No business wants to limit its growth potential. But that’s a real risk if the organization relies on outdated technologies, processes and frameworks in its back-office functions. That includes holding on to traditional approaches for resourcing highly skilled talent in accounting and finance. A better strategy to consider is transitioning to the next-generation labor model.
Robert Half and Protiviti* recently published a white paper — Skills and Scale: Why Emerging Companies Must Innovate How They Resource Back-Office Functions — which examines this new model, and explains why it is so important for businesses that are growing rapidly to consider using it. The white paper outlines five inflection points where finance and accounting functions can thrive, or falter, based on whether they are able to skill and scale appropriately. Here’s a look at those five critical points:
Inflection Point #1: Transitioning to an integrated accounting package
There comes a time when a fast-growing company needs to move beyond a simple bookkeeping tool to embrace a more sophisticated information system to support accounting and finance activities. Making this transition isn’t as simple as buying and installing new software, of course. The business needs to align the appropriate skills and knowledge to support the finance function in implementing and optimizing the new solution and managing related change.
Inflection Point #2: Handling revenue spikes, rapid hiring and new customers
How CFOs and other finance leaders at emerging companies decide to expand their teams in response to evolving business needs can make all the difference in whether their functions can manage similar challenges in the future effectively. For example, do they race to hire, onboard and train more full-time staff to meet immediate needs? Or, do they step back to take a longer-term view, and consider other elements, like technology systems, that can impact the function’s overall ability to scale in the future, and which may require investment sooner than later?
Inflection Point #3: Expanding geographic reach
Opening a new office in another global region often requires that the business secure finance, accounting and tax expertise that may not be available through the company’s existing outsourcing relationships. The Skills and Scale white paper notes that when a business outsources its development or manufacturing capabilities to Asia, for example, it “creates complexities that often expose the inflexibility of the traditional labor model and the skills and experience available within it.”
Inflection Point #4: Declining business demands
Scaling down the company’s workforce in response to business retraction, even if that retraction is only temporary, can be very challenging if the business isn’t prepared to pivot. Layoffs can undermine morale and lead to valued employees leaving voluntarily, especially if remaining staff members are expected to work long hours to cover the responsibilities handled by their former colleagues.
Inflection Point #5: Pursuing an exit event, like an IPO
As the Skills and Scale white paper explains, there are “a staggering number of finance and accounting requirements” that accompany an initial public offering (IPO), a disposition event or a more traditional sale. And, if the company’s accounting and finance functions are staffed too leanly, or if existing staff lack the skills needed to meet these requirements, it could adversely affect the organization’s timeline for an exit — or even its valuation.
For tips on assembling a strong IPO team, see this post.
According to the Skills and Scale white paper, the five inflection points outlined above should “prompt finance executives to reflect deeply on the efficacy of the current model they use” — and consider embracing one that allows them to take a more flexible, configurable and agile approach to sourcing skilled talent. And the best time to move to the next-generation labor model is before the business faces one of these inflection points.
The elements of the next-generation labor model
So, what does the next-generation labor model entail? It’s actually built on a decades-old concept known as the “Shamrock Organization,” which was developed by Charles Handy, an academic and a management author and philosopher. This concept includes three categories (or “leaves” of the shamrock):
- Full-time employees who form the company’s “professional core”
- A “contractual fringe” that provides additional capabilities to the business; these resources include individual consultants and organizations
- A “flexible labor force” that helps to address interim resource needs
Many companies have relied on the contractual fringe aspect of this model for years, turning to consulting professionals for specialized expertise, support for high-priority projects, and more. And all signs point to the contractual fringe handling even more work in the future.
As for the next-generation labor model inspired by the Shamrock Organization, it involves using a flexible workforce and tapping into resources from the so-called gig economy. A recent Robert Half Management Resources survey found nearly seven in 10 CFOs work with external resources, often in combination with internal staff, for major one-time business initiatives. Using this model gives finance executives a way to access diverse and advanced skill sets quickly, and to scale the size of their team up and down, with speed and ease, as business needs change.
According to Protiviti’s 2019 Finance Trends Survey, companies use the new model in different ways. But generally, applying it can create several benefits — namely, the adoption of a more proactive, forward-looking and innovative approach to staffing the back office.
Download a free copy of Robert Half and Protiviti’s white paper, Skills and Scale: Why Emerging Companies Must Innovate How They Resource Back-Office Functions, on Protiviti’s website.
A related trend: the rise of Managed Business Services
Robert Half and Protiviti help businesses take advantage of the next-generation labor model through a staffing strategy called Managed Business Services. This is an arrangement where a company contracts with an outside party to augment — and even entirely handle — the management of a major project or business function. Here’s a quick overview of how it works:
Protiviti delivers consulting expertise to companies in areas such as accounting, finance, business performance, analytics, risk and compliance, and mergers and acquisitions, while Robert Half provides specialized operational resources where needed.
For each engagement, a senior Protiviti consultant guides a combined team of Protiviti and Robert Half consultants, assembled according to a company’s specific needs. The senior consultant handles all of the planning, onboarding, scheduling, training and quality control duties related to that assignment so that CFOs and other finance leaders at the companies we work with don’t have to.
As needed, the Managed Business Services team will employ technologies such as robotic process automation (RPA) and apply best practices to achieve greater operational efficiencies.
Companies of all sizes use Managed Business Services teams to handle a wide range of accounting and finance challenges, including in areas such as accounts payable, accounts receivable, cash management, and order management and logistics. To find out more about this strategic staffing solution, what to expect when you partner with us, and how to request highly skilled talent to solve your business challenges, visit the Managed Business Services website by clicking the button below.
*Protiviti is a global consulting firm and Robert Half subsidiary.