compensation trends

2019 Compensation Trends for Finance Professionals

The finance and accounting field’s unemployment rate is lower than the national average. This competitive market is great news for finance professionals in regard to compensation trends.  While some executive positions didn’t see as much of an increase in salary as others, there is still upward movement across the board.

2019 Compensation Trends in Comparison

In 2018 Controllers received the highest average base salary increase of 3.6% – higher than CFOs, Treasurers and Vice Presidents of Finance. Executive and management finance professionals received smaller raises in 2018. But, finance staff enjoyed bigger increases of 3.9%, according to the Association for Financial Professionals (AFP).

CFOs saw an increase in base salary of 2.9%.  CFOs’ in the West average base salary for 2019 is #393,603 at organizations with $1 billion or more in revenue.

Despite smaller salary boosts than in years past, top financial executives enjoyed higher average bonuses last year of 23% over 2017.  

Bonus Determination Breakdown

According to the AFP’s survey the breakdown for how bonuses for finance professionals are decided is as follows:

(61% of companies) EBITDA (earnings before interest, taxes, depreciation, and amortization) targets.

(48%) Completion of specific projects

(46%) profit or increased profit

(33%) sales or increased revenue

When asked about what led to upward mobility and career advancement in finance, respondents most often cited “increased job responsibility,” at 86%. Other factors high on the list were contribution to profitability (69% of respondents), earning a professional certification (36%), earning an MBA or other advanced degree (30%), and becoming a CPA (24%).

The AFP survey, conducted in February 2019, collected data on total compensation earned by financial professionals during calendar year 2018 as well as data on base salaries effective January 1, 2019.

If you’re looking to hire finance and accounting professionals, the DLC Group Salary Guide has the compensation trends that will keep you competitive. Salary ranges, insight into the latest perks, hiring trends, etc… Compare compensation levels for the top finance and accounting positions.

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value

Sustainable Value Creation

A company is only as successful as the value it brings to its customers. Part of that value centers on providing a quality product and exceptional services to the consumer. While so many companies are trying to keep pace with the technologically driven transformations they are experiencing, it’s importation to keep in mind that the “customer first” mentality should remain the primary focus. After all, this is what will determine if a company remains in operation.

New Role for CFOs

This puts CFOs in an interesting position. They are tasked with meeting their reporting requirements while simultaneously acting as a strategic partner that creates value with the bigger picture in mind. In order to accomplish this, CFOs must rely on other departments to assist them. For example, they can use the Marketing and Sales Department to better understand the characteristics of the top customers and ways in which the company can reduce financial risk by obtaining new customers.

How Will Data be Evaluated?

However, these types of questions generate a huge amount of data. How can CFOs actually convert this size of data to do anything useful with it? The solution may be a single-data model. This allows CFOs to evaluate both operational and financial data and create insights based on the findings.

Of course, this will require finance to protect the quality of data while IT will ensure that the data is provided quickly. By working together, this will ensure that not only is the appropriate data being evaluated, but that the information is readily available, so they are analyzing the most current and useful information. After a certain point, data simply is longer relevant so therefore not as useful.

Success in the Workplace

Of course, the processes used for value creation should be learned by staff. This is an ongoing conversation as people will need proper training in order to make the of it. This allows companies to utilize innovative technology while still keeping people at the center of their strategy, moving forward. This will allow companies to stay in tune with their “customer first” mission while adding value to the company overall.

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financial executive priorities

Three Financial Executive Priorities

The desire to implement more technology, reduce costs, and increase data security are ranking at the top of the financial executive priorities list this year. It’s important to understand why these points remain the top focus and how they could shape the future of the company.

Financial Executive Priorities #1: Implementing Technology

While the type of technology may be determined by a particular company, automation tends to be the focus of many businesses. It allows work to be accomplished faster and more efficiently, thus saving valuable time and money. It will influence the company’s ability to experience more revenue and margin growth, which have been ongoing issues in previous years.

Companies should take the time to evaluate the need for new technology and how they can use it to better the workplace. What works for one business may not work for the next. Bigger picture thinking is critical when it comes to establishing a technology strategy that works not only today but well into the future.

Financial Executive Priorities #2: Cost Reduction

Many financial executives want to implement cost reduction while keeping their workforce the same or even growing it. This can be achieved by implementing new technology as mentioned above, or by relying on flexible staffing.

Flexible staffing often refers to temporary employment that answers a direct issue for a short period of time. It’s important for financial executives to understand that “going lean” can have negative impacts and lead to an overworked employee pool.

Financial Executive Priorities #3: Data Security

Data security is another area that is of concern for financial executives. It’s important to ensure that data isn’t corrupted by unauthorized users as this could create serious breaches in the company. While executives may be focused on cutting spending, they shouldn’t do it at the risk of exposing digital information. This is one area that expenses should be allocated in the name of company preservation.

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allocations

Allocating Less Time to Allocations

The allocations process can be time-consuming—especially when you try to iron out the finer details of it. In order to avoid a time-consuming, and often undermining process, you have to focus on making sure the value-focused strategies remain front and center.

Define Success

In order to make sure that the company is operating as it should, you must first get to the bottom of what success looks like. This means answering questions such as, is it better to use fully allocated profit margins or focus more on cash flow? In order to get the bottom of it, it is recommended to use Residual Cash Earnings (RCE).

However, it’s critical not to get bogged down in the analysis part of the allocations process. There will likely be unexpected spending that should be noted, but not obsessed over, as this will lead to endless reviews and further analysis. The problem with this is that this endless cycle will lead to more time spent on understanding a small portion of the allocation rather than focusing on the bigger picture and overall spending.

Tackling Skepticism of Allocations 

Getting numbers right can be a challenge when it comes to allocations. While analysts should certainly be doing their due diligence to get the numbers as close to correct as possible, it is the burden of managers to check the numbers double to make sure that they are reasonable and defensible in the event that there are changes in the future.

The simplest ways to do this is to clearly identify where allocations may be categorized as an advantage or disadvantage.  Keeping the process transparent will encourage others to understand and support the allocations process.

Considerations for Allocations for Measuring Performance

It is said that allocations for measuring performance are incredibly challenging. It can lead to a time-consuming process that sparks debate and solves very little. If not done properly, it can lead to value-destructive actions, which will impact the success of the company. To avoid this, focus on using strategies that promote clear, fact-based answers that are backed up by your analysis.

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gig workers

The Gig Economy: Gig Workers Could Be The Future

Contract and outsourced workers, better known as the “gig” economy, have become very popular as many employers are rethinking their hiring strategy. With the unemployment rate the lowest in 50-years and finance professionals in high demand, employers are expected to scale up their use of gig workers according to Deloitte’s third-quarter 2018 CFO Signals™ survey.

Skills in the Workplace

Skills such as analytical skills, digital technologies/automation, and core business skills are among the core skills that need to be further developed. It’ll be critical for gig workers to possesses these types of skills and work diligently to stay abreast of any changes that require the advancement of their current skill set.

Managing Gig Workers

Autonomy is the name of the game for most gig employees, but employers must rethink how they will manage this very different workforce. For example, incentives and scheduling may be very different for this pool of employees, and there may be the need for certain adjustments in typical employment strategy. It’s also important to figure out the rules associated with where the finance gig workers will reside. Many gig workers are spread out across various time zones, which could prove problematic for certain projects.

Promoting Creativity

While there are special considerations to keep in mind as far as management, scheduling, and location, gig employees could offer the solution for finding quality talent without sacrificing additional resources that are often used for hiring traditional employees. 

Gig workers have been around for a long time, and their involvement in the workforce is nothing new. However, there has been a shift in the preference for these types of workers, namely in the finance sector. Because it’s difficult to find quality talent, considering quality gig workers could be the solution. Not only does this potentially cast the net wider, but it could also open the door for incredibly skilled workers who haven’t chosen the traditional path of employment.

For more advice on hiring project based or interim financial and accounting professionals, or to find new job opportunities, contact our DLC team today.

data analytics

Data Analytics, Bridging Finance and HR Together

For years, HR and finance have operated as two totally separate sectors of a company. However, this may not be the most effective way to succeed. HR and finance rely on each other in order to have a total picture of people-related decisions. After all, these are the decisions that not only shape the organization but can influence its success. Data analytics may be the bridge that connects the two.

What Happens When HR and Finance Connect?

When HR and finance connect, this leads to several positive benefits for the company. It can lead to better business decisions. Specifically, when talent and finances are connected, the organization’s leaders have a full picture view of the company and then can make better decisions accordingly. Specifically, it allows HR and finance to communicate the value of the workforce and suggest changes as needed.

Understanding Cultural Differences in HR and Finance

Of course, HR and finance are different worlds. Both departments focus on the success of the company, but HR relies on people-driven success while finance focuses more on economics. Of course, to marry these two focuses is ideal because it allows you to see the company from all angles.

 However, because the focus is so different, it will require some effort to collaborate and overcome the cultural differences that exist. Ultimately, data and analytics are one way that companies are overcoming such differences and using the information from each other to better the company as a whole.

Tips for Overcoming Differences

According to recent studies, 83% of people involved are interested in bridging the divide between HR and finance. Both groups want to make decisions based on real evidence provided by data. This can be more successfully achieved by using emerging technologies; the two groups may rely on each other to make valuable decisions regarding hiring people and making relevant shifts to increase productivity. Only time will tell how effective this will be in the overall workplace. Fortunately, individuals from both departments are eager to explore this concept and see how far it can take the company as a whole.

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cybersecurity

Cybersecurity: The Latest Hacks

Cybersecurity seems to be the permanent buzzword of our current business climate. Today’s workplace is more threatened by hacking attacks than ever before. Nearly one in five CFOs claim hackers have struck their companies. As hackers launch cyber-attacks, everyone from your customers to your CEO should be concerned about their privacy.

What Are Hackers Looking For?

Most hackers are looking for credit cards, social security numbers and trade secrets they can sell on the black market. Most recently, the FBI has released a warning to H.R. professionals of a W-2 Form Phishing Scam that victimized hundreds of businesses during the last two tax seasons.

How the W-2 Form Phishing Scam Works

Cyber-criminals pose as a high-level executive in your company and send emails to payroll personnel, requesting copies of employee W-2 Forms or ask for a list of all employees and their Social Security numbers. Hackers use a technique known as, business email spoofing, these emails look like they were sent from within your company making detection difficult. Criminals then use the stolen personal information and data on the W-2s, such as Social Security Numbers, to file fraudulent tax returns or they simply sell the information on the Dark Web.

According to CFO magazine, almost half of all data breaches result from lackadaisical employees. The solution isn’t just to create stronger security for your network. It’s to create an office culture that understands, values and routinely performs computer network security protocols. We have compiled some tips recommended by top cybersecurity professionals.

Cybersecurity Tip #1: Do Not Post Personnel Email Addresses Publicly.

Internet posts containing personnel email addresses provide hackers an email that can be spoofed for sending phishing emails to employees.

Cybersecurity Tip #2: Avoid Unsecured WiFi.

Using Unsecured Wifi leaves your network exposed to hackers.

Cybersecurity Tip #3: Remote Wipe Missing Mobile Devices.

Employees should notify IT before notifying their carrier if their device is lost or stolen. So, IT can remotely wipe any corporate data from the missing device. Do not let the carrier turn off the device before this step as you will loses the ability to wipe any data from it.

Cybersecurity Tip #4: Limit removable media and cloud storage.

Removable and cloud storage limit your control over the portability of your data. If you need portable data, limit your employees to company approved solutions that you can monitor and control.

Cybersecurity Tip #5: Phishing emails.

Do your employees know how to recognize an attempted phishing attack, a cyber-criminal impersonating a trustworthy source in order to steal information, or place malware on your system? Your network security is only as strong as your least-trained employee.

Cybersecurity Tip #6: Limit Access

Most employees only need access to a small amount of your company’s network. By limiting access, if an employee’s account is hacked, the hacker won’t have access to your entire network.

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now-gen cfo

The Now-Gen CFO

It isn’t just the role of the Next-Generation CFO that is evolving, the Now-Generation’s role, is as well.  In order to be an effective strategic partner, the Now-Gen CFO must embrace BI (Business Intelligence).

BI is the technology that improves the way businesses analyze and organize the information they collect. BI combines financial and operational data to produce critical business insights.

Below we examine how BI can help CFOs become more efficient.

Finance Operations and Reporting

BI can provide the Now-Gen CFO with the ability to collect data from multiple sources and make it cohesive. BI can:

  • Automate financial statement preparation and distribution
  • Assist with budgeting and forecasting
  • Provide predictive analysis and bench-marking
  • Calculate compensation packages
  • Enable operational reporting of core business drivers
  • Calculate revenue recognition
  • Provide working capital analysis and monitoring
  • Identify, review and reconcile monthly results

Transaction Execution

BI can help navigate transactions and even warn of reasons to pause them. BI can also be  a valuable tool for merger integration and divestiture management. Additionally, BI can both diagnose the drivers of synergy and divestiture benefits and track them in real-time. Providing monitoring and analysis to inform post-transaction company efficiency.

Now-Gen CFO Performance Improvement

Unlike the old methods of finance function reporting, which measure company performance at designated intervals. BI is responsive and can measure in real-time. The targeted reports are instrumental in getting to the cause of financial flaws. BI can also provide turnaround strategies.

BI can also be helpful with:

  • Payroll trends
  • Invoicing and collections
  • Pricing impacts
  • Inventory
  • Procurement
  • R&D
  • ROI

Overview

BI can convert the old-school CFO to the Now-Gen CFO and optimize business diagnostics for transaction execution. That being said, BI can be an extreme value-add and bottom line booster.

Click here to learn more about the Transformation of the CFO

accounting industry

Digital Future of the Accounting Industry

A Perspective for the Finance and Accounting Industry:

Soon, the accounting industry will be working with brand-new technologies that haven’t even been imagined yet.  Today’s digital environment can be a strange dichotomy. On one hand, we hear constant buzz about dramatic advances and the opportunities presented by them.  We are inundated with the promises  of growth and the impact of artificial intelligence (AI).

On the other hand, for some people, new technologies can be confusing, and the real benefits seem like a pipe-dream.

Despite the dichotomy between the industry buzz and what some currently experience, technological developments in the accounting industry will be dramatic and ultimately beneficial.

Trends in Accounting Technology

Advances in processing power, memory capacity, connectivity, AI, robotics, and blockchain technologies are changing the accounting industry. Below are  important trends that will have a material impact on the way data is collected and processed.

  • Big data sets, drastically improved performance and memory capacity
  • AI augmentation of compliance and consulting capabilities
  • Robotic process automation and integration
  • Talent sourcing, crowd problem-solving, and shared ecosystems systems
  • Publicly available and easily accessible knowledge

Tomorrow’s Accounting Industry

By engaging in new technology processes, accounting and finance professionals will be able to enhance compliance practices, improve analysis, and provide greater value.

  • Big data will lead to better detail and accuracy.  Allowing enhanced analysis at the transaction level.  
  • Algorithms will be used to apply expertise, knowledge and experience. Meaning accounting professionals will need to apply that expertise early in the processes as real-time reporting accelerates the times at which data is submitted.
  • Robotic process automation technologies are evolving and becoming easier to use. Additionally, they will likely become smarter and therefore will have a greater impact.
  • Information will be delivered in a more personalized way through mixed-reality media and video. In the future, we might expect more use of natural language processing for emails and engaging virtual agents.

Overview

The finance and accounting industry will continues to transform with a significant change of pace and associated risk as we advance into the digital future.  Which means finance and accounting professionals should monitor technology developments and remain agile.

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excel

Excel for Budgeting & Planning

Most financial professionals have used Excel at some point. After all, this go-to method is certainly a popular option that many people believe is the simplest solution when it comes to budgeting and planning. However, it’s important to evaluate the pros and cons as a way to ensure that you are using the tool in the most effective way.

Pros of Using Excel

One of the most obvious pros for using excel is based completely on how commonly it is used. Most, if not all, financial professionals use this option for budgeting and planning already. In many ways, this streamlines the exchange of information and makes it easier for everybody to be on the same page.

There is no denying how flexible it is to use Excel. There are many functions available that allow people to customize their budgets in a way that is most useful for their particular company. While it is incredibly familiar to many professionals, it’s also easy to adjust in order to get the most for their particular needs.

Cons of Using Excel

The biggest pain point for using Excel boils down to its lack of features, primarily for the financial sector. Some of the most missed features include system integration, data scalability, and version control and data integrity, just to name a few.

However, while it may seem like a no-brainer to simply resort to an enterprise solution, there is a slew of additional concerns to weigh. For example, most financial professionals already know Excel well before they enter the workplace. A new system will require upfront costs, additional training, and across the board integration. This boils down to the need for more money and time, which many companies simply don’t have.

The Best of Both Worlds.

Perhaps the solution may be a system that incorporates Excel into the integration. A new eBook presented by Vena Solutions titled Enterprise Budgeting & Planning with Excel for Dummies allows financial professionals the opportunity to learn how to use both the new and old systems in a way that complement each other.  This combination could be just the ticket when it comes to finding a better system that has more sophisticated options with the traditional program so many already use.

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