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Rethinking People Development in Finance

It’s time to overhaul the way companies develop the careers of finance professionals

by Ankur Agrawal and Bill Huyett, McKinsey & Company

For all the innovation in financial management over the past 20 years, it’s remarkable how little the process of hiring and developing finance talent has evolved. Many CFOs do so pretty much as they did a decade or two ago, recruiting talent from a largely homogenous pool of candidates, predominantly with accounting backgrounds or quantitative skill sets, and assigning most of them to budgeting and planning or to finance operations. Many believe that rotational assignments can create the breadth that finance function generalists—and future CFOs—need.

CFOs report a growing tension between demand for traditional finance operations and demand for finance support elsewhere.

Yet that approach isn’t likely to deliver the leadership profiles needed to manage increasingly complex finance organizations and to serve business leaders broadly in the modern era. Turnover is high. Few new hires with an accounting background ever get the kind of sustained business experience that would hone their strategic and top-management advisory skills. CFOs report a growing tension between demand for traditional finance operations and demand for finance support elsewhere —in planning and strategic analysis, reporting to shareholders and regulators, and coordinating activities across a complex web of outsourced and automated transaction providers.

One way to develop the skills that the modern finance function requires is to differentiate development paths for distinct roles: specialists to handle traditional finance domains; advisers to counsel senior executives in business units and functions; and experts to manage areas such as investor relations, risk management, treasury, or taxation. The recruiting pools and profiles for these segments would differ, as would their career development paths (through rotations or formal training), and the people in them would be evaluated and compensated differently.