COVER STORY
Strategic Finance: Gaining a Talent Advantage
Schneider Electric is a widely-diversified business that, over the last decade, has grown strongly through multiple acquisitions, both global and domestic. Sugata Sircar, its CFO and Country Finance Partner, changed the structure of the Finance organisation to enable true business partnership, with Finance team members identifying the drivers of performance management in each business and providing ideas, both at the customer end and to create internal efficiencies, for implementation. This effort is what made him the winner of the ‘Excellence in Talent Management’ category at IMA’s 2018 India CFO Awards.
Despite having a complex bouquet of group companies, Finance is able to provide key inputs concurrently to the business. These insights make cross-selling across businesses a reality. Schneider Electric’s (SE) Finance leaders provide inputs on the right business mix that can achieve the overall P&L targets, monitor this at the opportunity level, and ensure predictive guidance. This level of alignment and ownership by the Finance organisation has contributed to the firm’s high double-digit growth.
That Finance has become a growth driver is clear from the fact that, on numerous occasions, it has come up with clear and viable customer solutions. In itself, this also reflects the high level of empowerment – and necessary knowledge enhancement – that Mr Sircar has enabled in the Finance team. He has invested strongly in creating a formal Assessment Centre, and also in mechanisms that enable reverse mentoring for himself. He invests significant time with a ‘sounding board’ of younger and high-potential team members. The Finance team’s culture now centres on driving core metrics like risk and P&L management in a manner that business consider useful and effective. Essentially, all of Schneider’s businesses in India have seen a steady improvement in sales and profitability over the last four years. The company’s risk in receivables, measured as uncovered risk, has almost halved while cash collections and the net worth of individual entities have improved.
Under Mr Sircar’s leadership, Finance’s engagement score has improved from 66% in 2014 (when he took up the role) to over 80% in 2018. Team members are both encouraged to and recognised for reaching beyond their normal capabilities, and for helping the business achieve its objectives. They are continuously assessed on a best-in-class scorecard with key performance indicators. Monthly feedback loops have been established to correct any aberrations in real-time, instead of having to rely on the cumbersome annual appraisal process. Resultantly, the team’s retention rate, at 92%, is higher than that for the company as a whole.
A firm believer in continuous learning, Mr Sircar draws up an annual Finance learning calendar at the start of every year. The focus is on the 3E learning philosophy – Education, Exposure and Experience – through a combination of classroom training, rotation opportunities, best-practice sharing and on-the-job learning. Finance employees are encouraged to take charge of their own learning and development, and to share those learnings with the team members through a simple hashtag: #whatdidyoulearntoday. The results of these efforts are reflected in improving employee ratings (up from 54% to 71%) with respect to its ‘focus on learning’.
In a candid conversation with CFO Connect, Mr Sircar shared his secret to attracting, developing and retaining quality talent within the Finance function.
The Big Picture
Achieving responsible growth with growth in volume as well as robust profitability and cash generation can be challenging, but that is what we are focussed on.
What major challenges do the markets offer SE India for each of its product lines, and for SE as a whole?
Schneider Electric has a full range of products and solutions for energy management, industrial automation and related services. India, with its trend of growing urbanisation, digitisation and economic growth, is very well suited for what our company has to offer. It is a growing yet challenging and competitive market. Achieving ‘responsible growth’ with growth in volume as well as robust profitability and cash generation can be challenging, but that is what we are focussed on.
The company has a large manufacturing footprint in India with plant locations all over the country. We compliment this by bringing in products from our global supply chain hubs, where they are most suitable. This equips us to offer the best solutions for every requirement.
How well structured is the organisation today to respond? What changes specifically did Finance engineer to enable the right organisational structure and design to maximise opportunity and minimise complexity?
The organisation is structured to address market segments and channels in our large, geographically wide-spread region. Finance is organised in a way to partner the business. The concept of Finance Business Partner is very strong in our structure. Roles in Finance are structured to engage in strategy and to deploy business targets. We constituted a strong performance monitoring and measurement system that can provide pre-emptive inputs to the business in addition to reports on past performance. Other roles in Finance specialise in the management of risks like credit, project contracts, etc. This kind of focus is designed to partner the business in maximising the opportunities in the market while managing risks.
Our core values help in this orientation, and especially so the five core values we animate (‘Customer First’ and ‘Act Like an Owner’) most continuously to build the right culture.
How is the business model evolving? In turn, how is Finance’s approach changing?
Our approach to our business models is evolving. We are now much more focussed on our channels to market and market segments. We have the widest array of products and solutions in the energy management and industrial automation space. Our approach is to saturate channels and segments with these offers. This calls for a different way of measuring performance, setting targets and deciding on resource allocation. We have launched several short-term projects in Finance to address these issues, including performance management by channel, development of a cost-to-serve model, rationalisation of finance activities, etc. These are led by Finance Leaders reporting into me, and talent from across Finance activities are assigned to work with them. I am quite excited about the energy and transformation that this can bring.
What are the corporation’s strategic goals for the next 3-5 years?
Our short-term and long-term business goals in India are aligned to our mission to ‘Make New India Energy Positive’
The strategy is to saturate our presence in all market segments with our end-to-end offer of connected products and solutions, which enable control and analytics for customers. Sustainability and access to energy are at the heart of our strategy. We believe that we are making our world better with our philosophy of innovation at every level.
In India, our mission is to ‘Make New India Energy Positive’. All our short-term and long-term business goals are aligned with this mission and we believe that this can be done while growing profitably. Coming from a legacy of best-in-class ‘connected’ products and equipment, we have built a complete digital ecosystem which leads the convergence of IT and OT (operational technology) for our customers, delivering significant energy efficiency, improving safety and reliability, and enhancing productivity.
We are bullish about the mid to long-term growth potential of India, which will be aided by rapid adaptation of digitisation.
Which risks would you identify as key? Conversely, what are the key opportunity areas?
In terms of the business environment in India, the key risks to be managed are credit risks and the risk of project delays. The risk of doing business, however, increases in specific market segments from time to time due to events such as fuel prices, regulation, etc. We are bullish about the mid to long-term growth potential of India, which will be aided by rapid adaptation of digitisation. We also see steady improvement in efficiency and productivity in business operations, which is also a focus area for us. At a larger level, the adverse effects of climate change and a carbon-constrained future are risks for the business community. However, we also believe that going green makes business sense for us as well as for our customers.
Identifying Competencies
What are the specific competencies that you need to develop in your finance workforce, from both the technical and the leadership perspective?
We try to differentiate roles within Finance, develop specialised competencies and efficiencies, and rotate people across those activities. The following are the competencies that exist for each role within Finance:
- Financial Planning and Analysis: The key activities involved are development, generation, validation, analysis of reports, and engagement with the business. We are creating differentiation between these activities, which builds efficiency. When you assign people to specialised roles, they deliver better quality more efficiently. Then they can be rotated as per their willingness.
- Financial Accounting: Transaction processing is a routine activity, carried out by a shared service that focuses on productivity and reliability. Closing entries, finalisation of accounts, and analysis of financial reports for audit and audit committee are specialised activities.
- Business Finance Heads/Finance Business Partners: We have a strong concept of Finance Business Partners. They co-own the business targets, provide insights to the business, and proactively simulate scenarios so that decisions can be taken in advance which impact the P&L in the near-to-medium term. While they understand the business strategy and execution plan, they are also expected to have an independent view and assert themselves so that P&L delivery is optimised and risks are managed. They report to the India Zone CFO (i.e., me) and not to the business heads.
- Central functions (like Credit Management, Treasury, Solution Risk Management): There is a certain competency and approach required to carry out these central roles. We look for analytical skills, communication and an excellent ability to work with different groups in business and Finance. The abilities to assert, influence and yet be collaborative are crucial.
We differentiate talent who can think beyond the routine and have the passion to propose different solutions
Are there new competencies required in both Finance and the business generally?
Some skills are becoming increasingly relevant, such as the ability to understand the scope of automation and digitisation. This would include things like data downloads, reconciliation, compilation, etc., which have always been done manually. Using Excel data from ERP, it can be automated, converted into dashboards and analysed. This is, in a sense, ‘smart Finance’, and Finance leaders must explore such opportunities. We encourage inputs from all members of the team to come up with such ideas that we can use.
We differentiate talent who can think beyond the routine and have the passion to propose different solutions. An SE value which we have taken as a theme for the Finance function in India is ‘Dare to Disrupt’. This represents the approach that we aspire towards and want to cultivate. For instance, we had a programme to encourage and recognise digitisation ideas in different businesses in India. People came up with small automation proposals, some of which we have implemented, and others of which are in progress. This is creating efficiency and also an awareness of what is possible.
Acquiring Talent
We inculcate a ‘Customer First’ mindset among all our employees.
What is your approach to acquiring Finance talent? What challenges do you face in this regard?
We look for technical skills, a strong orientation to the business and some clear behavioural traits, such as the ability to work collaboratively while having the courage to bring up ideas and persevere with them, a focus on results, a mindset of continuous learning, and openness to change. One of our leadership values is ‘Free up Energy’. We expect leaders to explore how we can do things differently, so that their and their team’s time is spent on aspects that add value to the business. ‘Customer First’ is an approach that we inculcate in all sections of the organisation. While we look for these traits, the challenge remains in being able to assess all of this correctly in a candidate.
We mainly hire CAs and MBAs. We are open to accepting professionals from other disciplines if they have the inclination – we have just started exploring this in India. Recently, we did a Finance job webinar for all professionals in the India business that evinced strong attendance from non-Finance folk.
Engaging Talent
The Finance team’s engagement improved from 66% in 2014 when you took up this role to 81% in 2017. What is your role—and those of your Finance leaders and C-suite colleagues—in fostering a talent experience within Finance that emphasises the right combination of development, opportunity, and work-life balance?
Our engagement scores have sustained at over 80% in 2018 as well. We have built a culture with the following elements:
- Communicating goals and objectives clearly. Continuous update on our approach to the businesses and the status of business performance
- Communicating successes regularly
- Taking inputs and feedback in several forums.
- Updating people on the actions taken
- Admitting the mistakes that we made and what did not work
- Differentiating performance. The expectation from our teams is high and it has to be felt by them. Appreciation is coupled with high expectation. On the downside, this can lead to some disappointment with performance ratings, but people progressively learn what is expected from them.
On my part, I do the following to foster a talent experience:
- Meetings with Finance teams in different locations, once every two months
- Individual meetings with Finance talent at various levels, by rotation. I do a few every month
- Individual meetings with my direct reports, monthly
- Meetings with the Sounding Board every two months
- An address to all Finance people every quarter
- Specific communication to leaders on important topics from time to time
- A special workshop on performance rating at the end of a financial year
- Learning sessions on various topics through the year
- One annual offsite were we create a high energy environment with lots of fun, while doing workshops on all the critical focus areas for business and finance
We leverage technologies to enable people to work from home. to feel responsible for delivery rather than for attendance.
How do you leverage emerging technologies to engage workers? What are the pitfalls of the same and how are these circumvented?
Our work-from-home policy is being used extensively. A person has to take her manager’s permission and can then work from home while being connected, giving flexibility to people to manage their personal commitments. We want people to feel responsible for delivery rather than for attendance. It works most of the time, though there have been instances of misuse. It is for the manager to deal with such cases strongly.
Everyone does not have the same level of orientation to self-development. People who are not upgrading themselves in spite of all the facilities and communication pose a problem.
At 92%, the Finance team’s retention rate is higher than that of the company as a whole. What makes your function a career destination rather than a career way-station? Specifically, how do you retain your critical staff? What is your view on ‘needed attrition’, i.e., where you find skills that are outdated, or team members that cannot be upskilled or are falling in impact. Does your unit include such people, or are you able to re-train each and every one of them?
The ideal scenario is where you can retain your critical talent and provide them with growth avenues while having a healthy attrition level. In reality, ambitious professionals assess from time to time, whether they are in the right place. Our regular connect with them gives us an indication of their thinking. We are able to retain some of them and lose some.
Our process of potential assessment, which is different from performance assessment, enables development planning. The development actions involve internal and external training and coaching, working on live projects, job rotations, etc. This helps in the retention of talent. However, at times we have a situation where we cannot fulfil someone’s aspiration in a preferred timeline. It is important from the company’s point of view to have a solid succession planning process in place for critical roles. We map people to roles to have a visibility of succession at all times.
Everyone does not have the same level of orientation to self-development. People who are not upgrading themselves in spite of all the facilities and communication pose a problem. Therefore, it is necessary to be fair to the business and to the people who emphasise self-development in order to re-calibrate roles and restructure the team from time to time.
Developing Future Leaders
You run an ‘Assessment Centre’ for Finance talent across your businesses in India. How was that constituted and how does it operate? What was the objective behind this, and crucially what has been the output? What was the extent of collaboration that was required with the HR and other Finance leaders?
The Finance organisation blueprint evolves with the evolution of business models. The ‘Assessment Centre’ was constituted to identify people for roles in a mutualised central Finance function. There were several steps under the assessment process, such as:
- Listing activities carried out by Finance resources in each team
- Identifying critical functional and behavioural competencies for such roles
- Leveraging multiple tools and assessors for objectiveness
- Evaluating analytical skills through case studies and technical written tests (using in-house training material), and behavioural competencies through group exercise and competency-based interviews
Key achievements from this process include:
- A restructuring of roles between central functions, business functions and shared services
- Process simplification, and better alignment of roles and responsibilities
- Individual development plans
- Strong buy-in with the team, who went through the process, leading to high engagement
This process was a good example of a strong HR Business Partnership working in close collaboration with the Finance leadership team.
You have a multi-pronged approach to talent management, combining mentoring, external exposure and stretch projects. How do you identify the talent to be developed? How do you ensure development efforts translate into behavioural change?
Our ‘talent philosophy’ is to unleash the potential of our employees and build careers around the globe. To achieve this, we begin with having a strong talent review process that captures people’s strengths and development needs; accelerates the development of those with the highest potential; ensures that everyone reviewed has the opportunity to maximise their potential; highlights those at risk of leaving or whose departure would have a serious business impact; and provides key inputs to development in their current role and for future roles, e.g., stretch assignments, job moves and development activities.
We assess the talent to be developed using the following parameters:
- Each talent should be a role model of our five core people values and demonstrate ethical behaviour in line with our principles of responsibility
- Each leader should demonstrate our six leadership expectations
- Talent for top leadership positions should be globally mobile
The next step is to assess potential and performance (over the last 3 years), which are mapped for each employee. Accordingly, individual development plans (IDP) covering the goals for the current role and goals for the future roles are documented and monitored on a periodic basis.
A few interventions in the Finance function through which we ensure that development efforts yield behavioural change include:
The focus is on the 3E learning philosophy – Education, Exposure and Experience – through a combination of classroom training, rotation opportunities, best-practice sharing and on-the-job learning.
You have a ‘Sounding Board’ of high potential talent that you engage with for counsel. How do you identify HIPO staff? What parameters distinguish them from high performers or other staff? What training intervention have you designed specifically for HIPOs?
The HIPO pool is identified using the following three parameters, which are based on Schneider’s 3A Model:
- Ability: Does the individual show capability and collaboration to deliver impact?
- Agility: Does the individual show adaptability and appetite for new challenges?
- Ambition: Does the individual show drive and desire to grow SE and to grow a career?
The focus is on knowing each employee’s strength and development needs, identifying those with the highest potential early and accelerate their development, providing inputs to their development for current and future roles, such as stretch assignments, job moves, nominating them for leadership development programmes, etc., and building a robust and diverse pipeline of leaders and experts in all areas and at all levels to support business growth.
The development of HIPO talent is facilitated by setting and managing specific development goals within an IDP by leveraging the 3E learning philosophy of ‘Experience’, ‘Exposure’ and ‘Education’. This involves nominating HIPO talent for global (in partnership with INSEAD France) and country-specific (in partnership with leading external trainers/consultancies) development programmes.
Conversely, how do you manage poor performance? Does HR provide a supportive and coordinated process that serves the parties involved efficiently?
Employees rated as under-performers in the annual performance review process are put under well-defined ‘Performance Improvement Process (PIP)’, helping them improve their performance to a minimum acceptable standard for a given role. This plan gives clear and specific performance requirements that the employee needs to achieve within a set period – normally 3 or 6 months. If the requirements are met, the employee exits the PIP and resumes their normal role. If the requirements are not met, the employee is assessed for other roles in line with their competency as the next step.
In the entire process, HR works closely with employee and managers, and counsels employees to ensure that they are willing and able to take action with guidance and support from their managers.
Emphasising a Culture of Learning
We create a culture of business engagement in Finance by relating Finance activities to business performance
You have been instrumental in building a culture in Finance by making ‘business engagement’ the way of working. How challenging was this? What measures did you take in this regard? What was the impact created on the business at large?
We create this culture by relating Finance activities to business performance. The business is exciting, so when we start the engagement with what we want to achieve in business terms, people feel connected. To illustrate, our Finance learning calendar, which I draw up at the beginning of the year, starts with business priorities. From this, we derive Finance function priorities. Business focus areas like sales maximisation in certain segments, profitability improvement through pricing and mix management, can be related to Finance activities in the FP&A and in the tasks of Finance business partners. Improvements in productivity and efficiency in business can be linked to process improvement initiatives in Finance and beyond while improvements in cash could be related to effective credit management. As we have several business divisions, Finance has to provide insights on performance as the basis of decision making. For instance, we assess the opportunities of orders in the pipeline much before they are won, to simulate the mix in the future period and assess the profitability. This helps in the decision of pricing for opportunities.
We are increasingly evolving our understanding of ‘Cost to Serve’. We carry out workforce planning of our businesses in the country, where we define the productivity improvement that we must target using benchmarks. Proposals are made by each business and function. I, along with the HR Head and Zone President, decide on the resource plan for the businesses and functions for each year, including hiring.
While we do not publish financial results of all our entities in India, I can say that the aggregate of all businesses in India have had a steady improvement in sales and profitability over the last four years. Our risk in receivables, measured as uncovered risk, has almost halved. Cash collections, on the other hand, have improved along with the net worth of all the entities.
Finance employees are encouraged to take charge of their own learning and development, and to share those learnings with the team members.
Your employee feedback on the company’s ‘focus on learning’ improved from 54% to 71%. What interventions are employed? How do you evaluate their effectiveness? How important is ‘on-the-job’ learning?
To evolve the Finance function for higher effectiveness, we believe that learning must continue to be our passion. In line with this vision, we have an annual Finance learning calendar, which is based on our assessment of the learning needs emanating from key success factors driving organisational objectives. The calendar focusses on our 3E learning philosophy:
We encourage employees to take charge of their own development and learning and participate in online and classroom programmes and at the same time recognise one’s own learning and share those learnings with the team members through a simple hashtag: #whatdidyoulearntoday.
We have several well-being policies and measures that are instrumental in driving a culture of high performance.
How do you maintain a balance between employee care and development while ensuring a stringent focus on outcome and accountability?
In fact, well-being is a part of our high-performance culture. Performance appraisals and differentiation are followed as a part of the same culture, where we promote employee well-being. We strongly believe that the well-being of employees has a direct bearing on their performance. There are several well-being policies and measures, including flexi work time, work from home, regular sessions on physical and mental health, and an online counselling facility for dealing with mental stress.
What is the role of HR in driving talent planning, processes, and experience within finance?
HR partnership provides key inputs and thought leadership combined with execution, to answer a few critical questions, such as:
Monitoring Progress
Do you maintain a dashboard to identify and prioritise key talent risks to business capabilities over time? What metrics do you track in this regard?
We do have a ‘People Priorities’ dashboard covering key areas of talent, learning, diversity and inclusion and high-performance. These are tracked on a monthly basis. A few of the key metrics tracked in this dashboard are:
- Talent: Infusion of senior-level men/women talent and early career talent
- Learning: Percentage of man days in learning (classroom and digital)
- Diversity & Inclusion: Percentage attrition gap (women vs men); percentage of diversity hiring; percentage of diversity representation at the functional head (n-1) level
- High-Performance: average span of control, number of management layers at the top
Schneider Electric is a widely-diversified business that, over the last decade, has grown strongly through multiple acquisitions, both global and domestic. Sugata Sircar, its CFO and Country Finance Partner, changed the structure of the Finance organisation to enable true business partnership, with Finance team members identifying the drivers...
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