OCFO of the Future AGA Executive Session. Introduction

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1 OCFO of the Future 2018 AGA Executive Session Executive session contributors: Anthony (Tony) Scardino Deputy Under Secretary for Intellectual Property and Acting Deputy Director for the United States Patent and Trademark Office (USPTO) Stephen Kunze Deputy Chief Financial Officer, Office of the Chief Financial Officer and Assistant Secretary for Administration Rachelle Cabading Assistant Director, Tennessee Comptroller of the Treasury, Division of Local Government Audit Executive session moderator: Mike Herrinton Partner, Ernst & Young LLP (EY US) Executive session report contributors: Ann M. Ebberts Chief Executive Officer (CEO) Susan Fritzlen Chief Operating Officer (COO) Can you really imagine what the world is going to look like when the robotics process automation and blockchain, for example, are really part of the fabric of how the activities are being done for the benefit of the OCFO organization? How does that change the mission, vision and purpose of the CFO? Mike Herrinton, Partner, EY US Introduction With the rapid progression of technology, a new working world is evolving as companies seek to digitize their operations and develop mature business processes. Technology is transforming how companies are approaching their business activities across the globe, especially in enhancing and streamlining operations. As the world embarks on this transformation, government agencies, such as the Office of the Chief Financial Officer (OCFO) realize potentially significant changes in team structures, role definition, and required skills and capabilities for overall management and execution. In order to be prepared to fulfill the agency mission goals, the OCFO recognizes redundancies in current employee tasks and responsibilities. There will be emerging roles that will require a new set of skills and capabilities. In order to prepare for the future, the OCFO recognizes the need for effective change management and communication strategies that ensure employees understand the facts and benefits of the change that the future brings. Annually, the Association of Government Accountants (AGA) hosts an Executive Session, sponsored by EY US, to discuss and brainstorm various pertinent topics. A united effort to share and leverage ideas is critical to anticipate workplace changes and talent implications to ensure optimal outcomes. At this year s 2018 AGA Executive Session, held during AGA s Professional Development Training in Orlando, Florida, an open forum was hosted to facilitate discussion on the OCFO of the Future. This session included thought leadership discussions, including: 1) What does the OCFO of the future look like; what skills, knowledge and abilities are needed to do the work?; 2) How does the OCFO attract the talent it needs?; 3) How does the OCFO develop and retain that talent? The 2018 AGA Executive Session s primary theme centered around having the financial leaders discuss and share ideas on proposed future-state measures, while remaining agile to pivot and respond to change. There are pervasive recognition technology benefits which extend beyond cost reduction and will require a shift of working norms, in addition to new skills and developing and retaining the workforce of tomorrow. Speakers discussed the importance of the Chief Financial Officer (CFO) role in embracing change and being able to quickly adapt to the new skills that did not exist or may not have been considered important in the past, but are now critical to the evolving environment. After the speakers provided input on each topic, the session was turned over to participants to discuss managing change in the hiring process, identifying and closing skill gaps, and determining how best to revamp the culture within federal and state and local government workplaces.

2 Which skills are needed? Technological innovation, globalization, shifts of work through platform-based economies, digital technologies and artificial intelligence (AI) are rapidly transforming the federal agencies and organizations at work as a whole. These transformational changes have major implications for skills and training that require new and more robust policies to train new employees into the labor market to match market demand. Acceleration of technology advances requires the OCFO to recognize the impact on the nature of the work as technology is growing in sophistication and jobs are also being reinvented. With this trend growing, agencies are reassessing job design, work organization, future growth planning and talent acquisition and retention. Investments in critical human capital skills for future-state workforce will be required to ensure success. This will require profiles with thought leadership, problem solving, creativity, project management, and listening capabilities based on a platform of moral and ethical decision-making guidelines. Data is ubiquitous. Our job will always be turning data into information. Anthony (Tony) Scardino, Deputy Under Secretary for Intellectual Property and Acting Deputy Director for the USPTO It is no secret that the OCFO will look much different in 10 years than it does today. Most executives agree that this shift will occur, not only driven because the fundamental role of the office itself will change, but more so because the process, the skills needed and the mix of employees behind how things get done will change. The rapid growth in technologies, such as AI and automation, will continue to create ways to more cost effectively do things, such as automated tasks like the transactional posting of financial data and the entry of the data itself. This fact, in and of itself, will cause a fundamental change in the makeup of the OCFO by causing the job requirements of employees to shift from being able to process data to being able to interpret and make decisions with it. This also means that increased value will be placed on being able to ingest the large volumes of data being output by new technologies and make that data understandable to the layperson, as well as visually appealing. Additionally, as with any technology, the systems that are processing the data will also need to have people in place to maintain and operate them. The shift in technology will change the internal makeup of the OCFO and cause a shift in the external demands on it. This will be due to the fact that as financial reporting becomes easier through automation, users will make more creative requests of the OCFO and shift their focus to items such as nonfinancial metrics, KPIs and social outcome reporting. Not only does the changing environment of the OCFO impact the structure of the office, it also greatly impacts the way in which the CFO of the future will have to manage that office. For example, as technological advances begin to enter the OCFO, there will be less full-time work for each of the individual roles as they currently exist. Instead, a need will arise to split roles across multiple functions and, as a result, this matrixed environment will create a more challenging management situation for the CFO. Additionally, the increased demand of employees for the flexibility to telework more regularly also changes the structure of the CFO s role. Most executives agree that a key function of the CFO role is to have the pulse of the organization at any given time. This is a task that is much easier to accomplish when employees are in the building, and one that becomes substantially more difficult as teleworking increases in popularity among federal employees. A shift in the way CFOs manage the OCFO means they not only need data real time, but expect it. With the implementation of all of the new technologies that will be available in the OCFO of the future, in order to keep up it will be imperative that the CFO s decisions be made based on what is happening today and not based on what happened this year. Finally, the types of skills needed in a CFO and throughout the OCFO of the future will also shift. For example, it was widely agreed among executives that a fundamental shift will occur in the backgrounds of those who occupy CFO positions within federal agencies. These positions will no longer only be occupied by those who have an accounting background, but will be occupied more and more as technology and the need for data interpretation grows by those with backgrounds in IT and the data sciences. However, almost all executives agree that some knowledge of accounting will be a must, as it will still be necessary for the CFO to have enough accounting-based knowledge to ensure that the information being produced by their respective agencies is accurate. This means that the OCFO roles supporting the CFO will also need to be diversified and the specializations hired should consist of a more heterogeneous mix of IT, accounting and data scientists all working together in the same office. You have to try and figure out what type of staff you re going to bring in today that will be able to contribute significantly in 10 years or 5 years. Stephen Kunze, Deputy Chief Financial Officer, Office of the Chief Financial Officer and Assistant Secretary for Administration 2 OCFO of the Future

3 How to attract resources Attracting talent is inherently challenging for government sector agencies. But in the future, attracting and retaining top talent across different functions, and particularly attracting the right people with skills needed to keep up with the technology, will become a dedicated focus area. CFOs will need to adopt a structured-competencies framework approach to ensure the right talent is in place, while proactively promoting a culture of a shared sense of purpose and belief in the mission, purpose and values. Articulating workplace culture Agencies must be able to describe their culture or what it is like to work for the specific agency during the hiring process. Spending more money on top talent In order to attract the right talent, agencies will need to raise not just the profile of the position, but increase the compensation plan for these emerging positions. Get creative with perks Agencies will have to work hard to differentiate themselves in the market. They have to recognize that health and dental benefits are not the only important perks employees appreciate. The future employees will be interested in different perks, such as work-from-home arrangements, more vacation days, and increasing 401(k) employer contributions. In addition, not all perks come with a price tag. There are simple perks, such as dress-down codes, when it is appropriate, agency-paid coffee and discretionary recognition awards for exceeding performance expectations. In order to attract talent, you have to attract their heart. You have to connect their heart to your mission. Organizations need to keep their mission simple so people can understand their mission and connect their heart to it. I have seen organizations with such cumbersome mission statements where people do not understand their mission statement and are unable to connect their heart to it. Rachelle Cabading, Assistant Director, Tennessee Comptroller of the Treasury, Division of Local Government Audit Streamlining the hiring process The demand for talent will outpace supply, and it is important for agencies to know that a key to the question of how to attract candidates with the critical skills is to act fast. Agencies that wish to identify and recruit candidates within a short timeline should work with efficient professional agencies instead of using USAjobs.gov. Offer development opportunities To attract top talent that will take agencies to the next level, agencies will need to create opportunities for impact. Development opportunities must span beyond standard classroom training and performance plans. Agencies will need to offer opportunities for employee creativity and autonomy, and support a high level of entrepreneurship. OCFO of the Future 3

4 Additionally, developing leadership is important. The CFOs and other executives at the session discussed the fact that more employees are having less or very little faith and trust in the agencies leadership due to unclear direction, lack of enthusiasm about the future, ineffective communication and lack of engagement in people investment. Employees today want to leave work knowing they made a difference. Anthony (Tony) Scardino, the Deputy Under Secretary for Intellectual Property and Acting Deputy Director for the USPTO, mirrors this idea and states that, If people can see the connection between what they do and what the mission of the organization is, they will feel more engaged and stay longer. Treat every candidate like a brand ambassador. Rachelle Cabading, Assistant Director, Tennessee Comptroller of the Treasury, Division of Local Government Audit How can the OCFO develop and retain employees to prepare for the future? The OCFO acknowledges how difficult it is to find great talent, but what is even more challenging is keeping the talent they have engaged. Unless the agencies continually reinvest in developing their employees with successful onboarding and ongoing training helping them reach their full potential the employees may leave. This will be a setback and becomes a challenge trying to procure new talent. With all these changes, the OCFO understands and knows the working world faces an epochal transition. Employees will need to redefine occupational categories as technology continues to disrupt the workforce. The kinds of skills federal agencies require will continue to shift, with profound implications for the career paths employees will need to pursue. The executives are increasingly seeing investing in retraining and upskilling existing workers as an urgent federal agency priority. Addressing potential skill gaps related to technology within their workforces is a top priority. The focus is on building a workforce with the right skills to complement the new technologies and enable the agencies to harness their power. Workers of the future will spend more time on activities that machines are less capable of, such as managing people, applying expertise and communicating with others. They will spend less time on predictable physical activities and collecting and processing data, where technology already exceeds human performance. With the decline of some occupations such as clerical jobs, which do not require specialized training or advanced degrees, and the growth of technological occupations, it is important for agencies to plan to develop the current workforce. The skills and capabilities required will also shift, requiring more social and emotional skills and more advanced cognitive capabilities, such as logical reasoning and creativity. In order to develop and retain employees, the CFOs recognized that the importance of providing job retraining and enabling employees to learn marketable new skills throughout their lifetime will be a critical challenge. Midcareer retraining will be even more important, as the skill mix needed for a successful career changes. The OCFO is already undergoing a mindset shift: a key to its future success will be in providing continuous learning options and instilling a culture of continuous learning throughout the agency by developing the workforce through mentoring; rotational, leadership and learning programs; and career development paths. Agencies must establish a culture of lifelong learning for developing the workforce of the future. The executives recognized the need for providing on-the-job training to retain the long-tenured workforce, and discussed the need to create training programs as a fast-paced introduction to technology learning to assist the transition process. Employees will select their employers in the future, not the other way around. EY Future of Work Now If people can see the connection between what they do and what the mission of the organization is, they will feel more engaged and stay longer. Anthony (Tony) Scardino, Deputy Under Secretary for Intellectual Property and Acting Deputy Director for the USPTO 4 OCFO of the Future

5 Agencies will need to take different type of actions to develop and retain their workforce: retraining, redeploying and keeping them engaged will increase the probability they will remain with the agencies. The combination of options that agencies adopt will depend on the mission and significant degree of technology potential and their current workforce skills and dynamics. The first step will be to understand the future talent needs and where critical gaps are to be found in the agencies. The OCFO will need to find the appropriate mix of retraining and deploying by evaluating how much of the workforce could potentially fit in these categories. Retrain Raise the skills capacity of current employees by teaching them new or qualitatively different skills and elevate the existing skills of an employee to a higher level or to keep pace with technological change. This type of investment in human capital will affect employee motivation and loyalty. Redeploy The OCFO will also need to redeploy workers with specific skills around the agency, thereby making better use of the skills capacity already available to them. However, to develop employees for a larger role within the agencies, the employees will need to understand how all aspects of the organization work. The leadership will need to create opportunities for their employees to take on new responsibilities outside their job functions. The additional responsibility will put employees in new situations, add challenges and expand skill sets and help improve their chances of success in the future as technology evolves. Remove obstacles Most agencies are rigid in their organizational structure and processes and it can be challenging to implement redeployment development. It is the leadership s responsibility to bridge silos, remove obstacles and implement systems that encourage a fluid approach to learning and working. Agencies will need to take the barriers away and watch their employees grow. Established mentoring programs These create a culture and an expectation that the leadership will help shape high potential into high performers. Leadership engagement Active involvement across the entire leadership life cycle helps attract, retain and accelerate highpotential performers. Conclusion The working world is evolving faster than we can keep up. Therefore, identifying the skills necessary for the changing work environment will be the key challenge of many CFOs as agencies continue to move forward in the technology era. Executives recognize a well-trained workforce equipped with the right skills required to adopt technology will ensure agencies harness the talents of their employees. In the future, agency mission success will depend, in a large part, on how well the workforce is trained, and how adaptable agencies and employees will prove to be in the face of multiple new challenges from rising technology adoption. For agencies, the organizational and human capital implications are significant. Agency executives will need to work together to ensure that the right programs are in place for the skills upgrade that will be required. Addressing the workforce skills necessary today for our working world of tomorrow is critical to the government s continued success. OCFO of the Future 5

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