Strategic Evolution: Why CFOs Must Embrace Automation
The “Great Resignation” is in full flow. The post-pandemic phenomenon has seen eye-watering shifts in the workforce as employees quit en masse to escape burnout and poor working conditions. According to McKinsey, more than 19 million US workers—and counting—have left their jobs since April 2021, a record pace disrupting businesses everywhere. Furthermore, a 2021 survey by PwC found that 65% of employees were looking for a new job, and 88% of executives said their company was experiencing a higher-than-normal turnover.
Much of the blame is laid at the feet of employers who have placed unreasonable demands on the workforce, especially as they seek to encourage that workforce back into their offices. Having tasted a hybrid working model for more than two years, today’s employees are looking for flexibility and a more human-centric approach.
Automation and changing processes provide fertile territory for change by eliminating the sheer drudgery for employees. As McKinsey puts it, “they want meaningful interactions, not just transactions.” Work needs to shift from mindless transaction processing to more fulfilling interactions with people—but not necessarily face-to-face interactions. However, many research studies indicate that employers are still getting it wrong.
A recent straw poll conducted by FSN and Tipalti in the FSN Modern Finance Forum on LinkedIn examined the hidden cost of not investing in automation. Nearly 200 senior finance professionals contributed to the quick poll, and the results suggest that employers fail to recognize the power of automation to transform the working environment for key talent. 70% saw the hidden cost of not automating purely in transactional terms, i.e., the risk of error and delay. Only 9% recognized that lack of automation could affect the ability to attract new staff, 11% claimed it contributed to staff absence through stress, and 10% said it left their organization exposed to resignation risk.
A 2022 Insight Avenue survey looking at Accounts Payable Automation suggests a much higher figure. This report says that finance and AP team disgruntlement, burnout, or churn affects 32% of businesses, and 73% concede that staff productivity and morale in the finance/AP department is a concern. Furthermore, 78% say that too much manual (non-automated) work is overwhelming for their finance/AP staff.
Young employees are particularly prone to leave. According to Gartner, only 19.9% of IT workers between the ages of 18 and 29 have a high likelihood of staying, compared to 48.1% of those aged 50-70 years. Research from The Institute of Financial Operations & Leadership (IFOL) adds to the emerging picture that modern automation is crucial to talent retention. The study reveals that almost a third (32%) of young finance professionals say modernizing finance with technology would be the most exciting problem to solve if they became a CFO.
Businesses need to look beyond quick fixes to remuneration and bonuses if they are to resolve employee concerns. They ignore working conditions and flexibility at their peril. McKinsey hints that company leaders are putting their very businesses at risk by not understanding what their employees are running from and what they might gravitate towards. Moreover, because many employers are handling the situation similarly—failing to invest in a more fulfilling employee experience and meet new demands for autonomy and flexibility at work—some employees deliberately choose to withdraw entirely from traditional forms of full-time employment. This may be why according to PwC, almost half (48%) of CFOs surveyed are altering processes to become less dependent on employee institutional knowledge.
It may not have been obvious before, but process automation is becoming an essential tool in the employer’s armory. FSN’s research indicates that investment in customer-facing systems has exceeded investment in ‘back-office’ systems by four to one over the last five years. According to another survey, 68% of organizations still manually type supplier invoices into their ERP or financial accounting software.
With the Great Resignation showing no signs of abating, smart CFOs know that now is the time to invest if they are to keep their people engaged and their businesses thriving.