How does an outsourced finance solution fit into talent planning practices? What are the future talent prospects like for middle market firms? And how can executives combine both of these concepts into a cohesive, forward-thinking growth strategy?
These questions are a few examples of issues that are currently at the forefront of most C-level executive minds. To delve into them more deeply, the CFO Alliance will host a roundtable discussion concerning middle market talent planning, led by Doug Farren, Associate Director at The National Center for the Middle Market.
Talent planning is a broad subject that combines many vital activities including succession planning, human resources, bench strength analysis and much more. In the modern knowledge economy, businesses of all types need to ensure they have the plans and resources in place to attract and develop the best people. But simply being a middle market firm can make these tasks difficult. Companies in this segment must compete with both smaller, more nimble firms as well as larger, resource-rich organizations.
Recent research from The National Center for the Middle Market made it clear that these challenges are not always properly addressed. From a survey of middle market executives, the Center found only 22 percent of these companies have a formalized talent planning process in place. In addition, just 14 percent would grade themselves at an A level for talent planning. This is despite 71 percent of the group recognizing that talent planning is of the utmost importance.
When middle market firms do master their talent planning conundrum, the results are striking. The Center's research found that in middle market companies that placed a particular emphasis on talent planning, annual revenue growth was more likely to exceed 10 percent. Therefore, it's extremely likely that those firms who do not devote considerable effort to talent planning are more likely to stagnate.
"The fastest growing, best performing middle market businesses place more importance on talent planning than their slower growing peers, and are more likely to engage in talent planning activities," according to research from The National Center for the Middle Market.
In a recent interview with author Bill Taylor of Simply Brilliant: How Great Organizations Do Ordinary Things in Extraordinary Ways, he discusses the unique opportunity for middle market companies to position themselves for success. Taylor writes “Middle market companies are really in the sweet spot -- they’re big enough to genuinely make a difference, to cast a shadow in their field, but they’re not tiny start-ups struggling to scale up.” Specifically on the topic of innovation, Taylor explains how middle market companies are “nimble and agile enough to outthink, outmaneuver, and out-innovate some of the lumbering giants in whatever industry they’re competing in.”
So how exactly do middle market firms put talent planning at the top of their agenda, and actually see results from that effort? Research cited by Consero in a recent whitepaper indicates more firms of all types are turning to business outsourcing and shared services to enhance their talent pipelines.
While most executives still see outsourcing services as primarily a cost-savings play, it is increasingly becoming a reliable method to inject new ideas and innovation into a company. This works particularly well for middle market firms, which need a low-cost solution to optimize key projects like finance and accounting operations.
Outsourcing is just one piece of the broader discussion around talent planning and the topic of human capital. As the CFO Alliance explained, it all comes down to reducing risk - not by simply avoiding risk but by optimizing the risks presented to businesses. Too often, executives get caught up in concerns surrounding "the risk of a wrong hire, the risk of hiring too soon, or the risk of not having the business to support the new hire." Instead, it's better to reframe this approach: "Think about the opportunity of hiring an additional team member. That's a tradeoff that very often doesn't get a lot of discussion in organizations."
Contact the CFO Alliance for more information about the roundtable discussion on talent planning in the middle market, and to sign up.