Managing Millennials in the Month-end Close Process

Transcription

1 Managing Millennials in the Month-end Close Process by Mike Whitmire, CPA

2 TABLE OF CONTENTS AUTHOR: Mike Whitmire, CPA Introduction 1 The Millennial Challenge 2 Playing to Millennial Strengths 3-7 Balancing out Millennial Weaknesses 8-10 Coming to the Close 11-12

3 Introduction Working in an accounting department at a Pre-IPO company, I experienced firsthand the challenge of a growing department. Expanding from 5 to 50 accountants created hurdles in both managing personalities and processes during the close. Being a Millennial myself, my time with the company started with grunt work and whatever was necessary for the team. Over the years, I assumed my hard work would pay off and I would eventually be promoted to middle management. However, as the department grew, the next round of hiring was made up of Gen-X employees in middle management roles. Suddenly, a position I was qualified for and working towards was occupied by someone with little or no affiliation to the current success of the department. In the next 2 years nearly half of the Millennial workforce, including myself quit. There were many reasons for the challenges we faced, most of which were a result of a lack of understanding of my generation and archaic practices we used to complete the close. - Mike Whitmire, CPA, CEO FloQast, Inc. This whitepaper will discuss best practices for managing Millennials, specifically looking at ways to maximize their strengths and minimize their weaknesses. We will then apply this information directly to steps that can be taken to improve the close process. 1

4 The Millennial Challenge The workforce today is dominated by the Millennial generation. There are more than 80 million people who were born between 1982 and 1993 and they now comprise one third of the overall workforce. Learning how to get the best performance from this new generation will be a major factor in the coming decade. Odds are you have already experienced the biggest challenge: the average Millennial quits after two years. This can become a significant problem considering the cost to replace an employee is twice their annual compensation and dependencies during the close are particularly sensitive to turnover. Of course, not all Millennials are the same, but survey results are able to paint a broad picture of their beliefs and behavior. Major cultural events during their formative years created a generation with common attitudes and a unique bond. Three characteristics that defined their youth were supportive Baby Boomer parents, an expansive economy and unprecedented advances in technology. Generally speaking, based on statistical research and surveys, Millennials tend to be very good at applying technology, fostering an innovative atmosphere and channeling their ambition to achieve impressive results. On the other hand, they lack commitment to their employers, may be described as having inflated egos and find face to face communication much more difficult than , text or social media. This information may seem troubling, but we have great news! Once accounting departments are aware of Millennial strengths and weaknesses, it becomes clear how to optimize their efforts and actually improve the close process. 2

5 Playing to Millennial Strengths Here are a few suggestions on how to put Millennial strengths to work for your accounting department. Applying technology Bottom line: technology is the best way to improve Millennial performance. Great software turns good accountants into Superheroes! This is a crucial topic and we will expand on how to utilize technology to improve your close process later in this whitepaper. Fostering innovation Great Leaders Inspire Action Simon Sinek Simon Sinek is an author and speaker who coined the concept of the Golden Circle of human motivation. This new approach to leadership dissects motivation and breaks it into three layers : Why > How > What. This concept can be easily applied to managing Millennials. The three layers represent different methods of explaining and assigning work. But which is the most effective for driving action and optimizing Millennials? 3

6 Let s walk through real life examples to help understand the concept. In this scenario we are hiring a new employee to get some work off your plate! Our new Staff is going to be taking over the Legal Accrual and needs to the Legal department each quarter to get their estimates. Explaining the What In this scenario the what would sound something like General Counsel and ask them for the Legal Accrual numbers. Get a summary explanation of each item and draft our Legal Accrual Memo. Make sure you book the journal entry as a reversing entry. Get the support together and send it to me for final review. Once approved, print everything so we can sign-off and keep in the binder. Explaining the what is the most common managerial style and can be a quick and effective way to get work done. However, this is a narrow-minded approach and gives the assignee no insight into the full scope of the assignment. As a result, the what stifles innovation and holds back efficiencies. Managers should not stop at the what. Explaining the How Since this is a training scenario the how will sound very similar to the what, but with a more hands on approach between the Manager and Staff. This gives the Manager the ability to speak from personal experience and show their expertise on the topic. The how would sound something like Each quarter we need to book our Legal Accrual. Let me walk you through how I did it last quarter. 4

7 Explaining the Why In this scenario the why is a great starting point and gives an understanding of the importance of this task in a greater sense. With this approach we take a seemingly mundane task and give the Staff insight into why their work is so important. The why would sound something like Legal accruals are a key piece of reporting that gives investors and management an understanding of our legal exposure. Investors use accruals to make investment decisions and we use it internally to drive budget discussions. Each quarter we have to get the Legal Accrual information from General Counsel and it needs to be well documented so we can provide all of the information to the auditors by the 6 th business day. By taking this approach we now have a Staff that understands the big picture and, as a result, can take full ownership over their role. Employees with this ownership take more pride in their work and are in a position to improve the process going forward. What, How or Why? So which approach is best? Well, it depends of course For routine tasks with no room for improvement explaining the what will suffice. Just get it done! The how should be used in training situations where you can speak from personal experience. Whenever there is an opportunity to take ownership and improve process we should explain the why. Often the best way to lead change is to identify a problem, explain the Why, and get out of the way. This is especially true for Millennials who are used to finding the most direct route to achieving specific results using technology. There are several benefits to starting with the Why. First, this approach gives your team a sense of purpose because they are truly adding value to the department rather than just completing an assigned task. Second, by explaining the Why a natural brainstorm session occurs and the team can better determine the most efficient method. 5

8 Enabling younger employees to provide their insight validates their position with the department and, in turn, increases loyalty and productivity. Finally, starting with the Why saves you time! It may require a few more minutes up front, but will save time on unnecessary questions in the long run and possibly lead to a more efficient process. Channeling ambition Popular opinion is that Millennials are lazy. The reality is that Millennials are very ambitious and, if channeled properly, it can be a major strength. Here are three keys to channeling ambition: 1. Set clear goals What is a goal? It s a dream with a deadline! The key to setting clear goals is to have an honest discussion about where the Staff would like to go in their careers and establish the steps required to get there. Then just set deadlines and you have a plan! If their dream is to move up to Controller or CFO, discuss the steps required to get there and plan accordingly. Once you have agreed on the goals and targets, write them down and stick to them! 2. Provide regular feedback Informal feedback should be constantly communicated and staff should be provided with formal feedback on a quarterly basis. Are they on track with their goals? Has anything changed at the Company that would impact the goals previously set out? What are they doing well and where can they improve? When providing feedback it is crucial to be completely honest. If a Staff is underperforming and is not on track to meet a previously set goal, this should be discussed openly. 3. Be totally transparent Oftentimes you won t be able to make everybody s dreams come true. For example, what do you say to the Staff who wants your Controller job? Be transparent! 6

9 If there truly is no room for advancement and you have no plans on leaving, the Staff must be aware of this up front. The best approach in this situation is to lay out the steps they can take within your Company to get prepared for the Controller job at their next Company. Yes, talk about them leaving and plan an exit. Set out a 5-7 year plan with well-defined goals that will help them get that job in the future. The reality is that they won t be happy being a Staff for the next 20 years and without a plan they will quit after two. By being transparent we can foster a great relationship and get the most out of them while they re working for you. It s better to keep them on board for a productive seven years instead of a disgruntled two. On the other hand, if there is not a clear vision of the future, ambition can quickly turn into a weakness and trigger the dreaded lack of commitment (as discussed in the next section). 7

10 Balancing out Millennial Weaknesses Weaknesses are not obstacles to be overcome, but pools of potential to be activated! Here are some suggestions on minimizing weaknesses or even turning them into strengths. Lacking commitment Millennials don t lack commitment to families or friends, just employers. Here are some simple ways to increase commitment: 1. Transparency throughout the close process helps them to see the bigger picture and feel like part of the team. 2. As previously discussed, explain the why to give a sense of ownership. 3. Millennials commit to each other more than a Company. Emphasize the team and you will increase retention. When they view the team as not only colleagues, but friends as well, they are much more likely to stay on board. 4. If you have the budget, surprise compensation for great performance has proven more motivational than raises and results in continued work ethic. Raises reward longevity, bonuses reward performance. A small gift like a meal or Starbucks related to a good performance encourages future performance. 5. Publicly recognize good efforts. One great way to do this is create a Hall of Fame wall. If somebody does an exceptional job during a close make a note of it and add them to the Hall of Fame. Remember that whole thing about Millennials quitting after two years? By creating an atmosphere focused on the team instead of the paycheck we can increase loyalty and extend their time with the organization. Inflated egos Inflated egos are a direct result of how Millennials were raised, with praise being given for pedestrian achievements. 8

11 Once again, the team is central to turning this weakness into a strength. Strong egos are great if they lead to strong performance, but that requires teamwork. Transferring positive attitudes about themselves to the team, just as in professional sports, generates a winning dynamic. Explaining the why also focuses the ego. The act of booking a journal entry may not seem significant, but by understanding why the journal entry is important we can play to the ego. Suddenly a person is focused on the greater good of the team rather than just getting their own work done. Communication difficulties In his book Fast Close to the Max, Gary Simon points out that, Collaboration and communication at all times are the two biggest areas to improve if one wants to have an impact on the financial statement close process. The financial statement close process has many moving parts and dependencies, which makes communication crucial. Traditionally this has been accomplished with status update meetings, but Millennials prefer social media, text messaging and over face to face communication. When approaching the communication problem we should break employees into two groups: those who want to go on to be Executives and those who are content with their role. The breakdown will become obvious after your goal setting meetings. For those employees with ambitions of moving up, it is essential that they improve face to face communication. Controllers, VP s and CFO s are expected to give presentations for Investors, Boards, Audit Committees and many other groups. They must be well spoken to represent your organization properly and instill confidence to the outside world. Now, you don t get paid to teach Staff how to give presentations, but there is an easy way! 9

12 Send them to groups like Toastmasters, which are dedicated to honing public speaking skills in a comfortable setting. It s a simple way to help an employee improve without wasting any of your time. Attending monthly Toastmasters meetings should be added as a goal during the goal setting process. For the second group of employees who are content with their roles, it s best to mitigate the weakness with technology. Employees with this train of thought view status update meetings as a waste of their time and would rather spend that time completing their monthly tasks (whereas goal driven employees view them as an opportunity to get face time with the Controller or CFO). There are several tools available to help with communication and cloud-based collaboration has often proven effective. 10

13 Coming to the Close Now that we ve discussed the Millennial generation, let s take a look at applying these strategies directly to the close process. Here are four suggestions that will help you get your entire organization on board with making the close process faster and more efficient. 1. Welcome Collaboration Collaboration is the key to creating the team environment you are striving for. The more open you are about the process and people s roles, the more buy in you will get from the whole department. Be visible and available, don t just sit in your office and operate in a shroud of secrecy. Greater transparency is directly correlated to greater collaboration. A major benefit you will see is during times of turnover, these tough transitions will be less painful because there is a better understanding of the roles and responsibilities within the department as a whole. On the other hand, a lack of trust and transparency can fuel employee turnover. 2. Improve communication between departments The amount of time it takes to close the books is directly correlated to the health and function of your entire organization. Dependencies on other departments coupled with broken communication can cause lag time for your accounting group. Requesting information from other departments is a great opportunity to employ the Golden Circle previously discussed. Make sure other departments understand why you need something from them and you will drive action. 3. Commit to continuous improvement There is an ancient maxim that applies well to continuous improvement: Water wears away stone. This can be applied to your close by getting everyone involved in the process. By making small incremental improvements with each close we can gradually improve the entire process. As time passes the accumulation of these improvements will result in a more efficient department. 11

14 The first element to this is a review, at least quarterly, of what is going well and where your processes can improve. Make sure that your Staff are involved in this review. When you involve your Staff, you encourage them to take ownership and start innovating, which is a win-win. 4. Forget your Excel checklist An effective Controller not only knows numbers but also understands people. Excel spreadsheets are necessary for certain tasks but can be deadly for others. Millennials want to understand dependencies and see how their role affects subsequent tasks in the close and reporting. Managing the close with an Excel checklist leads to many problems, including: Lack of transparency - The Controller manages the close checklist for the department. Controller, controlling makes sense, but the problem is there is no insight for the rest of the team. Processes have to be completed in a sequential order and many items in the close are dependent on others, which leads to wasted time Inefficient status update meetings - This goes hand in hand with transparency. The more transparency your department has in the close process the less you have to meet face to face. Status update meetings take time and dropping everything you are doing just to let people know where you stand in the process is not the most effective use of that time. The math is pretty easy: 10 people x.5 hours = 5 hours of lost close time. Ineffective onboarding - Onboarding takes time, partly because the way procedures are documented. Excel provides a list of tasks but nothing related to how to actually perform the procedures. The burden of onboarding is then put on other employees, taking away from their own work. This leads to overtime whenever a new employee is brought in. This same pitfall occurs when changing jobs within the company or covering for someone when they are on leave or on vacation. 12

15 About the author: Mike Whitmire, CPA CEO & Co-founder FloQast, Inc. Mike Whitmire is the founder and CEO of FloQast. In addition to strategy, sales and operations, Mike has led FloQast's product development since inception. His vision helped create one of the first Closing Software platforms in the market. Prior to founding the company, Mike worked as an auditor at Ernst & Young and an accountant and consultant at Cornerstone OnDemand. Mike has a BS from the Whitman School of Management at Syracuse University, is a CPA and an AICPA educational speaker. FloQast s Closing Software was built out of frustrations experienced first-hand in outdated accounting departments. Closing the books is manual, unpredictable and prone to expensive errors. FloQast is the fastest, most accurate way to close your books. Learn more at