Common Problems in Finance Department: CVs and interviews are the worse predictors of success in a job.

 

According to a report published by the HBR, the number 1 reason 82% of hiring managers gave for bad hiring decisions was inadequately qualifying candidates for key attributes required for the job during the hiring process (i.e., technical and soft skills).

 

After reading the HBR report, we were curious to find out why traditional hiring and recruitment methods were failing to qualify people for roles.

 

In 2010 we set up a longitudinal study to find out which hiring methods were the best at evaluating candidates for pricing, revenue and commercial management roles.

 


Table of Contents:

I. Common Problems In Finance Department Are Often Found In Usual Places

II. Why Do Talented Pricing People Keep Leaving Your Commercial Finance Department?

III. Is It Really That Difficult To Find Talent For Specialist Finance Department Job Roles?

IV. Business Continuity Plan for Finance Department


 


 

common problems in finance department


Common Problems In Finance Department Are Often Found In Usual Places


 

What we did…

 

In 2010 we began our research to find out which hiring methods were best (and worse) at predicting success in new and challenging pricing roles and common problems in finance department.  We have continued to study the topic of talent evaluation since then and have considerable insight and data analytics to support our clients build high performing teams and common problems in finance department.

 

In our study, we examined traditional methods such as CV, interviews and standard aptitude tests and more robust talent evaluation tools such as: pricing and commercial tests, team capability tests, and customised pricing assessment centres. We wanted to know which methods were better at solving common problems in finance department, evaluating/qualifying key pricing skills and capabilities for specialist roles and teams

 

Our target executive group for this study were pricing, revenue and commercial management executives; and to date, we have assessed over 867 pricing and commercial executives in Australia and worldwide. All the executives in this study came from leading companies in Australia, the EU and the US and practised pricing and revenue management across most industries and markets (B2B and B2C).

 

To assess the effectiveness of all types of hiring methods (i.e., how well each method identifies talent and potential for pricing and commercial roles), we developed a multi-trait assessment framework for pricing, revenue management and commercial executives.

 

This framework consists of a suite of traditional and modern hiring methods (listed above) and includes key both technical and soft predictors of expert pricing performance.

 

The framework was developed by Subject Matter Experts from pricing, psychology and data science to ensure all questions were statistically tested, mapped and strongly connected to key commercial pricing attributes and competencies.

 

Each executive was asked to complete the assessment program followed by a self-assessment form in which they ranked their own pricing capability across 9 commercial pricing competencies. They also provided explanations of their rating scores.

 

The hypothesis tested at the time was two-tailed – that there would be no significant difference between hiring methods used during a typical hiring process and more advanced assessment methods in terms of either qualifying key pricing attributes and/or predicting expert pricing performance.

 

Our findings showed quite a different story…

 

Survey Results on Common Problems in Finance Department:

 

We found that 56% of executives sitting the test failed to meet the pricing competency threshold/benchmark despite having CVs /professional background in pricing and commercial management roles and high self-assessment scores.  30% of executives were either on or close to the pass mark (i.e., acceptable); 8% of executives displayed strong price and revenue management capability and potential for new and challenging pricing roles to come.

 

We found that CVs and interviews were by far the worse predictors of success in the role or identifying talent during the hiring process with indicators as low as .24 for self-assessments and .18 for CVs.

 

In addition, we found that expert tests, customer pricing assessment centres and capability tests were the best predictors of success in all roles (from analyst to price leader) with a strong predictive indicator of .75 for expert knowledge tests and assessment centres and .70 for pricing & commercial reasoning tests.

 

We found that the recruiters and hiring managers/assessors level of knowledge and expertise in teambuilding and pricing helped accelerate and validate the talent evaluation & selection process.

 

Moreover, we found test-retest reliability scores for all specialist evaluation tools were high (Cronbach Alpha of =.8).

 

Implications

 

What someone says they can do in a CV or during an interview bears very little resemblance to how well they perform in a specialist pricing role.

 

Self-assessment based hiring methods like interviews and CVs are by far the worse predictors of success in a job.

 

More robust talent evaluation tools are essential to qualify key pricing skills, styles and competencies for all pricing and revenue management roles during the hiring process.  Hiring a manager’s gut feel is not good enough.

 

An integrated evaluation and onboarding program is now required to ensure the team includes a broad mix of working and thinking styles, skills and competencies.

 

How you hire and who you have on your hiring team can have significant results on the quality and cost of hiring.

 

Conclusion

 

Our study clearly shows that traditional assessments methods like CVs and interviews are failing to qualify key skills and attributes during the hiring process for new and challenging pricing roles.

 

We advise CEOs and HR leaders to break away from traditional hiring methods when building new or existing pricing and revenue management teams.

 

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common problems in finance department


Why Do Talented Pricing People Keep Leaving Your Commercial Finance Department?


 

Our studies show that one in four people in pricing and commercial teams are actively searching for a new job. In this article, we discuss common problems in finance department of high potential individuals in pricing and commercial finance. The aim is to help you identify and nurture them so that they don’t continue to leave your business.

 

Many pricing people say they are not satisfied with their pricing roles but love pricing.

 

Something is not quite right here, so we asked them. More specifically, we asked 185 pricing and commercial analysts if they were thinking of leaving their jobs?

 

This is what they said…

 

  • 25% said they were seriously considering leaving their current pricing job  – either actively applying or attending an interview
  • 85% of the people looking said this was because of issues with their boss
  • 15% said they were fed up with the complete lack of development options available to them in the business

 

When pricing people feel stuck or isolated, they disengage and leave. Sometimes they are even forced to resign because of dysfunctional and common problems in finance department gets the better of them.

 

It seems executives and managers could be doing a lot more to keep hold and nurture their pricing talent.

 

Research

 

There is a gap between what pricing roles are offering talented pricing people on the job ad. And what the role and culture are actually like when talent pricing people step into the business.

 

For starters, there is a prevailing view among team leaders that they should treat everyone on the team in the same way. Because this is fair and right, standard talent management practice.  However, we think differently. In fact, we believe that top performers should be treated differently from the rest.

 

Our research scope for top pricing common problems in finance department is broad. We have been looking at issues around hiring and talent management and things that engage. Also, the things that determine performance solely in the field of pricing, revenue management.

 

 

We have focused on the identification of pricing and commercial talent management for the past ten years.

 

In the past six years, we have been focused pretty heavily on this critical talent management issue and common problems in finance department.

 

The database we’ve got is pretty extensive. It includes over 2000 pricing, revenue and commercial management professionals from Australia and around the world that we have either assessed, surveyed or interviewed. Additionally, we have detailed pricing diagnostics from over 150 Australian businesses.

 

More than 734 organisations have participated in our research on pricing talent management and common problems in finance department.

 

The Number 1 factor that we find drives performance in a highly talented and skilled population (i.e., top-performing pricing people and high potentials) is their active engagement in business strategy.

 

To expand on this key finding: We find top performers are not happy doing low-level tasks without knowing the bigger picture. People want to be involved in something much more significant than just a series of daily tasks. They don’t want to be isolated from the high-level strategy; they want to contribute to it.

 

In short: to keep your top-performing pricing people happy and in your team, you’ll need to involve them in the growth of the business; not keep them on the sidelines.

 

In fact, we find that your high potentials are the quickest to disengage out of all your team. But they are the fastest to re-engage too. People ask more and give more. They get disappointed when they are not recognised. They also have a lot more job opportunities in a slow market than you might realise. Moreover, they are always trading off the value adds.

 

Helping top talent see how they can drive more contribution to strategy is critical to keeping them engaged. It’s not enough for them to stay with a business just because you offer them financial reward. They want to be engaged on a much deeper level; given the opportunity to contribute and recognised for their contribution – progressive talent management practices.

 

Who are high potential pricing people?

 

High potentials are not the leaders of companies but the next level down. They have high expectations and high aspirations about the contributions they can bring. Pay is still important. However, high potentials want to be a part of what they helped you to deliver. Number 1 factor to drive the performance of top performers in pricing.

 

High potentials are influenced by recognition and contribution; which means you have to change your talent management style and approach when you are dealing with a high-potential individual. Acknowledge their strengths and differences and support their success.

 

Many companies miss out on these low hanging opportunities because they enforce a democratic recognition and talent management system.

 

Talent management techniques

 

As a leader, link individual tasks to organisational goals – people are not clear about how their work drives more comprehensive strategy, and they want to know.

 

All this depends on manager bandwidth and capability, I realised. However, if you want an engaged workforce and they want to be engaged, then it makes sense to contribute actively and engage with talented people.

 

The pay-off for progressive talent management is enormous. A research study from Gallup calculated that actively disengaged employees cost the U.S. economy alone $450 – $550 billion per year.

 

Managers need to have a conversation with their top performers and differentiate them from their rank and file employees. They should sit down and think about how they can facilitate individual success in the organisation.

 

Maybe ask them why they joined or stayed in the business? Many managers don’t ask this question. For fear they cannot provide top performers with what they want.

 

Asking the questions does not mean you have met the demand.

 

The question sparks frank conversation about what the company can and can’t do.

 

Do firms need to do a better job of designating people to the position in the first place?

 

70% of high performers today lack the critical attributes for future success.

 

The idea of current performance being predictive of potential is only right 30% of the time.

 

Implication

 

Apart from technical skills and ability, there are three key people factors all pricing leaders need to consider when they build, optimise or manage pricing talent:

 

  1. Engagement: The person’s level of commitment. The degree to which the person plans to stay with the company and make a long-term contribution
  2. Values: and the degree to which the person is aligned with the values of the business as well as the changing sources of value of the company in a way that drives their full productivity.
  3. Motivations/Aspirations: how do you assess what an individual wants and compare it with what the company (and team) want and are motivated to achieve? It may not align with what they want, or you want as a leader.

 

Just because they are high potentials regarding ability and performance does not mean they are high potentials for your business.

 

In fact, to have a long-term contribution, data suggests a person has to be very carefully aligned with the promise of more senior roles in the future, and the various asks these roles bring with them.

 

In some cases, misalignment in the areas of work-life balance or geographic mobility or even in things like industry focus or activities across the day can severely limit a person’s success on the next level.

Solution

 

There’s a shortage of experienced pricing managers and analysts in Australia. Which is expected to continue over the next five years.

 

Pricing and commercial managers and analysts that are any good – i.e., that can demonstrate some level of domain knowledge, and technical skills – are in high demand even if they have gaps in technical capability and leadership.

 

We see a significant increase in the number of commercial pricing jobs in both B2B and B2C segments in Australia over the past two years. There’s no doubt that business executives recognise the importance of pricing and commercial staff. To help implement strategy and manage price and value in highly competitive and volatile markets.

 

You need a better talent management strategy to hang on to your top performers. The success of your price improvement programs and personal career trajectory, depend on it.

 

Engagement is desirable for your teams and yourself.

 

Taylor Wells suggests a 3-pillar approach to bridging the gap and solve ongoing performance and engagement challenges:

 

Competence – Does this person have the technical competency and experience to do the job effectively?

 

Working style – Can this person work well with other people in the team/in sales/with the executive leadership team/customers?

 

Values – what motivates this person, can you trust them?

 

Our three-pillar framework can help you identify who you should be investing in for high potential talent.

 

You’ll get much more from someone by putting them in a pricing role that suits their strengths.

 

Disengaged workers can lower morale, become less productive, and offer reduced service levels to customers and clients.

 

Find the best position for yourself and your team.

 

Conclusion

 

Experienced pricing managers and analysts in Australia will remain minimal over the next five years. You need to hang on to your top performers or they will leave your business to find meaningful careers elsewhere.

 

Identifying talent and proactive talent management (i.e., highly personalised and differentiated) is key to resolving severe performance and engagement issues.

 

Actively disengaged employees cost our economy billions of dollars every single year.

 

Contrary to what we believe, your top performers (not your underperformers) are the quickest to disengage. A robust talent identification and talent management strategy can help you hang on to your top performers and re-engage people with your pricing mission.

 

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common problems in finance department


Is It Really That Difficult To Find Talent For Specialist Finance Department Job Roles?


 

In a 1997 McKinsey report on seek talent, they released a sensationalist report proclaiming: “there’s a war for talent.”

 

Organisations around the world use this report to: 1) recruit apparently the “best” people 2) promote a small number of talented people from within; and 3) cull large numbers of “less talented” rank and file employees.

 

McKinsey’s report on how to seek talent is responsible for setting off a whole raft of unsubstantiated talent management practices and ideas around the world; without ever actually explaining what makes for talented employees…

 

 

What was wrong with this approach to seek talent for commercial roles?

 

In short, it was a tabloid report – lacking any real evidence or insight into complex human capital challenges.

 

Yet, on the bright side; “The war to seek talent” report did bring the necessary level of urgency to our human resource challenges and recruitment strategies. Unfortunately, it did not quite address the real problem plaguing us.

 

There is no war to seek talent; the real problem is that we don’t know how to find quality people. For the reason that we don’t know what we should be looking for.

 

What’s more, we have lost the ability to attract and engage quality people during the recruitment process. And, more worryingly still, we have become much harder to “less talented” candidates that could thrive if only we gave them a little bit more support to grow and develop.

 

Essentially, we are pouring billions of dollars down the drain every year. Because we stubbornly rely on flawed recruitment processes and methods that fail to: filter people out properly and detect high quality candidates with precision.

 

And, now we are all paying the price …

 

Implications

 

A radical re-think on recruitment is now in order. It’s time to give both the employer and candidates a chance to make more informed decisions. It’s time to replace myths and sensationalism with evidence and research to build smart price teams.

 

Unfortunately, scientifically understanding real human needs and individual pricing capabilities during recruitment as I am describing tends to take a back seat in business.

 

But it shouldn’t because evidence based recruitment has a bottom line business impact.

 

Research has shown that better recruitment processes drives quality, time to hire and critical diversity metrics.

 

What’s that worth to us?

 

  1. Gallup study show unskilled and unqualified managers at work cost their organisations from $450B and $500B worth of productivity annually. (This figure doesn’t even include the cost of managers overlooking talent during the recruitment process due to error or bias.)
  2. Cognitively diverse teams are smarter and faster at solving complex problems.
  3. High-quality candidates are disproportionately productive. One estimate is that the top 1% of employees produce up 25 times as much as average performers.
  4. High-performance cultures deliver 3 times more revenue and 12 times more value.

 

Recruitment is not simply a time to fill roles quickly. It’s actually a strategic opportunity to understand individual strengths and areas for development, diversity of thinking, team mix and dynamics.

 

We need to bring recruitment out of the 20th and into the 21st century. We need more evidence, data and quality recruiters to interpret and guide better recruitment processes. This is not only possible, but it’s here. And by using a little bit of science, you can go a long way to building a smarter and fairer recruitment practice and high-performance pricing departments and culture.

 

Conclusion

 

McKinsey’s report on how to seek talent is responsible for setting off a whole raft of unsubstantiated talent management practices and ideas around the world without ever actually explaining what makes for talented employees…

 

  • “Talent” means very little if you don’t have clear hiring criteria.
  • Talent management practices consistently under-deliver without a proven and tested framework and research.
  • Recruitment practice will remain in the dark ages unless we see it as a catalyst to accelerate high performance.

 

Transactional recruitment is seriously impacting organisational health and profitability.

 

Treating people like cattle for trading during recruitment will do us no favours in the long run and lead to serious engagement and performance issues. See our blog on business leaders and why they need to be involved in nurturing talent.

 

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common problems in finance department


Business Continuity Plan for Finance Department


 

Professional development: Retain top talent; drive pricing excellence

 

Effective professional development and coaching/training program is essential to retaining top pricing talent and driving team performance in new and more challenging pricing roles.

 

Gallup research is a key reminder that most teams are not engaged with their roles, business or even line manager. People tend to leave their roles because they have a poor relationship with their direct line manager not because of money. The 64% shows dissatisfaction with their development experiences and less than half have a high intent to stay.

 

Organizations that create a productive learning culture and understand how people actually learn will realise substantially higher employee performance and hold on to vital pricing talent.

 

This article will discuss how to develop customised professional development training and coaching sessions to retain and enable top pricing talent. We will also consider key methods to accelerate team performance and increase development performance.

 

The 70:20:10 model for professional development

 

The most effective way to build your pricing expertise is by repeatedly doing and reminding yourself and others of what you have learned at work, from others (coaching) and in formal classroom training, coaching and professional development workshops.

 

70% of what we learn comes through on-the-job experiences, 20% comes from learning through others, and about 10% comes from formal training. Most companies struggle to bring the 70:20:10 model to life. Executives tend to fall straight back into business as usual after a training course. Many forget or struggle to implement valuable pricing fundamentals and techniques necessary to generate substantial revenue and margin opportunities for the business.

 

To get the most out of your next training, coaching and professional development program, we recommend incorporating a series of shorter, high-intensity pricing training workshops to embed value and price leadership focus into the organisation.

 

The table below shows the importance of implementing a;series of targeted pricing professional development workshops to embed key learning over time.

 

We recommend that you have at least 3-5 workshop sessions;;split over 3-5 months to ensure people do not forget and/or fall back into old habits. We also suggest pre-work and post-workshop assignments and assessments to prompt and remind you and your team of key learning objectives, milestones and development plans.

 

Training, coaching and development _Taylor Wells

 

Training, coaching and development and the Supermemo theory

 

Remembering not to forget all the good things you learn during formal classroom learning is key to embedding pricing and value in your mind, team and in organisation. As the chart above shows, the amount of time it takes for you to remember or forget (depending on how you look at things) was calculated as part of the SuperMemo theory discussed in the “Decision Book: by Mikaek Krogerus and Raman Tschappeler.”

 

They write that: “ideally you should be reminded of key learnings when you are in the process of forgetting it.” The more often you are reminded of the pricing principles, in other words, the longer you will remember it. The longer you remember, the more likely you’ll change your mindset and educate others on why they should change their view about pricing models.

 

 

How to do get the most from your next pricing training, coaching and development program

 

Building pricing expertise and an appreciation of value are like becoming fluent in a new language. You learn key pricing principles and consider the market and consumer behaviour as you develop your price-setting strategies for various customer segments.

 

Your trial, test and explore new ideas and options. You gradually memorise pricing techniques through learning on the job and testing different pricing options work (successes and failures) in the market.

 

After a while, it may even become difficult to remember a time that you didn’t consider value when setting prices and developing strategy. At this point, you have changed your mindset and perspective on value, price and revenue management. You are now adding depth and breadth to your pricing expertise.

 

When your perspective on pricing and value shifts;at a fundamental level, you are ready to challenge, respectfully and competently conventional views/wisdom. You are ready to educate others on new ways of pricing and conceptualising value.

 

Conclusion

 

Experiential learning opportunities supported by dedicated pricing training; coaching and development tools will help you maximise your potential and the potential of your team.

 

On the job experiences at work, with others and during the formal classroom training; coaching and development sessions can accelerate team performance in the first 100 days in a new and challenging pricing role.

 

The strength of the alignment between you (the line manager) and individual team members of the team will be a key determinant of performance success or failure.

 

A targeted training, coaching and development program demonstrates to your team that shows commitment to their development path. Reciprocal commitment between the line manager and individual team members can drive team engagement and accelerate progress.

 

Most organisations rely on managers as the primary source for developing high performing teams; yet tend to overlook the importance of providing pricing managers with the right development tools.

 

While some pricing managers are naturally good coaches, most are not; which leaves development and learning to happen on their own.

 

A well-structured development program can help you maximise individual readiness for advancement in a specialist area. And improve the strength of your succession pipeline in a functional area that is very difficult to source for.

 

Click To Download Your Free Executive Guide To Best-In-Class Pricing Strategy Now.

 

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