It wouldn’t be a CFO conference in 2024 if artificial intelligence wasn’t omnipresent, and the recent CFO Leadership Council conference at the Boston Seaport was no exception. AI was everywhere, from the titles of keynotes to the selling points of vendors in the exhibit hall.
As generative of discussion as it was (too soon?), AI was far from the only topic on offer. Conference goers were aswim in ideas, data, and anecdotes on talent, capital allocation, and more. CFO Brew brought home some of the highlights:
Elephant meet room. Let’s duck below the heady swirl of AI discourse for a second. What are finance teams actually doing in the real world, right now? IBM Consulting’s Monica Proothi made a bullish case for the GenAI present, as opposed to its promise in a TBD future, in her keynote, “How GenAI will Transform the CFO Role in 2024 and Beyond.” She cited IBM research that found predicting anomalies, explaining variances, and generating scenarios are the areas in which finance is “poised to realize the greatest value from generative AI.”
Poised is the key word there, because only a sliver of the industry has actually done anything with AI, according to Big Blue’s research. It found that just 18% of finance organizations have trained their staff on generative AI technology, and only 2% are optimizing it. The stat was borne out in the room: When Proothi asked the audience who had advanced their GenAI projects beyond proof of concept, just a few people were left standing.
Asked what has kept IBM Consulting clients from moving faster on GenAI, Proothi said “people are terrified of using the technology…or losing their job if they don’t.” Regarding the latter, Proothi said “if you are not using AI, you will get replaced by the person who is.”
Look within. The woes of the talent shortage are well known (at least to readers of choice publications). But there’s a solution that finance leaders are missing, according to Peter Cappelli, a Wharton School professor and head of its Center for Human Resources: their own staff.
In the session “Preparing for Strategic Action: Navigating Employee Risks From Poor Hiring Decisions to Lawsuits,” Cappelli said that organizations aren’t developing their own employees. Just 15% of roles are filled internally, he said, even though outside hires take years to match the work of an internal employee and are costlier to hire. Or, as Cappelli’s slide put it: “INTERNAL CANDIDATES ARE SO MUCH CHEAPER!”
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Then there’s the matter of keeping them on board. An employee might say they’re leaving for better pay, Cappelli said, but they say it “because that’s a way of not hurting your feelings.” Exit interviews reveal that quitting has more to do with “their immediate supervisor and whether that person is paying attention to them or not.” Giving employees more rewarding work that helps them advance their careers are ways to do that.
He said when employees do advance, it’s short-sighted to not increase their pay. Nearly a third of newly promoted people leave “within a month of promotion,” he said, citing ADP data. “Think about how dumb this is. These must be your best people because you just promoted them, and we’re losing 29% of them immediately.”
Fight for it. Just like a rising star will leave if they’re ignored, a capital allocation strategy left to speak for itself will be overtaken by competing demands. In her keynote on “Leadership Through Hyper-Growth and IPOs,” Toast CFO Elena Gomez, who took the restaurant software company public in 2021, said that CFOs need “a very clear capital allocation framework that you articulate to your peers.”
For example, she pushed to establish Toast in other English-speaking countries, and doing that required spending some money that could have gone toward building its domestic market share. “We want enduring growth,” she said. “At some point, when we reach the market share we need to in the US, we’re going to want the new growth vector.”
Sticking to a strategy also requires turning down a lot of requests that don’t fit its goals, she said. “That’s probably the toughest part of the job.”
Not that it’s easy to deal with investors who are itching for the company to hit a certain outcome.
“One of the most important roles of a CFO is managing the expectations of your investors,” she said, and “if you do find yourself in a situation where there’s a gap, you work with your IR team to narrow that gap.”
“The most important thing is keeping close relationships with those investors,” she said, so that you have the same expectations. “And then if you build credibility, it earns you the right to do things” like investing in a market that isn’t profitable yet. “There’s a balance of growth and profitability, and as long as you lay out that roadmap and you’re on your journey, that should receive positive reaction.”