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Staff turnover is a significant challenge in finance departments. This trend has been exacerbated by retirements and a limited pool of qualified candidates.
Retaining and developing talent is crucial for a strong finance department. This includes providing training, coaching, and succession planning opportunities.
A supportive work environment and adequate resources are essential for a high-functioning finance team. This involves fostering a positive team culture and investing in necessary tools and technology.
Most of the time, “no news is good news” in the finance world. Most executives don’t pay a lot of attention to those quiet finance folks until something goes awry. Caring for the public’s money is critical to policymakers and public trust. What, if anything, can you do to ensure the ongoing health and strength of your finance department?
A good first step is to focus on the retention of existing finance staff and department leadership. According to the Society of Human Resources Management (SHRM), “each employee departure costs about one-third of that person’s pay, meaning that higher retention requires less recruitment resources and saves money. Improving retention is addressing the root cause and not the symptom.” In recent post-pandemic years, many experienced senior finance professionals retired, leaving behind a void of institutional knowledge with a limited pool of skilled candidates to replace them. According to the 2022 study Meeting Demand for State and Local Public Finance Jobs, “The supply-demand gap for state and local public finance workers is widening faster than the same gap for the finance sector overall, the public sector overall, and the economy overall.”
The solutions for public finance are not unique and can be easily applied to any department or operation. To start, don’t ignore the talent you already have. Focus on ensuring each finance manager and supervisor has the right balance of technical and management skills. Provide access to training, development, and membership in professional associations. Invest in their professional development while continuing to leverage their existing talents and strengths.
Another option is to provide a formalized executive coaching program. Raftelis’ executive coaching program pairs experienced former local government professionals with employees. The employees and their supervisors agree upon a formal, signed coaching plan of topics to be addressed and then meet for discussions on each. This provides a confidential outlet for employees to admit to and explore areas of self-assessed weakness, learn from others, and identify resources to assist with specific issues.
Going beyond leadership, consider succession planning for the entire department to build your internal talent pipeline. Identify key positions that require specific technical expertise, estimate likely retirement or departure dates, and identify your talented employees at all levels who can be trained and developed to be promoted into these key roles. A strong succession planning program can help you prepare for inevitable staffing changes and provide a potential career path for staff to stay and grow their talents with your organization.
Training and professional development are critical, particularly in public finance. Every year, there are new and sometimes highly technical Government Accounting Standards Board (GASB) pronouncements that require implementation. Often there are also new federal or state requirements or reports that must be completed and understood, such as grant reconciliation for the federal CARES Act related to the COVID-19 pandemic, as one example. Add in the implementation of a new financial software system or ERP, and the workload and stress can be overwhelming to your finance team. Not only do each of these tasks require staff capacity to address and plan for, but they also require technical training, without which staff are left attempting to create new systems themselves, further slowing productivity in meeting daily production deadlines. Just as a car with lights and sirens is a basic tool for a police officer, continuing education and training should be viewed as basic tools for your finance team.
A second step to a highly functioning team is ensuring a supportive and positive working environment. Finance leaders face a lot of responsibility related to managing public dollars and must depend upon their managers and staff to support them (I can vouch from personal experience that worrying about work often keeps us up at night).
It is vital that the daily work environment be supportive for all staff at all levels. Finance departments operate best when staff are a true team, where everyone understands their role in the big picture, shares information, cross-trains, and jumps in to back each other up so no one stands alone. Be sure that your Finance staff are operating as a team. This takes leadership that puts people first and sees them as individuals. As small as it may seem, regularly saying “thank you” or “I appreciate you” to staff can make a real difference in the way staff feels at work.
“I think the roughest part… is the need to implement change and having the staffing resources to make those implementations, making sure it’s done correctly and getting Citywide buy-in.”
– City Finance Director, 2024
A third critical piece to ensure financial success is to provide the right resources to perform. As one local government finance director told me recently, “I think the roughest part… is the need to implement change and having the staffing resources to make those implementations and making sure it’s done correctly and getting (sic) Citywide buy-in.” Finance is a service; having the appropriate staff and tools to perform is vital. For example, finance staff need access to good technology that helps to streamline their work, particularly as more transactions are performed electronically and as analysis becomes a larger part of the work. Sometimes Finance employees, as guardians of the public purse, are sensitive to the needs of operating departments and hesitant to spend on resources to improve their own operations. It is incumbent upon the finance leadership to document new requirements and justify all requests. It is also in the agency’s best interest to invest upfront in consultants or additional temporary staff to support software implementation processes rather than expect staff to take this on as “just one more task” on top of their daily work. This is a common cause for Finance Department woes.
A high-functioning finance team can be a great asset to any organization. Open and honest communication with your finance leaders and staff is essential. Listen carefully to requests for additional resources, determine if they are justified, and invest appropriately. Show staff at all levels how they can develop and grow. Celebrate and value their work to ensure that these professionals continue to support and hopefully grow their careers in your agency.
