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Human Capital Most Important in Treasury Operations

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The key factor in an efficient treasury operation, instead of technology or other elements, is the people, according to the third annual AFP Treasury Benchmarking Survey, released Sunday. Human capital factors such as education and training of key finance personnel play a dominant role in a well-run treasury.

The survey, a joint effort of American Financial Professionals (AFP), IBM and Deutsche Bank, looked for performance levels of participating treasury departments. It analyzed performance by peer group, defined world-class targets (ranking at the 80th percentile), and provided a basis for comparison. Organizations can then use these data to find their own performance gaps and look for viable opportunities to improve.

Thomas Hunt, the director of treasury services at AFP, said in a statement, "Since treasury departments are responsible for keeping enough funds on hand to meet their organizations' operating needs, improvements in treasury department performance can influence the health of an organization. In this survey, we wanted to identify and understand the traits that differentiate the top-performing corporate treasuries."

The previous surveys found that technology didn’t do much to differentiate performance in treasury departments. The focus this year on human capital differentiators found significant impact on efficiency from such factors as education levels and how long staff had been in place, indicating that the area was worth significant corporate investment.

Highly educated or professionally certified staff handling important functions meant that fewer personnel were needed. The drop was significant: Holders of advanced degrees such as MBAs who handled most treasury tasks meant that only half as many people were necessary in their department, while certified employees in charge of treasury functions can reduce staff levels by a third.

Ongoing training was demonstrated to be essential, particularly amid an atmosphere of a difficult economic climate, advances in technology, and changing regulations. Keeping staff skills and knowledge current means more time in the classroom; staff that hit benchmark levels spent, on average, 4-6 days in training, outperforming companies with staff that have only been given 2 days or less in training.

And the gap is widening, according to Robert Eimers of IBM Global Business Services: "When we drill into the responses to this year's treasury benchmarking survey and compare those to prior surveys, the findings reveal a widening gap between aspirational goals and actual capabilities and a widening disparity between top performing organizations and average performing organizations."

More specifics are available from the survey itself.