How can CFOs build resilience while facing down challenges?

As businesses navigate turbulent economic waters, CFOs face mounting challenges in their mission to manage costs, optimize resources and maintain financial resilience. These challenges are made even more urgent by a well-documented global shortage of talent across many industries, including an accounting talent shortage that's been building for several years. These shortages, along with unpredictability in markets, are not only ratcheting up the challenges for CFOs, they're also underscoring the importance of creating agile, resilient organizations. 

How much of a problem is talent scarcity?

Hiring and retention were the hardest challenges CFOs dealt with in 2022 and 2023, and it's increasingly expensive for companies to hire in-house talent. A Gartner survey found that 58% of CFOs plan to raise average employee compensation by 4% to 9% this year. Another 13% of CFOs will implement average raises of 10% or more. The only other category where CFOs plan to increase spending is technology.

A shortage of qualified hires creates work backlogs that fall on existing employees, which can stress them to the point where they decide to change employers, further exacerbating the problem. What's more is unfilled seats and overworked team members contribute to operational challenges: when the work doesn't get done, or contains human errors, the results can be dissatisfied customers and clients, financial reporting errors, and costly noncompliance, especially in accounting and finance roles. 

How can CFOs maintain or build flexibility in their organizations?

When talent scarcity problems accumulate, it's virtually impossible for a company to scale efficiently or to stay flexible and resilient in a changing economic environment. To avoid reaching this point — or to start resolving existing inflexibility — CFOs can invest more in hiring, training and retention, and explore their options for automation to reduce the number of tasks that employees need to perform. CFOs can also consider outsourcing as a way to introduce a scalable team solution.

Double down on hiring?

Committing more resources to hiring and retention is the traditional option, but in today's market it may not be the most effective or cost-efficient strategy. According to Deloitte's Q4 2023 CFO Signals report, 42% of CFOs say their companies will hire more people than they let go in 2024. However, building and maintaining a full talent pipeline may require resources, such as internal recruiting teams or external acquisition feeds, that could be better allocated elsewhere, such as implementing automation for standardized and repetitive tasks. In some cases, it may be next to impossible to keep the pipeline and in-house roles full because the talent simply isn't available in-market. While it's important to invest in internal hiring, that alone may not be enough to support flexibility and scale. 

Add automation

In 2023, more than half of CFOs (51%) began automating tasks that had been done by employees, according to a Q1 2024 survey by the Federal Reserve and Duke University's Fuqua School of Business. The top three reasons for automation were cost savings, quality control and employee experience. Among CFOs who implemented automation, 59% said it allowed them to maintain hiring, while 29% said automation allowed them to slow hiring and 16% said it allowed them to leave roles unfilled. 

Expect to see more organizations adopting automation. 80% of CFOs surveyed by Deloitte expect to leverage more automation in 2024. Of those respondents, 81% are planning to use automation to take rote tasks off current employees' to-do lists so they can work on activities that create more value (and also improve the employee experience).

However, automation is not a quick fix. It requires resources that organizations may not have yet, which is one reason that the Fed survey found that 75% of the CFOs who deployed automation in 2023 worked for large firms. Automation requires investment to get the company ready, such as data unification and standardization. It also requires integrations with the organization's existing enterprise software, which can take time to accomplish. Nonetheless, mid-sized and even small companies are now laying the groundwork for automation in targeted use cases, which can help position them for future expansion.

Explore AI now for greater leverage later

AI holds a great deal of promise for automation and operational assistance. However, because the technology is new, there's a lot that has to happen before AI can take over any tasks, especially within the finance and accounting function. 

Not quite a quarter of CFOs told Deloitte they expect their organizations to prioritize AI governance this year, and that governance is critical for implementing use cases that can scale. A solid governance program is also important for meeting regulatory requirements as they emerge. In the meantime, non-AI automation for basic tasks can help build out an automation program that's more ready to scale when the time comes to apply AI.

Outsource some roles or responsibilities

Outsourcing is another option for maintaining flexibility and resilience, and 35% of CFOs surveyed by Deloitte said their organizations will outsource more operational activities in 2024. A recent survey found that enterprises that outsource business processes save an average of 15%. That savings can arise from lower talent costs and less spending on more challenging recruitment and training for in-house hires. 

Outsourcing also opens up new markets of talent for organizations, and in the age of remote work, many business leaders are starting to see outsourcing as a natural extension of remote work. If an accounting team is working from home, the logic goes, it doesn't necessarily matter where in the world that home is. One Stanford economist forecasts that "about 10% to 20% of U.S. service support jobs like software developers and human-resources professionals could move overseas in the next decade." Exploring outsourcing now can give companies an advantage in controlling costs, filling roles, and maintaining operations for greater stability and flexibility, regardless of what the domestic labor market is doing.

Balancing the options for a stronger organization

Solutions for companies will vary, depending on their resources and stage of growth, and not every solution may fit or be attainable. At the same time, each of the solutions on its own is unlikely to achieve the CFO's long-term growth and resilience strategies. By understanding how hiring, automation, AI and outsourcing contribute to operational efficiency, cost and quality, CFOs can identify the optimal combination of solutions to build resilience into their teams and meet the financial needs of their business now and over the long term.