, Physician Compensation, Physician Contracts, Physician Employment, Retention, Talent Competition, Talent Management, Talent Pipelines • Leave a comment
https://www.linkedin.com/pulse/im-glad-california-hospital-practice-administrator-k-todd-phd-mha-f77ec/?midToken=AQHcpzuK5TbmJA&midSig=2Qnh-g7b4aiX41&trk=eml-email_series_follow_newsletter_01-newsletter_hero_banner-0-open_on_linkedin_cta&trkEmail=eml-email_series_follow_newsletter_01-newsletter_hero_banner-0-open_on_linkedin_cta-null-fll5j~lqpddslo~9-null-null&eid=fll5j-lqpddslo-9&otpToken=MTAwMzFjZTAxMzJhY2FjNWJlMmYwMmVhNDUxOWUwYjM4NmNjZDA0MDliYWM4NTZmNzJjZTAwNmI0NjUyNTlmNGZjYTY5NTg1NTFlNmNlZDk2Yzk2Yjc2N2RjZjM4MjA5ZGRjZjYzNTdiMWNlMDdiZmUyLDEsMQ%3D%3D

On January 1st, 2024 #AB1076 and #SB699, two draconian noncompete laws go into effect. It could put many #employedphysicians in a new position to walk away from #employeeremorse.

AB1076 voids non-compete contracts and require the employer to give written notice by February 14th, 2024 that their contract is void.

Is this a good or bad thing? It depends.

If the contract offers more protections and less risk to the employed physician, and the contract is void – does that mean the whole contract is void? Or is the non-compete voidable?

But for the hospital administrator or practice administrator, we’re about to witness the golden handcuffs come off and administrators will have to compete to retain talent that could be lured away more easily than in the past. But the effect of the non-compete is far more worrisome for an administrator because of the following:

The physicians many freely and fairly compete against the former employer by calling upon, soliciting, accepting, engaging in, servicing or performing business with former patients, business connections, and prospective patients of their former employer.

It could also give rise to tumult in executive positions and management and high value employees like managed care and revenue cycle experts who may have signed noncompete contracts.

If the employer does not follow through with the written notice by February 14th, the action or failure to notify will be “deemed by the statute to be an act of unfair competition that could give rise to other private litigation that is provided for in SB699.

The second law, SB699, provides a right of private action, permitting the former employees subject to SB699 the right to sue for injunctive relief, recovery of actual damages, and attorneys fees. It also makes it a civil violation to enter into or enforce a noncompete agreement. It further applies to employees who were hired outside California but now work in or through a California office.

What else goes away?

Employed physicians can immediately go to work for a competitor and any notice requirement or waiting period (time and distance provisions) are eliminated by the laws. So an administrator could be receiving “adios” messages on January 2nd, and watch market share slip through their fingers like a sieve starting January 3rd.

And what about the appointment book? Typically, appointments are set months in advance, especially for surgeons – along with surgery bookings, surgery block times, and follow up visits.

Hospitals may be forced to reckon with ASCs where the surgeons could not book cases under their non-compete terms and conditions. They could up and move their cases as quickly as they can be credentialed and privileged and their PECOS and NPPES files updated and a new 855R acknowledged as received.

Will your key physicians, surgeons and APPs leave on short notice?

APPs such as PAs and NPs could also walk off and bottleneck appointment schedules, surgical assists, and many office-based procedures that were assigned to them. They could also walk to a new practice or a different hospitals and also freely and fairly compete against the former employer by calling upon, soliciting, accepting, engaging in, servicing or performing business with former patients, business connections, and prospective patients of their former employer.

Next, let’s talk about nurses and CRNAs. If they walk off and are lured away to a nearby ASC or hospital, or home health agency, that will disrupt many touchpoints of the current employer.

Consultants’ contracts are another matter to be reckoned with. In all my California (and other) contracts, contained within them are anti-poaching provisions that state that I may not offer employment to one of their managed care, revenue cycle, credentialing, or business development superstars. Poof! Gone!

The time to conduct a risk assessment is right now! But many of the people who would be assigned this assessment are on holiday vacation and won’t be back until after January 1st. But then again, they too could be lured away or poached.

What else will be affected?

Credentialing and privileging experts should be ready for an onslaught of applications that have to be processed right away. They will not only be hit with new applications, but also verification of past employment for the departing medical staff.

Billing and Collections staff will need to mount appeals and defenses of denied claims without easy access they formerly had with departing employed physicians.

Medical Records staff will need to get all signature and missing documentation cleared up without easy access they formerly had with departing employed physicians.

Managed Care Network Development experts at health plans and PPOs and TPAs will be recredentialing and amending Tax IDs on profiles of former employed physicians who stand up their own practice or become employed or affiliated with another hospital or group practice. This comes at an already hectic time where federal regulations require accurate network provider directories.

The health plans will need to act swiftly on these modifications because NCQA-accredited health plans must offer network adequacy and formerly employed physicians who depart one group but cannot bill for patient visits and surgeries until the contracting mess is cleared up does not fall under “force majeure” exceptions. If patients can’t get appointments within the stated NCQA time frames, the health plan is liable for network inadequacy. I see that as “leverage” because the physician leaving and going “someplace else” (on their own, to a new group or hospital) can push negotiations on a “who needs whom the most?” basis. Raising a fee schedule a few notches is a paltry concern when weight against loss of NCQA accreditation (the Holy Grail of employer requirements when purchasing health plan benefits from a HMO) and state regulator-imposed fines. All it takes to attract the attention of regulators and NCQA are a few plan member complaints that they could not get appointments timely.

Health plans who operate staff model and network model plans that employ physicians, PAs and NPs (e.g., Kaiser and others who employ the participating practitioners and own the brick and mortar clinics where they work) are in for risk of losing the medical staff to “other opportunities.” These employment arrangements are at a huge risk of disruption across the state.

Workers Compensation Clinics that dot the state of California and already have wait times measured in hours as well as Freestanding ERs and Freestanding Urgent Care Clinics could witness a mass exodus of practitioners that disrupt operations and make their walk in model inoperative and unsustainable in a matter of a week.

FQHCs that employ physicians, psychotherapists, nurse practitioners and physician assistants could find themselves inadequately staffed to continue their mission and operations. Could this lead to claims of patient abandonment? Failed Duty of Care? Who would be liable? The departing physician or their employer?

And then, there are people like me – consultants who help stand up new independent and group practices, build new brands, rebrand the physicians under their own professional brands, launch new service lines like regenerative medicine and robotics, cardiac and vascular service lines, analyze managed care agreements, physician, CRNA, psychotherapist, and APP employment agreements. There aren’t many consultants with expertise in these niches. There are even fewer who are trained as paralegals, and have practical experience as advisors or former hospital and group practice administrators (I’ve done both) who are freelancers. I expect I will become very much in demand because of the scarcity and the experience. I am one of very few experts who are internationally-published and peer-reviewed on employment contracts for physicians.

Healthcare’s trap of overqualified workers

Posted on by • Posted in Employee Compensation, Employee Qualifications, Health System, Hospital, Hospital Industry, Job Market, Job Requirements, Labor Shortages, Labor Spend Management, Operating Expenses, Recruiting, Talent Acquisition Strategy, Talent Competition, Talent Management, Talent Pipelines • Leave a comment
https://www.beckershospitalreview.com/workforce/healthcares-trap-of-overqualified-workers.html?origin=CFOE&utm_source=CFOE&utm_medium=email&utm_content=newsletter&oly_enc_id=2893H2397267F7G

The post-pandemic labor force has 1.5 million fewer individuals with some post-secondary education short of a bachelor’s degree. This shortfall is hitting healthcare hardest, affecting wages and qualification levels among jobholders. 

Job vacancies requiring a post-secondary certificate or associate degree, particularly in healthcare, remain high. The mismatch between the supply of workers with this education level and the ongoing demand for them is leading to increased wages and greater reliance on more educated workers, according to a December 2023 bulletin from the Federal Reserve Bank of Kansas City. 

Five takeaways from the bank’s report: 

1. Before the pandemic, job openings across educational groups moved together and subsequently peaked together in mid-2022. Since then, while vacancies for most groups have fallen, the number of job vacancies requiring some college education remains 60% above its pre-pandemic level. 

2. Vacancies for jobs requiring some college education are concentrated in healthcare. As of August 2023, about 50% of all open jobs posted in 2023 that required an associate degree or non-degree certificate were in healthcare.  

3. As a result of the high demand, healthcare employers are turning to more educated workers to fill positions with requirements for some college education. Healthcare employment among workers with some college education has dropped by about 400,000 since 2019; healthcare employment among workers with a bachelor’s degree or more has increased by 600,000.

4. Combined, these factors can place upward pressure on healthcare wages. The supply-demand mismatch can lead employers to offer higher wages to competitively attract qualified workers. Employers turning to workers with more education, who are generally more expensive, will increase the average wage in these occupations.

5. From 2019 to 2023, overall wages for healthcare workers rose by nearly 25%, an increase the bank partially attributes to both increased wages within educational groups and composition effects. The shift in employment toward higher-educated workers accounts for an additional 2.7 percentage points of the total wage increase, for instance. 

Cartoon – Next Generation Leadership

Posted on by • Posted in Cartoon, Leadership, Leadership Continuity, Leadership Skill Sets, Leadership Transformation, Leadership Values, Leadership Vision, Recruiting, Sign of the Times, Talent Identification, Talent Imperative, Talent Pipelines • Leave a comment

Hospitals still struggling to retain talent

Posted on by • Posted in Cost Management, Cost Reduction, Health System, Hospital, Hospital Industry, Labor Spend Management, Nurse Retention, Nurse Vacancy Rates, Nurses Compensation, Nurses Leadership, Nurses Shortage, Operating Expense Reduction, Operating Expenses, Operating Income, Operating Margin, Operating Performance, Recruiting, Retention, Retirement, Talent Management, Talent Pipelines, Turnover Rates • Leave a comment

https://mailchi.mp/c02a553c7cf6/the-weekly-gist-july-28-2023?e=d1e747d2d8

Of all the pandemic’s impacts still felt today, disruptions to the healthcare workforce and rising labor costs may be most impactful to current health system operations.

Over the next three editions of the Weekly Gist, we’ll be exploring the lingering effects of this workforce crisis, with a focus on nurse staffing and recruitment.


In this week’s graphic, we use data from the 2023 NSI National Health Care Retention Report to show how hospital turnover and vacancy rates have changed over the past several years. 

While wage increases helped reduce hospital registered nurse (RN) turnover rates from 27 percent in 2021 to 23 percent in 2022, nurses—along with hospital employees in general—are still changing jobs at higher rates than before the pandemic.

Over half of all hospitals still face nurse vacancy rates above 15 percent, a slight improvement from 2022 but still far more than before the pandemic.

While the worst of nursing turnover appears to have passed, the “rebasing” of wages (for nursing, 27 percent higher compared to 2019) will provide ongoing pressure to strained hospital margins.

Bringing younger voices into the boardroom

Posted on by • Posted in Board, Board Diversity, Board Weakness, Diversity, Leadership, Recruiting, Talent Imperative, Talent Pipelines • Leave a comment

https://mailchi.mp/7f59f737680b/the-weekly-gist-june-30-2023?e=d1e747d2d8

At a recent board meeting, the discussion turned to what Millennial consumers want from healthcare. The system COO put the administrative coordinator, the sole Millennial in the room, on the spot to speak for the preferences of an entire generation.

Nearly every health system we work with is debating how to engage Millennial consumers or understand Millennial (and now Gen Z) employees—perhaps an even more pressing need, given that Millennials now outnumber Baby Boomers in the healthcare workforce. But having a real, live Millennial participating in a health system board meeting is a rarity. 

Most often we rely on secondhand information, either from studies analyzing their behavior, or Boomer board members’ personal experiences as the parents of Millennials. When we suggested that systems are at a disadvantage in not having Millennial board members, the system CEO agreed, and said they had tried—and failed—to recruit younger members. 

It was largely a question of availability. Family commitments were one challenge, but the greatest obstacle was committing to days away from work. Younger executives and community leaders are in the “high-growth” stage of their careers, and rarely in control of their own schedules, making the commitment to a (typically unpaid) board seat difficult. 

As boards push for more diversity among members, recruiting younger directors is a critical component. Even if systems aren’t ready to reshape the director role for Millennials, they must find a way to directly engage younger leaders and integrate them into decision-making at all levels of the organization.

Job creep reroutes path to CFO seat

Posted on by • Posted in C-Suite, Career Development, Career Growth, CEO, Certified Public Accountant (CPA), CFO, Leadership, Leadership Skill Sets, Masters in Business Administration (MBA), Skill Set, Talent Management, Talent Pipelines • Leave a comment
https://www.cfodive.com/news/slumping-cpa-mba-trained-cfos-raise-succession-questions/652092/?utm_source=Sailthru&utm_medium=email&utm_campaign=Newsletter%20Weekly%20Roundup:%20CFO%20Dive:%20Daily%20Dive%2006-10-2023&utm_term=CFO%20Dive%20Weekender

As the CFO remit gets broader and broader, the seat is beginning to attract individuals from different backgrounds, experience levels and skill sets outside of traditional accounting. 

While this opens up a wider range of potential candidates, this also means the traditional pipelines to the CFO seat are becoming less and less reliable. For companies, that means succession planning is becoming more critical — companies should be less focused on hunting for already experienced CFOs and more focused on developing those leaders, said Jim Lawson, co-leader of Russell Reynolds Associates’ CFO practice.

“You really need to make bold moves and give finance people a chance to sit in roles that might take a little bit of time to ramp up to,” Lawson said in an interview.

The new CFO path

A recent study published in May by RRA, a leadership advisory firm, pointed to the rapidly expanding number of responsibilities today’s CFOs are juggling, prompting changes in who is interested in the role and the skill sets and experience needed for the position.

There are fewer CFOs today who began their careers at the Big Four accounting firms such as Ernst & Young, KPMG, Deloitte and PricewaterhouseCoopers, for example, while the number of less-tenured or experienced CFOs who hold CPA certifications has shrunk as well.

In 2012, 55% of S&P 2000 CFOs had CPA designations, the study found. By 2022, that figure was down to 43%.

Part of the reason behind the shifts in financial leaders’ backgrounds is that the skills needed by such leaders have morphed away from those related to traditional fiduciary responsibilities into operational and capital allocation talents or expertise.

“What we’ve seen in the last few years is while having operational experience continues to be very important, this theme around capital allocation strategy, (being the) external communication interface, has been the leading trend more recently,” Lawson said.

The change in the experience that CFOs are bringing to their jobs means that accessing and developing future financial leaders should be a top priority for businesses today, as the career journeys of many CFOs veer off from their historic paths. The number of financial leaders who hold MBAs could potentially fall in the coming years, for example, according to the RRA study, which found professionals in younger generations — such as millennials — are less likely to hold such degrees.

While the number of CFOs in the S&P 2000 who held MBAs increased to 48% last year from 42% in 2012, the percentage of millennial CFOs with such degrees fell to 38% compared to 50% for Generation X and baby boomer CFOs, the study found.

Certifications like CPAs and MBAs have become less common following a trend in the early 2000s when many companies stopped paying for the completion of such programs, Lawson said — and as a natural consequence, those certifications are less prioritized than they might have been previously when filling the CFO chair.

“Do you have to get an MBA to be the CFO of a big company? The answer is not necessarily,” Lawson said.

The new CFO career pipeline

Another trend that could be impacting where future financial leaders are likely to come from is the increasing specialization of finance talent, the RRA study said: in the past, certain larger corporations served as “hotbeds” for upcoming leaders in the space, thanks to rotational programs that covered a wide remit of roles, business sectors and use cases, the study found.

As specialization increased, that means the “direct reports to CFOs’ responsibilities within the finance function had become a bit more siloed,” Lawson said.

While experience at hotbeds of financial talent like the Big Four is still highly prized, RRA is expecting the number of CFOs that have that training to slump in future years — a factor that will also change who is tackling what financial responsibilities as well as the future career paths of finance leaders.

For example, regional or division CFOs now have the ability to be more strategic, because they are no longer the ones doing all the transactional accounting, statutory reporting and local taxes, Lawson said — which could also be one of the factors for why CPA certification popularity is declining.  

The tech factor

New technologies like automation and AI are also changing the CFOs’ day-to-day responsibilities, which — while coming with some potential flaws or cons — could also be a positive for financial leaders.

“As tasks become more automated, it’s helping the CFO spend less time mining the data and more time analyzing the data, a difference which is really positive for the CFO,” Lawson said.

As CFOs’ makeup shifts to prioritize these operational skills, an emphasis on training is key for companies who want to tap future financial leaders for the seat. The emphasis on such experience — which means CFOs are also becoming more essential in driving business strategy, in addition to business execution — could also be changing the future career path for those who wind up in the chair.

The trend of CFOs taking on CEO roles at companies has increased, for example, and is likely to continue in the future, Lawson said, although he pointed to such moves being more likely in certain sectors such as manufacturing and perhaps less likely in sectors such as technology.

“I think we’ll continue to see more CFOs become CEOs as a result of CFOs getting a better opportunity to be part of the business strategy and capital allocation decisions,” he said.

The dawn of the interim CFO

Posted on by • Posted in Interim CEO, Interim CFO, Interim Executives, Interim Resources, Leadership, Leadership Skill Sets, Leadership Transition, Recruiting, Succession Planning, Talent Competition, Talent Identification, Talent Imperative, Talent Pipelines • Leave a comment
https://www.cfodive.com/news/dawn-interim-cfo-leadership-finance-executive-search/649975/?utm_source=Sailthru&utm_medium=email&utm_campaign=Issue:%202023-05-17%20CFO%20Dive%20%5Bissue:50544%5D&utm_term=CFO%20Dive

With companies fighting for financial know-how, a spotlight is beginning to shine on leaders who can bring the skill sets and expertise firms need in the moment.

Demand for interim leaders shot up significantly during the past 12 months, a report by Business Talent Group, a Heidrick & Struggles company, found, rising 116% year-over-year. Requests for on-demand finance chiefs in particular saw a considerable spike, increasing by 103% YoY, boosted by both continued economic uncertainty and the growing complexities of the CFO role. 

The rising demand for interim CFOs is also partly due to growing awareness of the availability of such short-term expertise, said Sandra Pinnavaia, Chief Innovation Officer for BTG.

“Companies, as they get more comfortable and aware of the fact that there is this on-demand talent world, it allows them to contemplate different kinds of changes and uses than before,” Pinnavaia said. “So I do think there’s an underlying driver here, that is in a sense, supply creates demand.”

The interim CFO’s appeal

For companies, interims can help firms navigate through tricky periods or transitions. Requests for interim CFOs made up half of all interim C-suite requests, according to the BTG report. Companies are specifically searching for financial leadership skilled in financial controls, accounting and audit. Demand for such expertise rose 76% YoY.

For finance leaders, the higher demand coincides with gains in the compensation and benefits that accompany the role, said Jack McCullough, President of the CFO Leadership Council.

There’s better money available for CFOs who do this type of contract or interim work, leading to more executives interested in these types of jobs, McCullough said in an interview. For example, some part-time CFOs have begun to receive stock options, he said, referring to a CFO who received the benefit at three startups.

Taking an interim role can also be a refreshing change for finance leaders who want to apply their skills in new areas, according to Diane Buckley, managing partner of Forte Financial Consulting LLC. Buckley, a veteran of Big Four accounting firm Ernst & Young, was drawn to interim and fractional CFO work because it afforded her the option to share her skills with growing companies and “really be impactful day one,” she said.

“It was like, ‘I can bring value to smaller companies that may not at this point in their growth warrant a full-time CFO, but I can bring that skill set to them,’” she said in an interview.

On the supply side, shifting workforce trends may be prompting more companies to take a second look at what they need from their leadership.

Talent shortages across the accounting and finance space mean companies may be facing a year-long period to find a qualified CFO, making it more necessary to put in an interim “even if it’s not the ideal person,” McCullough said.  

Meanwhile, the pandemic has also left a lasting mark: BTG clients have tapped more interims because “they have been forced over the last few years, to redefine their whole way of working,” Pinnavaia said.

“Now obviously we have a huge spectrum — there are companies that are back full-time, in-person every day, and there are companies that have really changed their business model and they’re not in-person at all,” she said. “But I think that has loosened up the aperture for what would be an acceptable solution” when it comes to leadership, she said.

The right talent at the right time

Hiring on-demand talent also allows companies to find a leader who can meet their needs in the moment — and since many interims come into a company to solve a particular problem or meet a specific goal, one’s skills are “kind of by definition matched to what the issues are,” said Reed Malleck, CFO of Ratio Therapeutics.

CFOs often need to operate in “four dimensions,” he said in an interview, including accounting, operational skills, investor relations and the ability to participate in the execution of strategy for the business.

“If you’re a permanent CFO, you have to cover all of those, even though you might be really good at only one of them,” according to Malleck, an experienced interim executive who took on several such roles as an engagement partner with executive talent firm Tatum, a Randstad company.  “But as an interim person, it’s more targeted, like, ‘we need a guy who’s really good at operations. We need this thing to be fixed.’”

Being able to slot one’s skills perfectly into the situation can be a huge benefit for CFOs, many of whom are dealing with expanding job creep. While becoming an interim is not necessarily less stressful than a permanent CFO position, “in a way, you get relief when you get to the point where you fix everything, and when you’re in a permanent role that never happens,” Malleck said. “When you’re in a permanent role, there’s always something new that’s a new problem.”

With CFOs taking on more responsibility for areas like digital transformation, keeping up with the books and juggling other operational needs across the organization, “the CFO is blamed for this and blamed for that … increasingly, people get burnt out or there’s a loss of trust,” he said.

“Hundreds of analysts are looking at your stock and your performance, the market and the competitors and the technology and you have to explain things not once a quarter, but like five times a day,” Malleck said.

Succession planning is vital

Another often unexplored benefit of on-demand talent is as a source of expertise for future company leaders. A shortage of talent in the finance and accounting fields is worsening, with potential accountants lured away by shinier fields such as technology.

As a result, building a pipeline for executives with CFO skills is crucial.

Moreover, CFOs who were at the top financial seat the last time the U.S. saw serious inflation in the 1980s have long since retired, McCullough said. Finance leaders today face a “steep learning curve.” 

“CFOs, through no fault of their own, they haven’t had to develop the skills” necessary to navigate current economic turmoil, he said.

Many CFOs with decades of experience are also either looking to retire, or seeking promotion rather than lateral opportunities, said Shawn Cole, president of boutique executive search firm Cowen Partners.

The jump from the CFO to the CEO seat is “way more commonplace” today than it was just a few decades ago, Cole said in an interview, opening up more opportunities for finance heads. Promoting internal candidates to an interim chair can be an easier and more affordable way for certain companies — faced with both a dearth of qualified external candidates and shaky succession planning — to fill the seat while they hunt for a long-term replacement, he said.  

“For the last decade or so, businesses have been in like a boom or bust kind of scenario,” Cole said. “And so I think there’s just this lack of investment in a future generation.”

Whether an internal or external interim hire, the executive should also be a welcome and engaged part of the search for a long-term candidate, Cole said. It is part of their fiduciary obligations to a company and its shareholders to “do the necessary due diligence to make an informed hire.”

While internal interims can be an affordable choice, there can also be drawbacks: the “most damning issue” being when an internal interim pick is acting both as interim CFO as well as retaining the responsibilities of their original role at the company, Cole said.  

“So what they wind up being is CFO in name only and they still are fulfilling the role of financial reporting or something like that,” he said. 

Interims and on-demand talent will probably play a greater role in a company as time goes on, Pinnavaia said. She pointed to clients who might think they need an interim CFO, for example, but who are really searching for an expert or CFO who is able to do a specific project with the existing leadership team. In such a scenario, hiring an interim controller or another executive on-demand with the right finance skills would be the best way forward, she said.

“I’m very excited about this as an innovation in how business gets done,” she said. “It is a way of applying … real time alignment of skill and capacity against particular challenges or opportunities in the business.”