What role do CFOs play in the Great Resignation?

In 2020, organizations across the country reduced their workforces as a result of the COVID-19 global pandemic. By April 2020, the United States reached a historic unemployment rate of 14.7 percent, an unprecedented level since the U.S. began collecting the data in 1948. One year later, the U.S. began to experience a different type of phenomenon.

Rather than organizations laying off employees, employees were voluntarily leaving their organizations in search of an improved balance between their personal life and work life, greater flexibility with where they work, more time with family, and more growth opportunities.

According to 2022 data from the U.S. Bureau of Labor Statistics, millions of employees quit their jobs since May 2021, a distinct difference over the mass involuntary workforce reductions the year prior. In November 2021 alone, over 4.5 million employees voluntarily left their jobs, the highest monthly amount documented since record-keeping began in 2000 for voluntary resignations. 

This phenomenon, the Great Resignation, has become one of this year’s biggest buzzwords and greatest challenges for companies.

Although companies would like to stabilize the resignations, it does not appear to be subsiding in the near future. An estimated one in five employees will quit their jobs by the end of 2022, and 85 percent are not engaged at work. 

People are unhappy with their jobs, opportunities and employers’ treatment. Many feel constricted and unable to advance their careers because their companies fail to provide efficient learning and development programs. According to a McKinsey report, 41 percent of employees said the lack of opportunity for professional progress was the principal reason they left.

Their workplaces had no room for personal or career growth, forcing them to look elsewhere. Moreover, 94 percent said they wouldn’t resign their jobs had their employers invested in learning and development. 

That is a grave problem. Gallup’s 2021 report found that turnover costs one trillion dollars to U.S. businesses per year. 

Would companies be able to prevent this issue if their chief financial officers took L&D programs more seriously?

Relationship between CFOs and L&D

The CFO is responsible and accountable for a company’s financial operations, such as financial reporting, budgeting, business control and accounting. They’re in charge of financial matters, and often have the final say in economic activities and decision-making, second in command to the chief executive officer. The CFO is considered a business partner to all functional departments. However, the relationship between CFOs and L&D has significant opportunities for growth. 

As a result of their role, CFOs can determine the future of a company’s departments, programs, initiatives, and strategies. Since they must ensure every action aligns with business goals and missions, they can decide whether something is risky or not profitable enough. 

According to a recent study at the University of Pennsylvania exploring the beliefs about training in organizations focusing on the perspective of CFOs, CFOs believe training enhances employees’ life, performance and organizational performance. 

However, in the study, many CFO interviewees did not have a direct relationship with the training function, while some identified their only involvement with L&D consisted of responding to budget proposals. The researcher found CFOs understood the value of training as abstract rather than concrete since CFOs did not describe specific ways training programs positively impacted their organizations. 

The few CFOs with an active connection with the L&D function regularly discuss how it aligns with a company’s strategies, goals and objectives as a part of the executive leadership team. These individuals also said their organizational culture supports training. 

If CFOs believe L&D and have the ability to drive business sustainability, they can advocate for a budget increase. On the other hand, if CFOs don’t see training as a priority or believe it doesn’t significantly contribute to a company’s profit, they can suggest financial cuts. 

In my research for “Exploring the Beliefs about Training in Organizations,” I found that although CFOs might consider training budget cuts when discussing financial reductions, training is not their direct target. Hence, CFOs have the power to determine L&D’s future, but it is rarely the first aspect they choose to tackle. 

Why should CFOs care about L&D programs?

CFOs are responsible for understanding the value resulting from each business unit. Subsequently, L&D has proven to contribute value to organizations in a number of ways, two of which are some of the most costly challenges organizations face: reducing turnover and increasing employee engagement. 

The CFO’s decisions and visions impact a company and its employees on a far-reaching level. CFOs must determine capabilities that can generate considerable value but L&D is not necessarily the first to come to their mind regarding profit. In many companies, L&D programs are secondary and do not receive enough acknowledgment, causing them to be sidelined or overlooked. 

Whether CFOs choose to invest in L&D can directly impact people’s performance and engagement. Because of that, CFOs should have a more holistic approach and dive deeper into how different functions drive growth and success. 

Career growth and training are increasingly significant for younger employees. Over 87 percent of Millennials believe learning and development are among the most critical aspects of company culture. 

Moreover, 70 percent of Gen-Z employees experienced a career awakening after the pandemic. They are unstimulated ,and want jobs that meet their passions and seek professional advancement.

Both generations are digital natives and continuously seek information and ways to improve themselves. As a result, they will gladly leave their companies if no training or development opportunities are available. 

Career progress programs also help people find joy in their daily assignments and discover new ways to perform routine tasks. That feeds engagement and gives them a reason to love their jobs or reignite the passion they felt when they started working. 

Lack of L&D opportunities is among the most sinister enemies of employee retention. When an employer fails to offer well-rounded training and upskilling, workers start feeling stuck and held back from accomplishing their goals and growing within the organization. 

That is typically enough to look elsewhere and quit workplaces that impede their growth. Even though CFOs recognize L&D helps employees adopt new skills, be more productive and drive organizational performance, they often want more concrete proof that training is profitable. 

Not understanding how inefficient career growth programs corrode employee engagement and cause turnover unconsciously gives them a significant role in the Great Resignation. Companies must raise awareness about the interconnectedness between job satisfaction, professional growth and training function and retention. 

Without that understanding, CFOs rarely prioritize L&D, making the path toward consistent programs challenging and causing a business to lose trillions of dollars. But how do CFOs feel about the L&D function? 

How do CFOs really feel about L&D and employee training?

According to ”Exploring the Beliefs about Training in Organizations,” most CFOs acknowledge that workers are a company’s most significant asset. They recognized employee retention, talent development, ensuring employees feel valued, enhanced organizational leadership and increased employee engagement are the top five training benefits. 

The sentiment that L&D helps prevent turnover is increasingly present after the COVID-19 crisis. But despite that awareness, most CFOs still couldn’t see a tangible financial value of the training function. 

For instance, although they acknowledge L&D helps create a better employee experience, they don’t see how that leads to a revenue boost. Yet, a higher bottom line is impossible without skilled and happy employees completing their responsibilities and serving the customers leading to customers returning to the business. 

Moreover, CFOs often have a partial understanding of the training function. They are familiar with leadership training, compliance, safety and regulation training, but not with other varieties of employee training, such as regular upskilling and reskilling.

Although CFOs perceive L&D as an investment, they don’t prioritize it. They struggle to see its real value and have no stable relationship with the function.

Various factors influence the beliefs of CFOs concerning training, such as organizational culture, peers, past experiences and family. When an organization is more willing to invest in L&D, CFOs will be more eager to prioritize this function and advocate for its budget increase. 

Moreover, when training helped CFOs improve their careers and help their companies achieve better results in the past, they had a more positive view. If the relationship with the training function is inconsistent, they are less likely to perceive it as a priority. 

That is a solid reminder of how important it is to reinforce the connection between L&D practitioners and CFOs. Doing so would ensure CFOs have more encounters with this function and understand how it contributes to business bottom line and success.

After all, CFOs aren’t the enemies of training, nor do they purposely target L&D budget cuts, according to recent research. On the contrary, CFOs wish they had a better collaboration with L&D, as that would probably result in receiving more concrete L&D reports.

Bringing CFOs closer to the training function would help them understand they have the same goal — to create value for their organization. It would also allow CFOs to see first-hand the domino effect of investing in L&D and providing employees with more learning opportunities. 

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When discussing the Great Resignation, people often disregard the importance of ensuring people have room to grow and can explore their potential in the company. Similar neglects happen with CFOs and their approach to the L&D function. 

Even though CFOs have superficial knowledge of how L&D helps increase employee engagement and reduce turnover, they lack details for a more well-rounded picture. The direct result of this is CFOs struggling to understand the tangible value of employee training and investing in these programs. 

A need exists to strengthen the relationship between the L&D function and CFOs, raise awareness about the tangible benefits of employee training and nurture an organizational culture that prioritizes L&D. Until CFOs are aware of the benefits and utilize L&D to its potential, they will continue to unwittingly contribute to the great resignation, the phenomenon costing businesses trillions of dollars.