As UK government furlough scheme winds down, MHR poll finds nearly three-quarters of finance teams will rely on manual methods to work out the cost of headcount changes
74% of companies have no analytics platform to plan the cost-impact of changes to the UK government’s furlough scheme, a poll by MHR Analytics, the financial planning expert, has found.
More than six-in-ten respondents in the MHR Analytics poll (61%) also said their organisation has no plans in place to prepare for the unfurloughing of employees placed on the government scheme.
From 1 August, the government’s financial support for businesses will start winding down, declining each month until the termination of the scheme at the end of October. Employers will have to pay National Insurance and pension contributions for their employees in August, and in September, they will have to pay 10% of furloughed employees’ salaries rising to 20% in October.
“Organisations without analytics platforms will struggle to work out how the termination of the furlough scheme will affect them financially,” said Mark White, Financial Workforce Planning Specialist, MHR Analytics. “A large company with thousands of employees will find it very difficult to come up with quick ‘what-if’ scenarios by relying purely on spreadsheets. Scenario modelling has become a vital capability at a time when employment rules and market conditions can change almost overnight.
“This is another instance where organisations with financial planning analytics are in a better position than those still collecting and collating data manually.”
Only 17% of respondents said their organisations plan to adopt analytics in the next 12 months, while more than a third (35%) said theirs have no plans to use analytics.
While the adoption of analytics is an aspiration for 23% of respondents, more than a quarter (26%) hope this does not take place. This reinforces the key findings of an MHR Analytics survey of 500 finance and technology professionals last year, in which a quarter said resistance from senior management held back the adoption of analytics in their company. Another 23% said reliance on spreadsheets stood in the way of the more sophisticated analytics technology that is widely available.
Analytics platforms offer the power to create different positive or negative scenarios very rapidly. Companies with these capabilities have been able to address the challenges of lockdown and adapt their plans almost instantly as furlough rules and market conditions change. They can use planning analytics to analyse the details of taking employees off furlough and how to restructure the workforce according to various parameters, taking into account salaries, commissions, bonuses, share schemes and so on. The consequences relating to individuals are all fully played out, so that for example, business-critical employees do not leave the organisation unnecessarily, have hours reduced or are moved to new posts where they will have less positive impact.
A recent survey for Generation CFO Research, examining the effects of lockdown on the CFO and finance team, revealed 47% of organisations had a finance transformation strategy in place and 52% said that the priority for transformation had increased. Yet few organisations have implemented financial planning analytics.
Mark White, MHR Analytics added: “There is still a long way to go. Talking about transformation is not enough. Finance teams need to see investment in analytics to prepare for what may be years of economic uncertainty. If ever there was a catalyst to transform it is now.”
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