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Treasury Management

Cracking the Career-Path Conundrum

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July 25, 2016

Treasury staff development: advancing careers in a small control function.

football x's and o'sAs the unemployment rate falls demand increases for specialized skills such as those prevalent among treasury executives. But even the biggest corporate treasury departments are relatively small compared to a company’s other units; so how to further those executives’ career paths and dissuade them from seeking that next step forward at another compelling function within the company or worse, a competitor?

Companies have long faced that conundrum. The issue bubbled to the surface at a recent NeuGroup Assistant Treasurers’ Group of Thirty (AT30) meeting, where members discussed how years of acquisitions have made control functions such as treasury and audit more complex. In addition, automating and outsourcing the more mundane activities has also elevated treasury executives’ strategic importance.

Rotation and development programs have been the traditional way to broaden and advance employees’ experience, and a poll of executives attending the AT30 meeting in May found that 57% reported having such programs, while another 19% reported informal versions. Comments from survey respondents, however, suggested that companies’ formal programs often don’t include treasury with many programs targeted at lower level staff and not mandatory.

A major challenge mentioned by meeting attendees was letting experienced people go. However, treasury staff members who enjoy their work and show little interest in moving on also presented a quandary. The assistant treasurer of a major industrial company noted 20-year treasury veterans. “So it’s hard to find places for the next generation to go,” he said.

Another said his healthcare company’s slowing growth no longer provided a “rising tide,” in which treasury expanded with the company and new senior positions could be created.

Treasury typically expands at a much slower rate than business units, especially as companies continue to adopt treasury workstations and other automation technology. Indeed, the trend over the last few years to shrink treasury staff continues, with the treasury executive of an $8 billion consumer products company noting his department’s voracious appetite for technology has shrunk staff to three.

That may be an extreme example, but even large treasuries, perhaps numbering as many as 50 employees at headquarters and another 50 stationed overseas, provide only rare opportunities for advancement compared to much larger business units. Nevertheless, treasury employees still need a path forward.

Tim Hird, executive director of Robert Half Management Resources, noted the “deep, technical expertise” required in treasury, similar to other control functions such as accounting and risk, and that unless companies proactively support career progression programs, such specialists can get pigeonholed. On the flip side, he added, those skills are in high demand in the marketplace. Offering such programs, he said, is critical to hiring talented executives and retaining them, and the plan must be discussed regularly and frequently, through formal and informal channels.

“What do people want and what are their priorities? And what gaps do they have in their skill sets that they need to fill to get the ready for that next move?” Mr. Hird said, adding that such discussions don’t have to be formal. “As long as career paths are talked about regularly, and managers can show staff how other employees have progressed, that’s often enough to get started,” he said.

Such progression may not necessarily involve climbing to the next rung of the treasury ladder. Some increase in monetary compensation is typically included, but broadening treasury executives/ roles as strategists in the company and increasing their soft skills and influence can also be effective incentives.

“One of the great opportunities for organizations is to identify special projects and initiatives that they’re running, and encourage people to work outside their technical areas on those projects,” Mr. Hird said. “I think that’s as impactful as rotating people within treasury, because you’re broadening their exposure to the company.”

Mr. Hird said such projects will vary by industry and company, but merger integrations provide opportunities, or business improvement initiatives. Additionally, these outside- treasury projects enable executives to broaden and improve their skills sets, which in some cases can substitute for financial compensation.

At the AT30 meeting, one member treasurer discussed farming out treasury staff to other parts of the company, including business units, an approach that enlightens both departments about each other’s functions. “One challenge we have,” said the assistant treasurer, “is making sure we have the right balance between treasury people who really know the function and the people we bring in from the outside to train, and who can also bring in new ideas.”

Daniel Carmody, head of treasury consulting firm TreaSolutions and a faculty member at Northwestern University, said these exchanges are a way of expanding executives’ knowledge, to provide treasury with a more holistic perspective when they return. Or the executive may discover he or she is more compatible with another department, such as IT, and prefer to stay there, creating the opportunity for a promotion within treasury.

Generally speaking, Mr. Carmody said, senior level treasury executives are the ones to move outside the control functions to a business unit, since they’re typically moving to provide strategic advice.

Bhushan Sethi, financial services people and organization practice lead at PwC, said one of the biggest challenges large organizations face is moving people around control functions, given the scarcity of such talent. One option, he said, is to create a “career path” in which several finance related functions are placed in a group, and staff can move between those functions. Alternatively, organizations can establish “resource pools,” in which staff with specialized skills can perform them across different functions.

“People who focus on elements of risk or data analytics, or with regulatory expertise, can be used across functions such as treasury, risk management and even business units,” Mr. Sethi said. “Because there’s such a scarcity of talent in these specialist areas, it can be a way to retain people as well as leverage scarce talent in reusable ways across organizations.”

Mr. Sethi noted that he focuses primarily on financial services firms, which may have greater crossover skills between departments in areas like foreign exchange and risk. Nevertheless, the concepts should be applicable in large corporates, he said, adding that, “It’s really asking, ‘What are the capabilities we need to execute certain job roles and how do we access people who have those capabilities in many different functions—from finance to risk, risk to compliance, etc.—and have a career path around that?’”

Programs like this may look good on paper, but top management must voice support for them, since department leaders naturally want to hold on to their best talent. “Unless top executives, meaning the CFOs and CEO, and the heads of compliance, risk, etc., actually buy into it—that we’re going to be thinking about this concept of enterprise talent as opposed to finance or risk talent—then it probably won’t succeed,” Mr. Sethi said.

Whether treasury staff leaves for another department or another company, the treasury department must thoroughly document each staff member’s responsibilities and requirements, to effectively replace that person.

“Many times there’s a difference between the official job description that human resources might have and what treasury personnel are doing day in and day out, so making sure there are no job responsibility gaps can help maintain treasury structure in an efficient manner,” said Mr. Carmody.

Likewise, having a treasury cross-training program in place can be beneficial when someone leaves the department, since another staff member, assuming he or she is qualified, can step in to perform the function. Mr. Hird noted that there’s a long list of nonfinancial incentives that can replace traditional promotions. Broadening skills sets is one, but other employees may have a hunger for new technology, improving the company culture, work-life balance or short commutes.

“Employees will often decide to stay at company or join a new one based on those nonmonetary components, especially if there’s a compensation adjustment but it’s relatively small,” Mr. Hird said. “The important thing is that organizations have these options for employees, and they’re talking about them regularly, both in the hiring process and through regular career discussions.”

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