The Great Resignation Reshapes Finance Functions, CFOs Face Unprecedented Tests

The Great Resignation is severely impacting corporate profitability and strategic planning, and Chief Financial Officers (CFOs) are at the forefront of helping companies adapt to this change. The scale of resignations is unprecedented: a survey released by PwC in August shows that as many as 65% of employees are looking for new jobs, and 88% of executives say their companies are experiencing higher-than-normal employee turnover rates.

Employees have firmly taken the upper hand. Traditional workforce planning formulas are no longer applicable, as existing and potential talent are demanding flexible work arrangements, adjusted compensation structures, and new expectations for work and corporate culture. In fact, a new global survey conducted by Oracle shows that 88% of employees say their definition of success has changed since the pandemic, 75% feel their career development has stalled, and the vast majority (85%) are dissatisfied with employer support.

Financial leaders need to guide their companies through this new landscape, making increasingly complex forecasts. The stakes are high. Depending on the position and location, the cost of replacing an employee is traditionally estimated at six months to two years of their annual salary. This includes the financial impact of recruitment, onboarding, and training, as well as the costs and negative business impact during the vacancy period until new talent reaches full productivity. Additionally, the intangible impact on employee morale from prolonged vacancies cannot be overlooked—remaining employees may face greater stress due to understaffing.

More than a third of CFOs in the PwC survey said they are very concerned that high turnover rates will persist indefinitely and affect revenue growth. To adapt, companies are making adjustments. Nearly half (48%) of surveyed companies are changing processes to reduce reliance on employee institutional knowledge. More than a quarter of companies will also change operating models, adjust office location strategies, and increase outsourcing.

CFOs need to lead these strategies, fund the changes, and work closely with business unit executives and other C-suite leaders to find the right balance. Ultimately, this crisis will accelerate changes many companies had already foreseen, making them more desirable workplaces and stronger strategic players in their industries.

Higher-Quality Work

Employees—especially new entrants to the workforce—are unwilling to spend their working hours on repetitive, monotonous tasks like data collection. Influenced by mobile devices, they are accustomed to easy-to-use, engaging, and meaningful app experiences powered by machine learning. They expect monotonous work to be automated. In fact, another survey by Oracle earlier this year found that millennial employees are nearly four times more likely than baby boomers to want to work for companies that use AI to manage finances. And the vast majority (95%) of Gen Z employees believe that organizations that do not embrace technology face significant risks, such as falling behind competitors, poor decision-making, and increased employee stress.

Younger employees want immediate access to data, systems with predictive analytics, and more strategic roles as a reward. If employees are frustrated with the tools they use at work, this can become a significant factor in their decision to leave—especially in hot job markets with many opportunities. Job seekers may also be wary of potential employers that require them to use outdated systems, as this offers little benefit to their career development.

These legacy systems—often customized for business needs and processes from years ago—also drag companies down in other ways. First, they make it difficult for companies to adjust strategies and processes as markets change. Second, companies need different insights and reports than when the systems were implemented, so employees may have to rely on various manual workarounds to get the job done. Finally, these customized systems require significant IT support, as staff must understand how all company systems work together.

If this institutional knowledge is lost when employees leave, these processes and systems can easily break down. Today, that is a huge risk.

Workplace Policies

While some people enjoy or even crave in-person interaction with teams and colleagues, the ability to work remotely at least part of the time has become a basic requirement for many existing and potential employees. For CFOs, evaluating and providing the right office space for the company and each location has become much more complex.

Some companies are subleasing part of their commercial real estate or not renewing leases when they expire. Others are contracting with temporary office space providers to give employees and teams places to occasionally work and collaborate in person—though such spaces may not always be available when teams need them.

If remote employees decide to move to another state or even another country, tax implications and potential salary adjustments come into play, further adding to the complexity of compliance and payroll processing.

Given all this complexity, CFOs need more than ever to have insight into their company's financial and HR systems, access accurate, real-time data, and be able to perform various analyses. Financial leaders need to work closely with HR leaders and key business units to develop an office and flexible work strategy that works now and in the future.

Finally, a more dispersed workforce brings another concern: increased security risks. If employees use various applications running on different infrastructures and access and manipulate data through tools with different security protocols, more exploitable vulnerabilities may arise. Cybersecurity threats are constantly evolving, and the hybrid systems used by dispersed employees add more layers of risk.

Communication Is Critical

Employees evaluating their next career move—whether joining or leaving a company—want clarity on long-term strategies for office space and flexible work opportunities. The more transparent a company is—for example, whether future plans involve returning to the office full-time after the pandemic subsides or allowing flexible work arrangements with clear geographic guidelines—the better talent can align their expectations with the company's direction.

CFO leadership is crucial in guiding, funding, explaining, and implementing these decisions. Employees fully understand that many of the factors they consider when deciding their career path—including where employees work and office space policies, the systems used for work, compensation, and many aspects of corporate culture—are deeply rooted in the company's financial bottom line.

For CFOs and their companies, the stakes today are higher than ever.