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Where Will the Next Generation of Financial Executives Come From?

In this podcast, FEI Managing Editor Oliva Berkman speaks with Ajit Kambil, Global Research Director of the Deloitte CFO Program, and Charles Holley, Retired CFO of Walmart and CFO-in-Residence of the Deloitte CFO Program on hiring strategies, the effects of automation, and developing accounting talent.
A transcript of the discussion is below the podcast.

Olivia Berkman: Ajit and Charles, thank you for taking the time to speak with me today. I wanted to start off by sharing a quote with you from a recent Wall Street Journal article. "Amid accounting changes to the generally accepted accounting principles that govern U.S. financial reporting, companies are scrambling to find so-called 'technical accountants' and regulatory experts who can understand the rules and ensure that management and staff comply."
This leads us to the first question that I want to ask. Are you concerned with the amount of people going into accounting and finance? Maybe a bit about your background before we jump in.
Charles Holley: I was a CPA. I started out in public accounting. I spent ten and a half years in public accounting with one of the old Big 8. Then, I oversaw international accounting for a multinational. Then I got out of accounting and finance and ran a consumer electronics company in Europe. I ultimately went to Walmart to help start their international operations and, overtime, became the CFO of Walmart. I retired last year, 2016.
Ajit Kambil: I'm Ajit Kambil, I'm the Global Research Director for a CFO program. I use to lead Deloitte's think tank for many years. Over the last eight years, I've been focused primarily on CFO issues, created our transition labs and I've sort of worked out about 250 CFO's worldwide through our transition labs.
Berkman: Great. Ajit, we'll start with you. Are you concerned with the amount of people going into accounting and finance? How do you think businesses will manage to keep up with the demand?
Kambil: Yes, I am concerned. I think there are things to be done to encourage more scholarships in the area, make the brand of an accountant more favorable. Firms recruit folks and do some education at the university level, or even in high school to some extent, as to the opportunities that the profession provides.

I think there is concern, but I think we all need to do more to engage people at a young age to look at the profession as a valued profession.
Holley: You know I actually think it's in pretty good shape. I think we can always use great people, whether it's in public accounting or in industry. It is obviously getting more technical and more complicated, but I do feel good about the direction I've seen, not just at university but even before university. There are a lot of programs educating kids in high school on accounting and careers and what they lead to, which really excited me.
I will say though, once a student graduates and they go toward their CPA and they are working at a company or an accounting firm, it's really important to continue their development, because as you stated, it's becoming more complex and GAAP is continuing to evolve, and it's really important that they have a continued foundation in their accounting and what it's going to involve going forward.
Berkman: Do you think people coming out of the industry have the critical thinking skills that they need to be an effective financial executive?
Holley: I do. I think they are being trained well. It doesn't mean that they can't continue to develop, but I will say this, I've been very impressed over the last, I would say, seven to ten years at the students that graduate that would come into Walmart. The amount of knowledge and command of topics that they had, the amount of maturity that they had in order to get up and actually communicate that knowledge about topics has been very impressive.

My generation, we didn't have those opportunities to develop like that in college, but they are definitely getting that today. I do think it's on the right track. But again, it's really important that they continue that development as they come into the working world.
Kambil: I’ll just concur with Charles there. I think we are training people better through business schools and through financial programs and things are getting more specialized. I think we are developing people pretty well in terms of critical thinking skills.
Berkman: Do you think people coming in have those critical thinking skills through the education that they receive or through real life experience?
Charles: It’s both. I think university gives them a great foundation to start, but you really do need experience. If you look at, for instance, working with SEC filings: it's really important that you have experience and if you have people around you that have that experience to teach you. Not all of that is going to be obtained just through your college education.
Kambil: I find a lot of people have come to my transition labs and obviously have a good set of critical thinking skills. The two areas that I would focus on would be to be a strategist effectively, and being a good catalyst for change at the CFO level. If they are coming through a technical accounting route, they may not have accumulated the skill base necessarily to frame strategy, and establish the strategy presence in their organization. Or, to really drive transformational change.
Berkman: Does having an MBA help there?
Kambil: I think it gives some sort of basic foundation and the language of business, but I think as Charles alluded to earlier, a lot of it depends on the experiences that you've accumulated in your career trajectory towards being a CFO, and whether in that trajectory you have to manage complex projects, drive change, and enable different strategies for a company.
Holley: Back when I got my MBA and came out into the business world, we were very concentrated, whether it was in finance or marketing and management. Today's MBAs are much more generalist and strategist. I think that's good. What I've found is they are taught not to be afraid of problems, any kind of problems. I've found they are very open and actually they really do want those kinds of challenges.
There are plenty out there today in the business world. I think that's good, but as we've alluded to, getting that on-the-job experience and getting their feet wet, getting their heads around real problems and being able to solve those is really important for development.
Berkman: How can businesses plan for getting new recruits up to speed on technical skills? Are colleges giving recruits the technical skills they need?
Holley: The big four have always had by far the best in class in developing those kinds of skill sets. Larger companies, though, also understand that you cannot build a bench by just dealing with the big four. You've really got to have your own development programs and I think that takes a lot of work and investment to make sure that the employees that you've hired at the beginning levels get the rich technical information and how things work.
If you are working in a controllership area, or the S&P type reporting, you really do need on-the-job experience with people that know and have been around it for a while. You need both. You need continuing education but you also need the on-the-job training.
Kambil: You see firms manning in-house training programs, and in-house rotation programs so that they get their high potentials exposed to critical problems, and as well as developing their skill base.
Berkman: Charles, this one is specifically for you. Can you explain the ‘open to hire’ concept, and why you think more CFOs should embrace it.
Holley: It's pretty simple. I've always been taught and I always try to use the rule that you should always hire people that are better than you, and not be afraid of that. I think a lot of people are afraid to do that. You want to have the best people on the team.
I know budgets can get in the way, everybody has them and they are always the pressure, but if you find a best in class, excellent person out and available, I've always said that you should have an open to buy mentality, regardless of the budget. I can promise you that person will pay for themselves if you bring them into the company. I've had a lot of experience where I've brought in former CFOs and controllers of companies. We put them on the bench, we created roles for them, and within six months or even sooner, they had major roles in the finance area of Walmart. It just pays off so much to be able to fill the bench with the best possible professionals you can find.
Kambil: I fully concur with Charles. It's critical to get the right people in the right seats as quickly as possible. It's having really good talent, even if they are on the bench for a little bit, I think that's terrific.
Holley: Business is changing quickly with digitalization and mobile and everything else. That's going to require different skill sets. You've got to continue to refresh the bench anyway.
Berkman: I would think that for those people on the bench, it's really important to keep them engaged.
Holley: Exactly. I think that's up to the CFO and to executive management to keep people challenged constantly at what they are doing.
Berkman: Has automation changed your perspective on succession planning?
Kambil: That's a great question. I think it demands CFOs going forward to be more cognizant about technology, the possibilities of using technology, and be capable of changing the operations of a finance function by incorporating technology. But other than that, I think the ways in which you develop people will continue pretty much the same, which is to train them, put them in challenging positions that enable them to grow.
I'm not sure it changes my view per se so much on succession planning. It's just that I probably look a little bit into strategist and catalyst capabilities of the individual. We’re seeing that across the board, the CFOs coming into our transition labs increasingly are not traditional controllers and have pure accounting skills, but people with a broader repertoire of skills because they've done some other things in the organization.
Kambil: I agree with Ajit. I don't think that it changes dramatically succession planning, but I do think that it does require you to make sure in your succession planning that you are cross breeding your people, that they are understanding other parts of the business, whether it's in the controllership or it's in operations or treasury.
Automation has been around for a long time honestly in the finance area. Since 2008 most companies have gone through at least one organization efficiency project, and I would venture to guess that most companies are in the middle or have completed a second one. That's just because we are in a lower growth environment, those things become so much more important. CFOs are having to lead those exercises. It does play a part, maybe not directly, but indirectly.
Berkman: I want to thank you both so much for your time. Do you have any final thoughts, maybe specifically around companies struggling to find technical accountants and also finding future employees that have those critical thinking skills that they need?
Holley: One thing I've always said, and I think it's true. I don't think any CFO has ever been let go or displaced because they had too much great talent. You can have all the great technology in the world, but if you don't have the right talent and the best talent underneath you, you are ultimately going to fail. I think it goes back to talent. That has to do not just from hiring off of campuses; it has to do with how robust and how good your development programs are. I think that's extremely important.
Kambil: When I work with CFOs in our transition labs, managing and developing talent is one of their top five agenda items. They are very cognizant that they have this five year run at the role, or a seven year run at the role. They are often looking to develop their successor in that time frame. When they come in it's not usually that they have somebody who is ready now, but it make take two or three years to develop. To do that, they've put in a variety of programs, whether it's putting in individuals who are high potential in challenging roles, rotation programs, and things like that. I think that what I find across the board is that most CFOs are really focused on talent.
The other thing I'd say is it's important to build a grant for your finance organization, to attract talent. The grant should in some ways show that if you come to the organization, you really have an opportunity to learn and progress.
What we find in our survey work is that the number one reason employees leave is lack of progression. Having individual development plans and good progression strategies and taking ownership of that as a leadership to finance I think is an important attribute in helping to attract and obtain critical talent.