When veteran CFO Eric Sockol became the first finance chief at Gemvara, an online customized-jewelry venture, he quickly developed a plan to staff up the finance department in order to boost its productivity, an effort that will entail pulling back into the company some finance work that had been outsourced.
Sockol’s strategy, however, won’t make much of a dent in the unemployment rate. Even if Gemvara’s revenues hit $100 million, which would roughly match the revenues at Sockol’s previous company, business publishing firm TechTarget, he expects Gemvara’s finance department to top out at less than half of the 25-person staff he supervised there. Should Gemvara go public, as TechTarget did, he would have to modify his staffing plan slightly, but he says that the number would still fall well below 25.
For the moment, Sockol, who joined Gemvara earlier this year, is proud to claim the following: “I can fit my entire finance department in my car, and I have a two-seat convertible.”
Welcome to the jobless recovery, finance-style. Already so lean that they often escaped the deep cuts that other departments endured over the past two years, finance departments are slimming down even further as CFOs find new ways to avoid adding staffers as the recession fades.
A combination of increasing automation, new business models, and offshoring has pushed down the average size of a finance staff by 30% over the past six years — to 92 people per $1 billion in revenue — according to benchmarking firm The Hackett Group. That number isn’t likely to grow much, at least in the United States, considering that the majority of CFOs (75%) plan to keep domestic finance head count steady in 2011, while only 15% plan to hire, according to a CFO survey of more than 150 finance executives (see “The State of the Finance Department” at the end of this article).
In many cases, the jobs that remain are meatier and more interesting, which is good news for those finance employees who remain on the payroll. But the jobs that went away, usually to offshore locations, aren’t likely to come back to the States — ever. “This is not about, ‘How many jobs can I save?’ It’s about, ‘How can I save my company?’” says Michel Janssen, chief research officer for Hackett.
That means, Janssen says, that the so-called war for finance talent has shifted in emphasis, from hiring “25 or 50 clerical staff” who can address basic tasks to looking for “a very small number of people” who are analytically minded and who can work with colleagues in lower-cost locations around the globe. Adds Paul Boulanger, managing director of the finance and performance management practice at Accenture: “The demand for finance talent in the United States remains strong, but in many cases it’s about a shift in mix rather than an increase in volume.”
Don’t Blame Bangalore
While offshoring has borne much of the blame for rising unemployment in America, Hackett estimates that automation and job consolidation have, in fact, sliced out nearly twice as many back-office jobs as any other factor. In the last 10 years, the average large global company has dropped about 30% of its finance, IT, public-relations, and HR staff, Janssen estimates, with productivity increases accounting for twice as much of that slide as offshoring.