Building finance departments: from recruiting to retaining; What might be viewed as a "perfect storm" brewing in the labor market--an aging workforce, talent shortages, fewer people entering the workforce and wage pressures--can be counteracted to avert a talent crisis.

• Author: Messmer, Max
• Position: Fundamental step for building a finance department

Maintaining and strengthening a highly skilled and responsive finance and accounting department is one of the senior financial executive's most important tasks. In today's environment, it is also one of the most difficult. At the same time, corporate governance regulations have added to the finance department's work, making it increasingly complex and high-profile.

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Companies now must expand not only the number of financial professionals they employ but also their skill sets. The result: businesses everywhere are vying for top financial talent, while, in many cases, demographic and economic trends are working against them. A recent survey of hiring managers commissioned by Robert Half International (RHI) and CareerBuilder.com cited the primary hiring challenge businesses face: a shortage of qualified workers. Furthermore, most of those surveyed expect it to remain difficult.

Talent shortages have hit finance departments especially hard. Although accounting enrollment has started to rise, following years of declines, the supply of graduates has yet to catch up with the increased demand. In addition, the first wave of baby boomers is approaching retirement age, and demographic patterns point to fewer skilled professionals entering the workforce.

And, with an encouraging but still inconsistent economy continuing to limit corporate budget increases, many companies appear hesitant to boost employee compensation significantly. Another RHI survey found that the majority of U.S. employees are not expected to receive higher raises and bonuses in 2006 than in 2005. Less than one-third (29 percent) of CFOs polled said they will give bigger salary increases this year, and just 20 percent anticipated boosting bonus amounts. The apparent employer reluctance to markedly increase compensation may likely complicate or delay efforts to recruit and retain top talent.

These converging trends may cause a further tightening of the market for accounting and finance professionals, and an even more pronounced shift to a candidate-driven market. In this challenging environment, finance departments may need to intensify their efforts to attract and hire skilled professionals.

Assessing Needs

Carefully analyzing current and anticipated needs on a regular basis is a fundamental step for building a finance department that truly supports an organization, particularly as needs change. The following address some key considerations to help decide whether a company has a short- or long-term requirement for additional staff:

* Why has a need arisen? Is it in response to a lasting change in the business, or a temporary operational issue or problem? If one primary goal is to expand the company internationally through acquisitions, finance personnel are likely needed to handle the additional work, particularly if the business begins operating in new areas. If, however, the company is implementing new enterprisewide technology and needs assistance with data integration, it may be more beneficial to bring in professionals on an interim basis to address immediate needs.

* Do existing personnel have the skills, capabilities and time needed to achieve the goals of a particular project or initiative? If a firm is growing in different...