Are You Ready for Shifts in the Workforce?

Here are two important facts:

1. This year, Millennials, adults between the ages of 18 and 34, became the largest cohort in the U.S. workforce, according to Pew Research Center reports.
2. The Census Bureau predicts that Millennials will become the largest group in the U.S. population, not just the workforce, later this year.

Why are these facts important?

It’s simple. Major shifts in the workforce and the population will have dramatic effects on your company, and you need to start planning now. For example, as your senior managers retire, do you know who will take their places? Do their replacements have the knowledge and experience they need to be successful? Are you training and mentoring younger employees so they can become effective leaders?

During the last six months I’ve had the opportunity to assist a few publicly traded companies with their transitions to the new COSO Framework. My clients were primarily interested in meeting the SEC reporting requirements concerning evaluation of internal control over financial reporting, but I noticed an unexpected area that has needed extra attention – attracting, developing and retaining competent individuals within the organization, as well as creating effective succession plans. It’s an area that COSO deems important for all organizations.

As you know, COSO, the Committee of Sponsoring Organizations of the Treadway Commission, released its original Framework for designing, implementing, and conducting internal control and for establishing requirements for an effective system of internal control in 1992. They followed the initial release with an update in 2013, which public companies currently are working to implement.

Here is a summary of the COSO Framework’s major points concerning competency, mentoring, and succession planning:

• A company should establish policies and practices that reflect the organization’s expectations of the competence necessary to support the achievement of its objectives.
• The board of directors and management should evaluate competence across the organization and in outsourced service providers in relation to established policies and practices, and act as necessary to address shortcomings.
• The organization should provide the mentoring and training needed to attract, develop, and retain sufficient competent personnel and outsourced service providers to support the achievement of objectives.
• Senior management and the board of directors should develop contingency plans for assignments of responsibility important for internal control.

Most companies, both publicly-traded and privately-held businesses, will soon face challenges related to the demographic shifts that are already underway. One of the greatest challenges is transferring 30 years of institutional knowledge to the next generation as Baby Boomers retire. Developing effective succession plans, training programs and mentoring relationships will help make your organization’s transition easier. How companies handle mentoring and training the next generation could well determine their ultimate success or failure, and simple initiatives can go a long way to mitigating these risks.

One simple initiative is formalizing current job descriptions. After a key team member retires, management must ensure that all the retiree’s responsibilities are handled by his or her replacement. Writing formal job descriptions now will certainly help during transitions, and it may help eliminate some overlap in current responsibilities.  Better yet, if you are looking to bring new people to the team, you can easily identify their areas of responsibility.  Many of today’s younger professionals work best with clearly defined job responsibilities.

As part of your planning, take into consideration that younger professionals work best with more feedback, delivered more often.  You should be coaching and providing feedback to younger team members on a regular, consistent basis. Getting into the habit now will make it easier to attract and retain future leaders of the company.  After all, how will your team members understand the strategic goals of the company if you don’t tell them?  How can you expect them to help you reach those goals if they don’t know where you’re headed?

As I’ve worked with clients during the last several months and found potential risks in their planning, I have mentioned the phrases “goal setting” and “formal evaluations.” I’m getting used to seeing “the look” that translates to, “Who wants to do that?”  It doesn’t have to be that hard.

Goal setting, formalizing job descriptions, creating mentoring programs and developing succession plans are only as painful as you make them. A process that breaks the whole task into manageable chunks and asks each team member to identify only two to three key goals or strategies can be very effective.  And it’s okay to ask for help.

As business partners, we strive to assist companies in areas where we bring the most value.  We can help you align your accounting and finance teams so they can be successful.  We can help you formalize your key accounting and finance team members’ job descriptions.  More importantly, we can address any shortcomings your team may have, fill an immediate need, and train your current team members. We can help you develop leaders for the day you hand over the keys. Let us help you build your bench strength and grow leaders for a bright future.

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