To develop, retain or recruit? Closing the finance capability gap

In the previous article More applicants, harder decisions: Finance recruitment in 2026, we explored why a softer recruitment market and rising application numbers have not made critical finance capability any easier to secure.

As such, senior leaders should now be asking: how much of the capability the business needs next could be identified, developed and retained within the existing finance team?

Commercially minded, data-literate and transformation-ready finance professionals remain difficult and expensive to recruit. A business that only considers its capability requirements when somebody resigns will repeatedly enter the market under pressure.

The stronger approach is to understand what already exists internally, what can be developed in time and where external or interim expertise is genuinely required.

Succession protects business continuity

Succession planning is not simply an HR exercise. It protects continuity in reporting, forecasting, commercial decision-making and transformation when a critical finance leader leaves.

When a Financial Controller, Head of FP&A or Finance Director resigns without credible internal cover, the business is forced to recruit under pressure. It has less time to challenge the brief, weaker negotiating leverage and a greater likelihood of paying a premium for scarce capability.

That cost goes beyond salary and search fees. Knowledge leaves, projects slow down and the CFO or FD absorbs more operational work. The business may also need interim support while a permanent appointment is found.

A credible succession plan should identify:

• The roles and capabilities most critical to the business strategy
• Where important knowledge depends on one individual
• Who could step up immediately or with development over the next two years
• Which gaps are unlikely to be filled internally
• Where external or interim expertise may be required

Succession gives you options. It reduces the risk of entering a competitive talent market with an urgent vacancy, no internal cover and limited negotiating power.

Build capability through commercial exposure

Scarce finance capability is not created through occasional training courses alone. It develops through relevant experience, decision-making authority, feedback and exposure to work that stretches judgement.

Useful development assignments might include:

• Leading a forecast, systems or working-capital improvement project
• Building commercial analysis around pricing, margin or customer profitability
• Presenting recommendations to the board, investors or operational leaders
• Owning part of an acquisition, refinancing, audit or transformation programme
• Deputising for the CFO or FD with clear authority to make decisions
• Managing and developing people rather than remaining the person who solves every technical problem

Each assignment should address a defined capability gap and include clear outcomes, decision authority and feedback.

A word of warning: adding work without support develops exhaustion, not leadership.

Mentoring gives emerging leaders access to relevant experience. Assessment and profiling can help them understand how their behaviour affects others, while coaching can turn that awareness into stronger leadership. Each intervention should connect directly to practical experience and a clearly defined capability gap.

Retention depends on progression

The same market that makes scarce capability expensive to recruit also makes it difficult to retain. Strong finance professionals know that commercial, analytical, systems and leadership skills command interest elsewhere.

Employers face pressure from two directions: the external cost of securing capability and the internal risk of losing people who already understand the business.

Counteroffers may protect critical capability in the short term, particularly where pay has fallen behind the market. However, by the time someone has accepted another role, the decision is rarely about salary alone. Unless progression, workload, leadership or opportunity also changes, a counteroffer may simply postpone the person’s eventual departure.

Capable people need to understand how their role can grow, how readiness for the next step will be assessed and which experiences will help them progress. If advancement depends entirely on waiting for their manager to leave, the external market may offer a clearer and faster route.

Do not wait for a resignation to discover the value of scarce internal capability. Benchmark pay, discuss progression and identify retention risks before a competitor creates the urgency.

To delve deeper into talent retention, read our article on Strategies for success: Talent retention.

Looking beyond current responsibilities

Internal succession should not default to the longest-serving employee or strongest technical performer. The objective is to identify people with the potential, aspiration and learning agility to deliver what the business will need next.

Current roles do not always reveal that potential. A Financial Controller may be ready for broader commercial responsibility. An analyst may have the judgement and communication skills required for business partnering. A management accountant may possess systems and data capability that their current position gives them little opportunity to demonstrate.

Assessment and profiling can add rigour when combined with evidence from performance, aspiration, experience and work-related exercises. They can help reveal learning agility, leadership strengths and likely behaviour under pressure. 

Profiling should support judgement rather than replace it. Internal candidates should still be assessed against the future requirements of the role, with external market insight used to test whether a proposed successor is genuinely credible.

The expensive mistake is recruiting against an outdated brief while overlooking capability that could have been developed in the existing team.

Make succession an operating discipline

Succession planning should begin with the market and the business plan. Leaders need to understand which capabilities competitors are buying, what those capabilities cost and which will matter most to growth over the next three years. They can then decide what to develop, what to retain and what must be recruited.

A practical finance succession process should:

• Translate the business plan into the finance capabilities required across control, insight, commerciality, technology and leadership
• Map critical roles, scarce knowledge and single points of dependency
• Assess performance, potential, aspiration and retention risk using multiple sources of evidence
• Create specific development assignments, coaching and mentoring, with named accountability and timescales
• Maintain external talent intelligence for capability that cannot be developed internally or within the required timeframe

Understanding when to develop, retain or recruit

An internal-first approach should not become a rigid rule. External recruitment is the right decision when the business needs specialist expertise, a different perspective or experience that the existing team cannot provide within the required timeframe. The strongest approach makes the choice deliberately:

• Develop where the capability exists in part and can be nurtured in time
• Retain where critical capability already exists but is exposed through uncompetitive pay, excessive workload or limited progression
• Recruit where the gap is material and requires experience unavailable internally
• Use interim expertise where delivery is urgent but the long-term capability can still be developed within the team

This makes external recruitment more precise. Instead of searching for a broad replacement, leaders can define the commercial outcome, the exact missing capability and how the appointment must add to the team. Market mapping, targeted search and structured assessment then concentrate investment on the capability the business genuinely cannot produce itself.

Five questions senior leaders should ask

1. Which finance capabilities will the business need most over the next three years?
2. Which already exist, fully or partly, within the current team?
3. Who could step up with focused experience, coaching or mentoring?
4. Where are pay, workload or limited progression placing critical capability at risk?
5. Which gaps genuinely require external or interim expertise?

In brief

The finance capability your business needs next may already exist within your team. However, potential only becomes valuable when it is identified early, tested objectively and developed deliberately.

Senior leaders should know which capabilities they can build, which people they must work harder to retain, and which gaps genuinely require external or interim expertise.

This does not remove the need to recruit. It makes recruitment more precise, succession more credible and the finance function less vulnerable when key people leave.

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• Transformation
• Finance
• Strategic HR
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• Talent retention