Adam: Hello and welcome to PwC Canada's newest podcast, Finance in 15, a series that explores finance transformation and what it means for leaders in the finance function. My name is Adam Boutros and I'm your host.
As we've covered in previous episodes, at PwC, we like to take a holistic view to finance transformations focused around three pillars: people process and performance. Today, we're going to go deeper on the people pillar, certainly a critical focus area for a successful finance transformation. Joining me today to get into this in more detail are PwC partners Phil Hagel and Lee-Anne Kovacs. Welcome, Phil and Lee-Anne. Thanks for both being here today.
Phil: My pleasure Adam.
Lee-Anne: Great to be here, too, Adam.
Adam: All right, so to start things off, can each of you give a quick background on your roles and what you do when you're working with finance leaders?
Phil: Happy to, Adam. So I'm Phil Hagel, a partner from our Toronto office. And I lead a national cross-functional team that provides comprehensive solutions to finance transformations in the mining, energy and utility sectors.
Lee-Anne: And I'm Lee-Anne Kovacs, and I kind of do what Phil does, but for technology, media and consumer markets industries and like Phil, I'm also an audit partner. And so in that role, I see many finance functions in various stages of their optimization and their transformation journeys. I've seen the common challenges and I've also seen what well-run finance transformations look like and what well-run finance functions look like. So I'm kind of excited to bring that perspective to bear on today's podcast, Adam.
Adam: Well, Lee-Anne, I've heard you say a number of times that transformation starts with people. Can you elaborate on why you think that to be the case?
Lee-Anne: I'd say that the tag line here, Adam, is that people drive transformation, not technology. And an effective transformation really starts with your finance leaders, your CFOs and their direct reports. And they need to be the change agents that accelerate and inspire and even give permission for new ways of working. Too often we kind of see transformations being delegated to more junior resources, and those junior resources need to kind of do the impossible. They need to rally the troops. They need to build consensus. They need to motivate and they need to deliver on a tough transformation agenda. But that's really too much to ask of people who structurally cannot influence change and these resources Adam end up being frustrated. And the transformation doesn't take flight and people kind of leave a transformation with a kind of bad taste in their mouth. Your transformation needs to be led by people with the clout and the strategic lens and the influence, really to lead the effort and drive change and adoption. And people embrace change Adam, when they're not afraid of it. And fear comes from a couple of different things. The first is that we sometimes don't understand it or we don't trust in the new way of doing things. How will we know which roles are human based and which roles are supposed to be machine based? How do we trust the machine based roles and how do we know that there are still going to be human based roles? And often we're not confident in our skill set and whether our skill set matches the new ways of doing things. We've trained and rewarded certain skills and behaviors for the past decade. So how do our people evolve when when our expectations of their role evolves? So investing and upskilling, and then we're going to talk about that over the course of the next 15 minutes, becomes critical to people led transformation.
Adam: I think we've all seen that sort of the failed transformations that don't have buy in and support from the top. So that is certainly a great place to start when we're looking at the people pillar. So, Phil, you recently took part in a virtual event with the mining CFOs on finance transformation that included some very interesting polling questions on some of the challenges that we're talking about right now. Can you tell us what you found and talk about what the findings mean?
Phil: A couple of the questions we ask that are insightful and pretty common across transformations that we see. The first one being, what are some of the concerns you have about having the right finance skills? And forty one percent of the respondents said their people don't have the necessary skills and capabilities to execute against the finance transformation objectives. Another thirty six percent of those respondents said that finance is not structured to deliver efficiently to the business. We also asked about some of the challenges encountered when trying to drive value through analysis and insights. And sixty one percent of respondents said their team spent more time generating reports that analyzing them. And I suspect that for many folks listening to this, that's going to be a pretty common theme here. So these responses among many of the other polls and our team's first hand experience really reinforce the need for finance executives to think about skill sets across functions and where they need to change. And this includes looking at how roles will change as a result of automation and technologies like machine learning. Just like Lee-Anne mentioned. This also raises the question of upskilling your existing people versus hiring highly skilled folks. It's important to really strike a balance between Catalyst hires and giving your existing teams the opportunity to upskill themselves. And as we all know, allowing teams to be part of the change increases the likelihood of embracing the change.
Adam: Yeah, that's great Phil. Some nice insights from the mining group there. And I suspect also the case with a lot of other industries. Those are certainly some some universal problems that we come across. So I'd like to hear comments around upskilling a little bit further. What do you think is the best approach to get people onto the upskilling journey?
Phil: Well we talk about, things like automation, data analysis, artificial intelligence and a lot of other emerging technologies that can really enable and deliver productivity. But technology is really only as good as the leaders who identify its opportunities, the technologies to deliver it and the people who actually work with it every day. And that's where some companies are coming up short for finding the right mix of skills of skilled and adaptable people aligned to the right culture and with the right mindset and behaviors is critical. And it really starts with your company strategy, assessing your current and future business needs, identifying the size and nature of your skill gaps and mismatches, and then which opportunities to prioritize for any project and anticipating the right skills for the future based on your strategy and goals, and helping or enabling that by laying a cultural foundation, that, by delivering modern upskilling programs and building a learning and development function with the right educational technology to really deliver vastly better return on your upskilling investments for people. And as a reminder to my earlier point, it's not a program for a select few in your organization. Really, the entire organization needs to move forward and modernize and invest in their own modernization of their skills in order to be able to use the information and tools that they're actually given. It's a bit of a tall order, but one that we see produces very high returns.
Adam: Yeah, absolutely. Phil, it's amazing the buzz and energy that we see at companies when they really embrace something like this across the organization. PwC being a great example. I know we're certainly on the journey and it's it's just fantastic what people are taking out of the whole upskilling journey. There's there's really something in it for everyone. Let's go back to Lee-Anne. If we're talking about finance leaders and leadership, looking at tackling this big, gnarly finance transformation problem, where should they get started?
Lee-Anne: Well, I mean, transformations can be daunting and people get that transformation fatigue when they can't see progress Adam. And if you're a finance leader, you're often removed from kind of those details of the processes. You kind of know what your group does, but maybe not the specifics of how they go about doing it. And companies grow with processes which were good enough, often become difficult to scale. And we often hear CFOs and finance leaders who are due to roles are due to organizations say they have no idea why financial processes are so cumbersome and why it takes, for example, three weeks to close their books. So I think the critical first step in a transformation is to understand what people do today, move away from assumptions and get the data and the facts. One of my clients started with asking the question, what do you do in a month that's an absolute waste of time? Or as they say, what do you do in a month that's absolutely stupid? And we have an activity survey at PwC that captures what people in finance spend their time doing. And we actually take H.R. and payroll data and we cost that out. And you compare that to the work that you want them to be doing and the areas with the biggest gaps, with the highest cost and therefore the highest payoff can really drive your transformation priorities. And I would say this Adam, you need to build momentum quickly. You need to show some fast results to earn the trust of the team so that they stay invested in the transformation. And you can avoid that transformation fatigue. And once you do it once, iterate and iterate and iterate so that you get some fast results. And it's always important to keep in mind, and I mentioned this before, that the push to transform has to come from the top, that you can't expect the finance, I guess, transformation team to do all the heavy lifting. But then the CFO and the finance leaders still want information the old way and they want data produced to them the old way. It's everyone's job to transform. It's not just the transformation team.
Adam: Yeah, that's great, Lee-Anne. I like it, a data based approach to it where where you're going to tackle transformation. And I think there's a lot in it around the people having a voice to contribute and where do they actually see the pain points and to show that leadership's listening when setting setting the agenda for the transformation. So those are some great insights. OK, let's talk about the biggest obstacle that companies will face as it relates to the transformation. Both you Phil and Lee-Anne have seen a number of these. You know, maybe you're kind of top challenge and what's a good strategy that companies can use to address the challenge? Let's start with Phil.
Phil: So I would say on the people front, it really depends on your stage of modernization and industry. But many of our client executives do talk about a lack of real analytical talent. And often when we start diving into the issue, we find challenges with data quality and system integration are pretty common, but it can be also compounded with a lack of staff with deep data science and technical skills, or sometimes teams just don't have the time and bandwidth to actually deliver on what was expected of them. But if your industry really has extensive data available to you, the value of insights that can actually be unlocked when handed to a small team with the right data skill sets and space is tremendous. Not surprising, but we at PwC have teams of data scientists across the country in our network, and that's just what they do for our clients. And my advice for the traditional finance organization is to be open minded when you're thinking about the new skill sets that you're looking for. It may not be a typical skill set that you ask your H.R. team to go and search for or is hired for in the past. And it, frankly may not even fit perfectly into your current organizational chart. But again, industries that have rich data sets, the ROI of a small group of highly skilled data scientists, along with an open mind of an executive sponsoring them, is really astounding. So really engage with them, give them access and enable and, support them to have the space to unlock these insights from the data you have and you won't be disappointed.
Adam: OK, to close things out, how about one takeaway you'd have for finance leaders tackling the people aspect of transformations? Lee-Anne, you want to start off?
Lee-Anne: Yeah, I'd say invest in your finance talent. Some of it will be through Catalyst hires, but you can't solve your transformation through just hiring alone. Take them on that kind of upskilling journey. You need to kind of equip your people with the skills to evolve, kind of as your, in their role, and your expectations of them evolve. And when you do this, you kind of instill this spirit of citizen led innovation by having people really question what they do not now and what doesn't work and what they can change to make their jobs better and more efficient. You need to find ways to encourage them to opt into transformation. And you want to kind of reward that transformation. This has big benefits in terms of talent retention and developing the organization. People don't want to focus on mundane tasks and they're looking for more meaningful career paths. They want opportunities to automate. CFOs often forget what it's like to be that junior analyst that's crunching through forty spreadsheets, kind of some of those soul crushing work that that often happens in the finance group. Creating that kind of spirit of bottom up innovation can free up that white space that we talked about to focus on more value-add work. And Adam, we often see how finance teams score low on, or lower on employee satisfaction surveys because they spend so much time inside the spreadsheets and on repetitive tasks. Manual reconciliationss. This is an opportunity to not only elevate the finance group for others, but to elevate the experience of your finance groups.
Phil: I would only add to that as, as Lee-Anne and I have mentioned sort of a few times throughout, is that you really need to engage with your people and the business on the transformation right from the start and really support them. Solving a company wide issue with the support of leadership and your executive team is really a critical success factor and engaging with your people and stakeholders across the business. I mean, that's paramount to any successful transformation. And don't underestimate the importance of people change management in your plans as you embark on your transformation projects.
Adam: Thanks for sharing your views today, Lee-Anne and Phil. I hope today's discussions have given you some ideas for how you can build a finance team that will really thrive in the future. We've seen amazing results at organizations that put people at the heart of their finance transformation programs. And thank you for joining us today. And we hope you'll join us for our episodes on the process and performance pillars of finance transformation. With that, have a great day.
Adam: Visit our Web site at www.pwc.com/CA/FinanceIn15 to learn more about the opportunities ahead for finance leaders. That's www.pwc.com/CA/FinanceIn15. If you enjoyed today's episode, please let us know by leaving a review and reading us on Apple Podcasts. I'm Adam Boutros and this is the Finance in 15 podcast. This podcast has been produced by PricewaterhouseCoopers LLP and is for informational purposes only. Contents discussed are for general guidance on matters of interest and should not be taken as professional, legal, business, or investment advice.
