CFOs are under increased pressure to drive top-line growth. Their shareholders expect them to double or triple last year’s revenue, but average corporate growth isn’t measuring up. In fact, median returns across corporate growth investment portfolios lag business case expectations by 25% or more. For the typical Fortune 500 company, this gap is equal to 200 basis points of foregone growth every year.
Communicate jobs to be done, not job titles
For CFOs looking for higher returns on growth investments, resource availability is key. A lack of resources hinders an organization’s ability to pursue meaningful investments and creates bottlenecks to major growth initiatives. Funding flexibility and effective management of project support staff are also critical to ensuring the success of such initiatives. This is especially true in areas such as HR, IT and marketing.
To minimize the risk, finance leaders must better understand the support each project requires and plan for how those needs correspond with the inevitable capacity changes that occur within these functions throughout the year.
Read more: Efficient Growth: The New Finance Mandate
Forecast supply and demand
To address this obstacle, the finance team of one insurance company designed a mechanism for forecasting support function capacity for large growth initiatives. They created a taxonomy of the most popular support skills and used project management software to track and regularly update the relationship between supply and demand for those skills. The software was also able to identify red flags, such as staff assigned 100 hours of projects per week. Results were visible soon after implementation —an increased number of growth projects that met their completion deadline and more projects that stayed within their allotted budgets.
CFOs who want to implement a similar mechanism should consider three key steps:
- Communicate jobs to be done, not job titles. A majority of organizations express their demand for support in terms of job titles, which doesn’t provide an adequate view for forecasting. Instead, list the specific types of work required by each growth investment.
- Evaluate future demand, not just current capacity. For each category of work listed, estimate how demand will compare to staff capacity over the next several years. This resource hot spot analysis provides a longer-term view of resourcing, which promotes the right leadership action.
- Pinpoint resource bottlenecks and form mitigation plans. As mentioned in the previous step, determine long-terms trends to help develop the right action. For example, if teams estimate their staffing levels will be insufficient over time, they should consider hiring more full-time employees to fill the gap. Conversely, if demand appears that it will peak only temporarily, teams should consider hiring contractors.