Navigating change with ease is a highly sought expertise in competitive markets. Those lucky few with the prescience to anticipate the next big shift can help their organizations thrive, and that is especially true in the world of work, where economic variations can drive the narrative throughout the talent ecosystem, from wages to hiring and retention.
Workforce dynamics can have a meaningful financial impact, and mastering its ebbs and flows is essential to driving shareholder return. But because change is inevitable, crafting a strategic path to sustainable growth requires a roadmap with alternate routes. From managing financial growth, to helping mobilize a workforce, the CFO role provides unique visibility and perspective that could offer valuable insight to build future-forward organizations.
Balancing Many Factors
The macroeconomic landscape is of course one of the key elements that typically sets the tone for business strategy, and for the CFO, it serves as a barometer for growth. The adoption of transformative and potentially game-changing technologies like generative AI will certainly play a role in future strategies.
However, there are also less immediately obvious considerations such as how business leaders will also address and prioritize talent acquisition and retention strategies. CFOs who can leverage data and insights that track macroeconomic trends, balance that with the latest transformative innovation trends, and apply emerging talent and skills trends can provide their organizations with more of a competitive advantage.
The role of generative AI. Generative AI — and technology in general — is top of mind across the world of work. Many CFOs are evaluating how it can help their finance organizations make smarter decisions, better manage cashflow forecasts, improve workflows, and streamline processes. In a world filled with data, how quickly you manage and process data to make informed decisions greatly impacts your ultimate business success.
Interestingly, the current value of generative AI is its ability to deliver short-term profitability and relieve some of the labor market woes by automating more tasks and increasing productivity. Most CFOs I speak with want to use generative AI, but it may be too early in this evolving technology to fully realize its potential. Regardless, it will continue to be a source of interest as organizations weigh responsible use cases and work to incorporate the technology in a way that will best address their organizational needs.
Why talent matters. An organization’s approach to its workforce is the ultimate balance sheet. In a shifting economy, as many attempt to anticipate what is next, it is important to look closely at the unique talent needs of your workforce.
As CFOs, the path we choose depends on our industry. For example, in some cases, talent dynamics may allow for more flexibility to enlist contract workers and address both organizational needs and financial outlooks. This approach could also help address fluctuating interest rates, and the pressure companies are under to deliver short-term profitability.
However, some supply chain-reliant business models require longer-term planning. Other industries are more dynamic and can pivot quickly and react as necessary. Obviously, the nimbler you can be the better since so much of what is occurring in the macro environment is a moving target.
Leading Through Change
The CFO view is as 360 as it gets. From inside, the variables driving business strategy, to those outside macroeconomic forces. This view from all angles provides a unique lens to dissect, and ultimately craft, a tailored, yet agile playbook designed to navigate the changing dynamics of today’s workplace. At the same time, the CFO can influence many outcomes in the organization, including advancing efficiency, productivity, and workforce management.
Many companies are operating in a more rapidly changing competitive backdrop than five years ago. From a CFO's perspective, while the resources that are immediately available may not change right away, there is always the opportunity to advance the internal decision-making process to serve an umbrella strategy that covers talent, financial performance, and other business pillars. To accomplish this, we need to work closely on strategy with our peers.
Managing talent is a good example. The changing economic tides can have a significant impact on an organization’s workforce and in turn, affect a company’s bottom line. This creates an opportunity for the CFO and chief human resources officer (CHRO) to align on a talent strategy that meets the organization’s overall financial goals. CHROs know what talent costs and its availability in different geographies and professions. To achieve a particular business goal, the CHRO and CFO need to address what talent that objective will require, if it is attainable, and what will it cost.
Employee satisfaction is no longer just a concern for CHROs. Productivity hinges on engagement, which is a leading indicator for retention. According to a study by the ADP Research Institute, employees have a greater focus on skills development and career progression.
Investing in upskilling — learning new skills or improving existing ones — should remain a foundational area of focus in an overall talent strategy. Regardless of labor market conditions, investing in your current workforce could offer a greater return. It is more financially sound to hire good people, develop them, and keep them.
Now more than ever, leaders need to make strategic decisions in an efficient manner that will help move the organization in the right direction. With a keen focus on the various macroeconomic forces and how they are impacting business-critical decisions, CFOs can provide the context that can impact employee success and drive sustainable growth for the organization over the long term.
Don McGuire is the chief financial officer at ADP.