Digital technologies have the potential to transform organisations, delivering improved customer experience, spurring company growth and innovation. However, there is a growing awareness among finance leaders that this growth is contingent on securing the right talent to deliver digital strategies.
The 2024 American Express CFO Survey found that 29.6% of finance leaders globally are concerned that digital skills shortages could prevent their organisation from meeting strategic goals. Concerns are highest in Japan (35.5%) and Germany (37%). Meanwhile, research from McKinsey suggests that 87% of businesses either have or expect to have shortages in critical digital skills [1].
The growing importance of digital transformation for corporations
The scarcity of digital talent is a huge challenge for CFOs. In recent years we’ve seen a rapid transformation in how we do business, with organisations implementing new technologies from AI to cloud computing and data analytics. These digital technologies enable new strategies that help to unlock value, drive innovation and improve efficiency and growth.
Without the right digital skills and talent, organisations cannot realise the value of digital transformation. The need to unlock and track value from digital technology puts digital transformation firmly in the CFO’s remit: our survey found that 49% of global finance chiefs expect to take on more responsibility for digital transformation in 2024. In some cases, the CFO's ownership of digital transformation is even greater, with 79% of finance leaders in the UK and 78% in both Singapore and India reporting that they are responsible for digital transformation. Additionally, three quarters of those surveyed globally (75%) say they expect digital transformation to rise up the corporate agenda this year.
The talent challenges facing finance teams
The talent challenge facing CFOs has several facets – a combination of rapid technological advancement, lack of relevant training, and a highly competitive job market makes it hard for organisations to develop, attract and retain digital talent.
Skills gaps
In 2023, Forbes magazine found that 93% of businesses in the UK said they were experiencing a gap in IT skills [2]. While AI was named as the number one in-demand skill, it was closely followed by digital talent in IT support and troubleshooting, and cybersecurity.
If AI is by far the most in-demand skill for businesses, that’s hardly surprising, since 40% of finance leaders told us they are under pressure to adopt digitisation within their organisations, and 33% say the same about AI.
Resistance to change
Cultural barriers are seen by some as the biggest cause of failure in digital transformation. Initiatives can stall if your organisation culture doesn’t empower employees to be innovative or take risks; a culture that’s too stagnant will lead to resistance to change or developing new skills to deliver transformation.
Among the finance leaders surveyed by American Express, 40% admitted they themselves were not confident about how well they might adjust to the changes involved in digital transformation. CFOs in Mexico were most sure of their ability, with only 5% admitting to reservations about their ability to adapt to digitisation, compared to the UK, where 59% of finance leaders said they did not feel confident.
Competitive jobs market
Competition in the jobs market is a major cause of the digital talent shortage – there is a scarcity of skilled candidates and the number of opportunities in this fast-growing sector makes recruitment a challenge.
Research also shows that employees with digital and IT skills change jobs more frequently, with younger Gen Z employees paying increasing attention to cultural and learning aspects of employment rather than just the size of their salary.
The context - what the CFO is juggling
The talent shortage is an increasing issue for organisations, but it is far from the only priority for finance leaders.
Cash flow still tops the priorities for CFOs in 2024, to support increased growth and innovation. Following a turbulent period for many organisations, CFOs are also keen to improve risk forecasting and management, with respondents in our survey reporting that organisations are actively pushing for new digital services that will support innovation and make use of new technologies such as AI.
How can organisations overcome the digital talent barrier?
Organisations must take practical steps to bridge the talent gap to remain competitive. This means developing strategies that will help to build, attract and retain people with the critical skills needed to deliver digital transformation.
Upskilling, reskilling and training
More than half of all employees globally need to upskill or reskill by 2025, according to the World Economic Forum, and 80% of future jobs are likely to require digital skills [3].
Organisations should consider strategic workforce education programmes to help employees keep skills fresh and further their careers while meeting the demands of digitisation and closing skills gaps.
Hiring the talent of tomorrow
To attract in-demand workers with digital skills, organisations need to offer recruitment packages with more than a competitive salary. Career development and advancement potential is the most important factor for IT professionals when accepting a new role, closely followed by flexibility and finding a job that has meaning.
McKinsey found that 54% of those aged 18 to 34 rank career development and advancement potential as a top reason for staying in their current job, compared with 40% of those aged 45 and above [4].
Fostering the right culture
Digital transformation often requires a change in culture to support increased collaboration, innovation and agility. The CFO can play a critical part in this change by empowering the organisation to take appropriate risks or adopt innovation more easily.
This might mean changing escalation procedures to empower business units to make more of their own investment decisions, or giving business users access to information and tools that help them to make smart choices. For example, giving customer support staff access to real-time account data allows them to offer personalised offers or deal with complaints more quickly – and makes the job a lot more engaging.
One eye on the future
Today’s talent barrier can be overcome, but it may require a change in how organisations approach skills entirely. Skills-based recruitment should be combined with a workforce skills framework that matches talent with desired business outcomes.
Finance leaders can support this shift in talent management by supporting inclusive, lifelong learning, upskilling and reskilling initiatives that will tackle the skills gap and build vital digital skills.
Digital transformation has already reinvented the way that many organisations do business. But transformation isn’t a ‘once and done’ project. As CFOs turn their attention to new transformation technologies, it’s important to ensure that organisations’ talent strategy evolves alongside the digital strategy. As much as Generative AI and machine learning promise to transform business, the digital talent shift could help us reinvent work.
Download the 2024 American Express CFO Survey to learn more about global CFOs' attitudes to digital transformation and other issues impacting the finance function.
Sources:
[1] McKinsey, How a government agency is preparing workers to thrive in the skills-based economy, February 2023
[2] Forbes, IT Skills Gap Report 2023, September 2023
[3] World Economic Forum, Upskilling for Shared Prosperity, January 2021
[4] McKinsey, Cracking the code on digital talent, 2023
