View
225
Download
0
Category
Preview:
Citation preview
8/3/2019 Ledgers Leadership
1/56
From ledgers to
leadershipa juny tug t nanc
unctin 2012 Upat
Cgma report
8/3/2019 Ledgers Leadership
2/56
Contents
ecv 2
ic 4
tk : d Cb, CFo, K C Cf 5
tk : V r, CFo, inttra 7
1. a c f c v v c 9
tk : W B, CFo, B 15
2. t cc f fc f 17
tk : J m, CFo, tk a 26
3. t v f fc f 28
tk : B sc, dc f acc, at&t svc ic 37
4. rc f fc f 39
tk : a l, ecv Vc p, CFo t, m m m
51
1
Tw t w mt ptigiu accunting bi, AICPAan CIMA, av m a jint vntu t tabi t CatGba Managmnt Accuntant (CGMA) ignatin t vat tpin managmnt accunting. T ignatin cgnit mt tant an cmmitt managmnt accuntant wit ticipin an ki t iv tng buin pmanc.
8/3/2019 Ledgers Leadership
3/56
FroM ledGers To leAdershIP a juny tug t inanc unctin 2012 upat2
exeCutiVe summary
The role o the nance unction is expanding rom
ledgers to leadership. The nance unction retainsits traditional responsibilities and is taking on newones. Employers require management accountantswho can do much more than produce accuratenancial accounts. These remain important and
must be produced ever more eciently. Finance isalso expected to provide management inormation,analysis and insight to inorm decision making and
to help to improve the organisat ions perormance.A combination o technical and commercial skills isneeded to ll the portolio o roles in a progressive
nance unction.Chartered Global Management Accountants,possessing both technical accounting skills and
commercial nance skills would be well positionedto ll these roles.
CIMA works closely with major employersand academics in order to maintain a keenunderstanding o employers needs o their nanceproessionals and how the role o the nance
unction is changing. We apply this understanding
to continually develop our syllabus and help ourmembers to uture-proo their careers by meeting
employers needs.
We know that many leading organisations have
already transormed their nance unctions. Theyhave increased the eciency o their accountingoperations by orming shared service centres toachieve economies o scale. Systems have been
standardised and processes streamlined. They havealso improved the nance unctions eectiveness
in supporting value creation across the business.They have taken advantage o developments
in inormation technology to generate bettermanagement inormation. Furthermore, theyhave developed management accountants with
commercial skills and deployed them as businesspartners. This new role is about applyingproessional objectivity to help improve decisionmaking and perormance management in the
long term interests o stakeholders.
Many credible commentators including major
consultancies and sotware vendors share CIMAs
view o how the role o the nance unction is
changing. Their view is based on their clientsexperience but these are major organisations too.
Some commentators even seem to suggest thatthe nance unction is changing radically,abandoning traditional accounting roles and
becoming more integrated with the businessas a commercial advisor.
We need an independent, objective and broaderview. How ar have nance unctions in generalprogressed rom ledgers to leadership? What are theimplications or the competencies required? What
does this mean or the training, development or therecruitment and retention o nance proessionals?
The CIMA Centre o Excellence at the University oBath School o Management was ormed to conductindependent academic research into best practice inthe development o nance personnel in the context
o nance t ransormation.
The rst two cycles o this long-term research project
have taken the orm o two online surveys in 2009
and 2010. These were completed by 4,000 and 3,000respondents, rom a wide range o organisations
across the world. The respondents were mainlynance proessionals but some non nance seniormanagement were surveyed too.
Analysis o the data gathered by the CIMA Centreo Excellence in these global surveys o a widerpopulation ound that evidence o radical change
was not apparent either in structural terms (with asubstantial majority still being located within thenance unction and with the bulk o time being
spent in a physically distinct nance/ accountingdepartment) or in terms o the allocation o work-time: traditional activities such as the preparationand interpretation o management accounting
inormation still dominate and business partneringis reported as a rare or specialist activity akin tointernal audit or tax.
Nevertheless, the results o the empirical investigationsin the second cycle o this research indicate thatmany nance proessionals are highly business
oriented, or example:
8/3/2019 Ledgers Leadership
4/56
3
Even amongst those in the nance unction, the
majority see their duties as involving the supporto operating units or as being related to otherunctions or units.
Many spend appreciable amounts o their time inproviding business advice or engaged in strategicnancial planning or management accounting.
Ratings o skill importance reveal the relativesuperiority o non-technical skills connected
with interaction and the achievement obusiness objectives.
The report shows that nance proessionals requirea mix o skills and competencies and while technicalskills are a critical requirement at the recruitment
stage or organisations, there is evidence o aneed or business and commercial acumen to bedeveloped or many senior nance roles.
The apparent need or the more business-centricskills has not led organisations to look to recruitbusiness people and train them to take on nanceroles. It seems that the worldwide preerence is or
proessionally qualied nancial proessionals rstand oremost.
When it comes to the recruitment o uture nance
leaders and the choice between two similar candidatesthe report makes clear that personal characteristics
are actually the key distinguishing criterion. Wesee that technical skills are still critical, next inimportance are proessional nance qualicationsand these rank above work experience.
These skills are o course not just recruited into anorganisation. Both business and technical competency
can be developed via training in post. While learningthrough doing is viewed as being the most useul
development and training activity, in practice thisseems to be seldom used in a structured manner.
The data suggests that this orm o training is usedmuch less oten than its useulness would merit.
Cost and the need or time o away rom the dayjob clearly put many organisations o investing intraining and development, in particular external
training. Oten the less valuable but cheaper andquicker training tools or activities may be used.These may be alse economies when consideredover a longer term.
We also see less enthusiasm among senior nancepersonnel or external education, including training
or proessional qualications, than one mightexpect given the ongoing importance o technicalcompetency. However, we see a large proportion
o organisations buying these proessionalqualications and skills at recruitment, ratherthan developing them in-house.
There seems to be a disparity between what supportsenior respondents say their organisations providein terms o time o and nancial support, such as
course ees, and what non-senior nance respondentsactually experience. Organisations may need toensure that learning and development programmesand training opportunities are communicated
throughout the organisation. Oten it seemsnance sta are simply unaware o their employerstraining oerings. It is very notable, however, thatorganisations with a higher degree o business
partnering deliver more training and developmentsupport. Companies wanting to transorm theirnance unction and develop personnel or business
partnering roles need to evaluate the training anddevelopment policies and oerings careully.
Individuals also need to take responsibility or theirlearning and development. Inormal consultationsabout the academic research suggest that a minorityo nance proessionals have good intentions where
training and development is concerned but do notollow through. They cite lack o time, pressure oexisting workload, encroachment into personal time
or simply lack o will as restraining actors. Theseaccountants could nd their skills out dated as therole o nance changes. Continuing proessionaldevelopment is not just a responsibility; it is necessary
to enhance and uture-proo career prospects.
Finally, we see that nancially qualied personneldo not leave their organisations because theyeel there is a lack o training and developmentopportunities. They are lured away by highersalaries and promotions suggesting employers
need to address the impression that the prospectsor personal advancement are better elsewhere byvaluing key personnel and providing career paths.
8/3/2019 Ledgers Leadership
5/56
4 FroM ledGers To leAdershIP a juny tug t inanc unctin 2012 upat
introduCtion
CIMA has been actively engaged in researching
the nature o the nance unction in todaysorganisation, the path it has taken over a decadeo change and its likely uture trajectory. Thisresearch into nance transormation allows orthe better understanding o the changing
development needs o the Chartered GlobalManagement Accountant.
The role o nance in todays organisations requiresa dual approach with nance devoting ocus ongetting cost and process eciencies while also
becoming more eective in how it supports decisionmaking and perormance management. The nanceunction is evolving and collaborating more withother parts o the organisation to create urther value.
We see that nance unctions require a portolio oroles and nance proessionals with a diverse range
o competencies and skills. Both business-orientedand technical competency are indeed seen as beingcrucial to the business partnering role or the nanceproessional but their importance is not restricted
to this role alone. Instead, we see that business
competency is increasingly perceived as importantacross nance roles.
Research ndings highlight that the key changesneeded are those that really create value via
improving internal processes and ocusing nanceon the products and services the organisationprovides. The research also reveals that seniormanagement expect to see an increase in ocus
and nance resources being directed to thesemanagement support activities. At times this may
be at the expense o eort directed to operationaland transactional areas o nance.
To this end, this update report looks primarily at the
trends and recommendations in this area o ocus,and includes insights rom AICPA members.
These trends raise many questions or the eectivestructuring o the nance organisation going orward
specically in the areas o recruitment, developmentand retention, or example:
What exactly is meant by business competency?
Does its importance outweigh that o technical
competency?
What is the optimum balance between technicaland business competency?
How can this balance be established in an
organisations nance unction?
How can an individual nance proessional
achieve the right levels o competency andmaintain them throughout his or her career?
How can organisations plan or the developmento their nance sta to really add value to
the organisation?
What are the optimum ways in whichorganisations recruit and develop talent?
What are the actions to consider or organisationsand the Chartered Global Management Accountant?
CIMA and the AICPA will be continuing to researchtrends in the changing nance unction to supportthe Chartered Global Management Accountant.
8/3/2019 Ledgers Leadership
6/56
5
talKing headdan CrumB, CFo, Kansas City ChieFs
dan Cumb wa nam Ci Financia oc t KanaCity Ci in sptmb 2010. Pi t jining t Ci, Cumbwk t Nw oan hnt t NBA a t tamsni Vic Pint an Ci Financia oc. B tat,Cumb v a t CFo Abita sping Wat Cmpany Inc,aving bgun i pina ca at KPMG.
I think the last ew years have certainly seen
nances role change. Earlier on in my career,25 years ago, the nance organisation was viewedas more o an accounting department; you processedthe numbers, you did the nancial statements, you
put out the nancials on a monthly basis.
And then it evolved to where the CFO o theorganisation is really a trusted advisor to the
president. You see the ownership leveragingthat nance person and the nance departmentsknowledge and their expertise in making decisions.
So, now it is not just giving nancial statements, it iswhat do you think about this business opportunity?
And it is air to say we have a unique ability, thanksto our training and experience, to decipher what thenumbers are telling us and to be able to partner upwith the dierent departments, and advise them and
pass on knowledge. Hopeully we can also increasetheir nancial literacy along the way.
W want u (nanc) pp t act
ik t buin wn, w untan
t numb but w a knw wat ittak t gw an manag a buin.
But even though nances role is being transormed
in some ways, we have to maintain our objectivityand independence. And in my view, it really boilsdown to your internal control environment. Forinstance, in our organisation, we have an audit
committee, external auditors, we have leagueauditors. As a result, we have a lot o layerso accountability that strengthen our internal
control environment.
It is also about the tone at the top, rom our
ownership down, the commitment to control andmaking sure that everything is correct and thateverybody is accountable. From the nancialstatements, the analysis, the reporting; everythingis properly and airly stated, according to generally
accepted accounting principles.
There is always going to have to be that one
department or person that plays devils advocate.For me, that has to be nance and the CFO.They are going to have to continue to be the
objective, independent enorcer o the rules,making sure the business is looking at everythingin the proper context, applying the right principlesand sound business judgment. I think we will
continue to see nance maintain that role ogatekeeper and enorcer.
O course in order to make sure you are ollowingthese guidelines, you need the best people. To ndthem, we have to maintain a good connection tothe universities and proessional education sector
to ensure the curriculum and syllabus development
supports that. This is important because as thisunction evolves the requirements are going to be
about more than just core nancial competency.People working in it are going to need to be moreliterate in management areas and marketing andin business operations, or instance.
We want our people to act like the business owner,who understands the numbers but who also know
what it takes to grow and manage a business. Themore we are able, as nance proessionals, to give
that advice and to look at things in that context, themore value we are going to add to our organisation.
8/3/2019 Ledgers Leadership
7/56
6 FroM ledGers To leAdershIP a juny tug t inanc unctin 2012 upat
Finance is truly going to be able to help an
organisation grow, get nancially stronger,maximise value and maximise prots.
So, we really impress upon the nance sta to think
like the owner, think strategically, and cover all thebases. Make sure when they make a recommendationon an opportunity they have looked at everything,
they have applied the proper analysis.
A CFo I away t my nanc ta tat
w cant jut tink abut wat i g tay
an wat wk igt nw. It a t b abut
wat i ging t b g in t ng-tm.
How do we support this? We constantly train our
people, to make sure they are up to date in theirskill sets and we support continuing proessionaleducation. All those things are there to keepus sharp. And we also benchmark against ourcompetitors and other organisations, in and
outside our sector.
Our way o developing people into that sor t o role
involves the nance department going out andinteracting with other parts o the business. So in ourbusiness, I would have our nance people interact
with, say, our stadium operations crew and have
them do part o the stadium operations or a day ora game. It can involve working in the ticket oceor a game. And we do that so that they see what it
is like, to understand what it takes to operate ourbusiness. In that way they are not just seeing thenumbers; they also know what activities createthe numbers.
In addition to that, we demand that they look aheadand think strategically. As CFO I always tell my
nance sta that we cant just think about what is
good today and what works right now. It has to beabout what is going to be good long term. So when
we make a decision, or advise a course o action ona certain opportunity, we cant just think about theshort-term implication.
As part o that process, we want to make sure thatwe look at everything. And thats where the nanceskill set , I believe, comes in. It provides a true value
add because we know that a business must look atthe details and drill down; you have to look at theone, three, ve, ten year out scenario to see whatthe implication o that decision is.
8/3/2019 Ledgers Leadership
8/56
7
talKing headValerie rainey, CFo, inttra
Pi t jining INTTrA, Vai wa dict Financ atPitny Bw in ti Intnatina Mai svic iviin, w gani t nanc tam an v nancia cu anaccuntabiity tugut t ganiatin. B tat, at t AICPA an ent an Yung.
Over the course o my career, I have certainly
seen nance become more strategic. And as part othat trend, I think its been important to battle theperception o nance as being overhead and nota strategic unction.
Now, the emphasis is on looking more to theuture and playing a strategic role through the useo uturistic projections. That o course includes
providing nancial data to support the businessowners to make good decisions.
And that trend has, in my view, largely been
driven by the desire o individuals coming into theproession to do more beyond traditional nance
roles. I also think, at least here in the US, that wehave had to work to raise the awareness o what thenance unction could be. That has meant workingboth with accountants to develop their skills, but
also with business leaders to underline the valuethat the accounting proession creates.
At INTTRA, we in nance support the businessunits. In return, those units know that they are
expected to work with us. And i you can alignnance around certain business units and make
it crystal clear where you want to support them,you can really start to give good nancial insightto the leaders in those business units.
And our approach to developing a businesspartnering strategy is simple. Just this year, we
started to create nancials or our dierent businessand product lines, and we set up monthly meetingswith the business owners to go through and analysetheir nancials in a digest ible way. It was very
enlightening to the business teams because theyhad never seen the data presented that way.
And that allowed them to get a true picture o the
protability o their product: They were able tosee what they were spending on R&D, what themaintenance costs were, what it cost to go out tothe market and drive adoption, or instance. As aresult it really got people very laser-ocused on
improving perormance. And as a result o that,we saw products that werent protable becomingprotable, and protable ones becoming more so.
T mpai i n king m t
t utu an paying a tatgic
tug t u utuitic pjctin.
Thankully, the leaders o the business units arereceptive to our approach. In act, I believe this
is what they want rom nance: they want tounderstand their protability and the actors thatdrive perormance. And o course, nobody wants tohave the least protable product, so its actually very
healthy, in that it creates a little bit o competition.
And nance can only do that i it s independent.
And it is important to say that the CFO is the
guiding light on the issue o independence. It is anabsolutely central part o my job. So or example,when we started to report directly on lines o business
and sales costs and so on, people started to lobby myvote to allocate costs dierently to this or that line obusiness to make their own look more protable.
That is exactly what you have to guard against: youneed an independent objective voice to say; No, this is
the way the costs should be allocated and heres why.
I the CFO ails to do that, there is a danger they can
become a pawn in the game. So you need a strongleader at the top o nance to stop that happening.
8/3/2019 Ledgers Leadership
9/56
8 FroM ledGers To leAdershIP a juny tug t inanc unctin 2012 upat
O course you need the right people to support this
vision o a value-added nance unct ion, so we lookor strong accountants rst and oremost. Once wehave ound them, we then look to develop them andbroaden their skills base.
And there is another element o this that needs tobe recognised: Within every proession, not just
accounting, you are going to have certain peoplethat are going to be your strong technical peopleand theyre going to rise to a particular level andnot move beyond that.
And then there are those that rise to the top becausethey are able to do both parts demonstrate sound
technical skills as well as having the interpersonaland management skills.
Yu n t igt pp t uppt
t viin a vau-a nanc
unctin, w k tng accuntant
t an mt. onc w av un
tm w tn k t vp tm an
ban ti ki ba.
As CFO, I spend a lot o t ime on developing mypeople and equipping them with a range o skillsbecause I think it is important. I also do it because
its what I did in my own career. I didnt take thetraditional route to CFO. In act I spent hal o mycareer running business units marketing, operationsand so on.
And I honestly believe that because I walked in thebusiness owners shoes, I remember what I wanted
rom my CFO at the time, and as a result it helpedme understand where both sides are coming rom.
8/3/2019 Ledgers Leadership
10/56
9
CIMA ac a cu n intiying t typ cang tatav takn pac witin t nanc unctin v t at ca ann untaning xpctatin utu cang. Ti wk aw ut btt gaug t impact n t ki an vpmnt quimnt t nanc ganiatin an t Cat Gba ManagmntAccuntant a it wk t btt uppt ganiatina tatgy.
The survey ound that the main types o nance
unction change were as ollows:
cost reduction
re-engineering o business processes (BPR)either by using shared service centres (SSCs)
or outsourcing
an increased ocus on the organisations productsand services
an increased ocus on internal processes in theorganisation as a whole.
These types o change have been classied ona matrix (Table 1.1) to illustrate the ocus and
motivation or these changes based on: ocus towards the internal or external
environment
motivation or change:
- cost eciency: the desire to make ecientuse o organisational resources
- value creation: the desire to perorm tasks androles better and in dierent ways so that the
organisation can increase scope or protability
and thereby create value.
1. a deCade oF Change the eVolutionto Value Creation
taBle 1.1: ty o fc co ch
Motive for change
CosT eFFICIeNCY VAlUe CreATIoN
Orientationfor change
Intna
CosT redUCTIoN
ructin in acunt
Gat mpai n ct uctin
INTerNAl ProCesses
C cabatin
Inca mpai n vpingutu buin a
Gat mpai n xping ppmanc
Inca xtna bncmaking
extna
BPr
Inca u :
utucing
ssC (a vic cnt) utin nn-utin tak.
ProdUCT/serVICe FoCUs
Inca wk n puct /vic:
picing
vpmnt intiatin.
8/3/2019 Ledgers Leadership
11/56
FroM ledGers To leAdershIP a juny tug t inanc unctin 2012 upat10
ic f fc fc c
The key to understanding the orientation and
motive or change in the nance organisation is tolook at those changes that have the biggest impact.
Here it is very striking that cost eciency changes,rather than value creation changes, have generallyhad the greatest impact on nance in the lastdecade (see Figure 1.1). Our consultations point
to a concerted ocus on driving down costs andgaining process eciencies as a key remit. Manyorganisations also working actively to reduce the
actual cost o nance itsel, as a percentage orevenue, to align with industry benchmarks.
The research shows some dierences relating to thetype o organisation. Finance unctions in small tomedium-size enterprises (SMEs) and public sectorbodies reported greatest impact changes in line
with the population as a whole, but larger companiesreported use o shared service centres or routinetasks as having had the greatest impact more oten
than reduction in headcount, with outsourcing oroutine tasks next.
These Business Process Reengineering type cost
eciency changes can come as a package and
are more likely to have greater impact in biggerorganisations. This is because larger organisations
can benet rom economies o scale and achievetransormational change.
This occurs when process changes are implementedtogether with a shit in the ocus o the nance
unction away rom traditional nancial accountingroles towards more business-acing roles.
Nevertheless across all types o organisation, theact that nance change to date has been driven somuch by cost issues may highlight a call to action.
It perhaps highlights a mismatch between theorganisations vision or change (to be a driver ocost eciency) and the vision o the transormingnance unction itsel as being a value-creator.
d fc - f v c
However, during our consultations, it was alsoevident that both nance and management nowperceive a higher value rom nance when it worksto better understand protability and supportdecision making or growth strategies and plans.
The rationale rom our consultations highlightthat nance can no longer be solely perceived asan overhead, but that in act it has a key role to
play in driving growth and ullling strategy.
This means o course that there is substantial scope
or many organisations to pursue urther changesin their nance unction that support this type ovalue creation.
0 5 10 15 20 25
Finance functionchanges
Percentage of respondents reporting changesas having greatest effect in their organisations
Cost reduction
Collaboration
Reduction in headcount
SSC routine tasks
Exposing poor performance
Other
Outsourcing routine tasks
Product pricing
External benchmarking
Product development
Future business leaders
Product differentiation
Outsourcing non-routine tasks
SSC non-routine tasks
Ky
Ct cincy
Vau catin
ot
Figure 1.1: g c fc co ch
8/3/2019 Ledgers Leadership
12/56
11
t f: w f c ?
To ully understand the requirements and demandsrom business that will impact nance we haveworked to identiy what urther changes are needed
in nance to maximise its contribution to theorganisations goals.
What changes are required next to improve thenance unctions contribution? Will the ocus beon reducing its own costs or on increasing the valueit contributes by collaborating with the business?
As can be seen rom Table 1.2, the answers are clear:
Nearly two-thirds o respondents to CIMAs
global survey eel urther changes are neededin their organisations.
Those in larger organisations eel the need orchange more strongly:
- over 70% o those in organisations with morethan 250 employees reported this
- and those in small to medium size enterprises(SMEs) with up to 100 employees eel it least
strongly (just under 52%).
The uture priorities or many, the ve most popular
changes, are not all cost eciency changes butinstead have value creation as their ocus (Table 1.2).
Perhaps we can be encouraged that, ater a decadeo change in the nance unction, and even giventhe current economic downturn, respondents see
the value and are still keen to pursue moving nanceto ocus more on working directly with the businessand on driving growth and protability.
Tp Cang qui t impv nanc unctin cntibutin
1. Inca c-unctina cabatin an buin patning
2. Gat mpai n ytm (IT, accunting an nanc)
3. empai n cincy
4. Impv ta quaity, taining an vpmnt
5. Puc btt inmatin t uppt m tatgic buin ciin
Bttm Cang qui t impv nanc unctin cntibutin
18. empai n xping p pmanc/uppting btt pmanc
19. ructin in ta
20. rguaty iu an -guatin
21. empai n managmnt accunting a pp t nancia accunting
22. Financ aip (pucing utu buin a)
23. Inucing
taBle 1.2: th : th x ch h w d h fc co
8/3/2019 Ledgers Leadership
13/56
12
O course, reducing processing costs creates value.
Here, we choose to classi y the nance unct ionsinitiatives to improve its eciency as being internalcost-based initiatives rather than externally ocusedvalue creation.
What we can expect to see is the Chartered GlobalManagement Accountant, and nance generally,
acting in a more collaborative role and as a businesspartner. They will help the organisation to dealwith the challenges aced by both improvinginternal accounting processes and ocusing on
the protability o products and services.
tf c
c f fcThe CIMA research moved to analyse the impacto the dual ocus o eciencies and value creationon the levels o nance resource and their location.
ic fc c
We have looked at the expectat ion o nanceproessionals with regards to changes in the level
nance resource, number o ull time employees(FTEs), going orward.
On average, as shown in Figure 1.2, the high levelpicture seems to indicate an expectation o growth,with increasing resource or nance across all typeso organisations.
In SMEs growth is expected in all service areas,as these respondents envisage overall net growth
in nance sta numbers. However, it is notable thatthe greatest growth required is in the managementsupport and management accounting areas.
Similarly, larger organisations, and the public sectorto some degree, on average see these as the key
areas in which growth o eort is needed. But inthese cases, at the expense o other areas, both seea need to reduce eort (have less nance sta) onaccounting operations.
In the private sector, management accounting isseen as almost a concomitant o management
support but less so in the public sector. The publicsector sees a need to reduce eort dedicated tostatutory reporting, perhaps signalling that too mucheort is currently devoted to meeting regulatory
reporting requirements at the expense o supportor operational eectiveness.
ic fc c c
Smaller organisations are likely to have less
fexibility in how they congure their nanceunction, thereore attention is ocused on largerorganisations, ie those which are not SMEs.
Mean expectedchange
1 = increase0 = no change-1 = decrease
SME Large organisation Public sector
Organisation type
0.4
0.2
0
-0.2
Figure 1.2: excd ch fc by vc y d oo
Ky
Accunting patin & intna
nancia pting
statuty pting & pciait
activiti
Managmnt accunting
inmatin & anayi
Managmnt uppt &
pmanc managmnt
Accunting & managmnt
inmatin ytm
ot
FroM ledGers To leAdershIP a juny tug t inanc unctin 2012 upat
8/3/2019 Ledgers Leadership
14/56
13
Among such organisations the research nds that
or some perormance measures, such as return oninvestment (ROI) and prot margin, increasing levelso perormance are associated with larger nanceunctions and also with more integration o nance
proessionals with the rest o the business. Theseproessionals out in the business are categorised intwo groups the rst where the proessionals havesome reporting link back to nance, and the second
where they are ully integrated without any reportingline into nance, as Figure 1.3 illustrates. For largerorganisations we also see that they devote somewhat
more eort to management support activities.
Figure 1.3 highlights this trend and shows some
correlation in that better perorming large rms,
in terms o ROI, tend to have more nanceproessionals ully or partially integrated andcollaborating with the organisation.
So there seems to be some tendency, albeit limited,or higher perormers to have a greater proportion
o their FTEs in management support. This willhave an impact on the skills and competency needso the Chartered Global Management Accountant impacts that will be discussed in later sections.
Median numberof people
0
1
2-5
6-10
11-20
21-30
31-50
Well below average Below average Average Above average Well above average
Return on investment
Figure 1.3: Cofo o fc oo d o v ( f)
Ky
Pp in nanc unctin (FF)
Financ pciait wit m
pting pnibiity t FF
Financ pciait wit n
pting pnibiity t FF
8/3/2019 Ledgers Leadership
15/56
Mean changerequired to progress/
percentage points
Generalfinance/accounting
Specialistfinance/accounting
Finance/accountingsupporting operating units
Other functions/units
Duties
5
0
-5
-10
10
Figure 1.4: Ch wok x d o o by d o
C c b f wk cvc
To gain a perspect ive on potential changes to work,and thus competency demands, survey respondents
in our research were asked about what the mix otheir work should be in order to progress withintheir organisation (see Figure 1.4).
Here again we see that perceptions rom nanceproessionals reinorce the previous trends
with increasing ocus on the duties to supportmanagement and perormance.
The responses point to a strong element o management
support as the key change or progression beingrecognised across all the groups. This emphasisesthat, again, the perceived shit towards management
support is principally at the expense o time or eorton accounting operations activities.
It is also notable that those in specialist roles (tax,treasury etc) perceive the need to reduce the timespent on statutory reporting and specialist activitiesin avour o greater exposure to management
accounting activities. It is in these areas where
the value is perceived.
Ky
Accunting patin &
intna nancia pting
statuty pting &pciait activiti
ot
Managmnt accunting
inmatin & anayi
Accunting & managmnt
inmatin ytm
Managmnt uppt &
pmanc managmnt
In summary, the nance organisation continuesto provide a ull mix o services and we see its
proessionals undertaking a range o roles andactivities providing cost and process eciencieswhile also driving protability and supporting
management in decision support working morecollaboratively with the organisation.
However, we see the changes or nance driving
ocus and eort on the business-acing duties viamanagement support and the creation o urthervalue, oten at the expense o the more transaction
nance operations areas. These trends impactnance proessionals and the CGMA in the activitiesthey must undertake going orward. It will alsorequire a review in the approach to training and
development to remain t or purpose and orcareer advancement.
14 FroM ledGers To leAdershIP a juny tug t inanc unctin 2012 upat
8/3/2019 Ledgers Leadership
16/56
talKing headWerner Baumann, CFo, Bayer
Wn Baumann a bn CFo at Bay inc May 2010.Pi t i appintmnt a numb int int cmpany inc jining in 1988. h a wk ac Baypatin in spain, t Us an, t at nin ya, in Gmany.hi pincipa cnt a bn at Bay hatca AG.
For me, the role o nance in ensuring cost and
process eciency remains critical, the challenge isthen to move nance out and maximise the value insupporting the wider business.
At Bayer we have around 200 to 250 people incorporate nance and treasury globally, whichincludes headquarters, and the treasury unctions insome o the hubs. They include nancing companies,
so it is already a highly consolidated unction.
In terms o our perormance, the company has just
gone through an eciency program and the results
o that were encouraging. As conrmation o that,there was a recent report rom the Bank o New York
Mellon which looked at our US nance unctionand their assessment was that they had never seena company which is so ecient and so highlyautomated in the nancial processes o the
business. However, we can always improve.
Utimaty nanc an buin a nt
tw paat pat, but actuay intga
mnt a w unctining cmpany.
The question then is whether we as an organisation
are able to take that eciency that we havedeveloped within the nance unction, and takenance urther out into the business. That includes
how nance sta work with other non-nance stato support innovation, or example.
It is a key question and o course, i you considerunct ional excellence, it is clear that you need tocreate an environment which provides people withthe opportunity to continuously improve on the
core capabilities o the nance unction.
But i you do that in isolation, it will lead in the
end to urther isolation. And that is the oppositeo what is needed in order to make sure that thenance unction caters to the business needs.Ultimately, nance and business are not twoseparate parts, but actually integral elements
o a well unctioning company.
The issues are always at the interace, so consider
the example o capital markets. I we want to issuecommercial paper, or to issue new shares, that is anon-issue because it is in capital markets, either indebt market or an equity market issue that we deal
with in the nance unction. That is clearly a nanceunction responsibility.
But when it comes to nancing our operationalbusiness, be that discussing terms and conditionswith suppliers, potential win-win solutions in
supplier nancing, or to making smart businessdecisions on how we best support our commercialorganisation with customer nancing, the nanceunction has to be an integral part o the business
and work outside the lines.
That was certainly the case at the sourcing end o
the business processes, where we had to make surethat our procurement organisation on the one hand,and the nance organisation on the other hand worktogether seamlessly. I they dont do that , it ends up
in suboptimal business results or the company.
The procurement organisation ocuses on optimising
the price per item. They dont look at payment terms,or example, or i there are purchases outstanding.And maybe things which are a little bit more innovative,
like supplier nancing, do not come to the mind o a
15
8/3/2019 Ledgers Leadership
17/56
normal procurement manager. And thats because
he/she does not have exposure to a truly involvedand business-minded nance unction.
That disconnect means that we have to improve
the way we develop our nance sta . What wehave come to realise is that developing expertisemonolithically or within a silo mentality is not a
smart way to develop talent, because they do notnecessarily understand what happens on the otherside o the ence. Think o it as there being twosmall backyards you dont have a clue what is
going on in your neighbourhood.
In order to make sure that we avoid this mental ity,
we are transitioning into a much more broad andholistic approach to talent management. This meansthat when young people who have an economics
background, or example, arrive at the company,be it into consulting, nance and accounting orbusiness analysis in the operational business, theyhave to rotate during the early years o their careers.
That means they have a short stint in the businessunits, then go into nance, look at treasury andhow to nance the company, go into accounting,and understand how a country organisation works
and so on.
Once you have done that you should have a airlygood understanding o how our company works,and wherever your next job is , whether you aredealing with the broader management responsibility
or a unction expertise, you are immediately enabledto look at other important issues you have to takeinto consideration. And that also means you willnot be looking at a nance division in isolation and,
with this approach, we get the sense o the way ourbusiness works.
O course, you need to make sure you have theright resourcing structures in place to allow this tohappen. That means that the more automated you
can make your back oce unctions, the more youcan ree up your nance sta to make a highervalue contribution.
At the same time, the increased fexibility andversatility o our talent pool means that it is much,much easier to be able to shit rom one area to
another. That oten happens at a t ime when a loto people look or stimulus and a new challenge,
because they are getting stuck in a routine.
T m autmat yu can mak
yu back c unctin, t m
yu can up yu nanc ta t
mak a ig vau cntibutin.
Because it is true that not everybody can rise upin the ranks o the company, it is really also an
absolutely essential element o better career andemployment development that we provide peoplewith the opportunity to work in a dierent area.
And the better they are prepped beore, because othe exposure they have already had to other partso the company, the better it is or both the companyand the people.
The worst thing or me, as an employee, is to nd
mysel in my late 30s, having done a job or tenyears, and my supervisor tells me that the levelI have achieved is very nice, but it cant go anyurther. With that, the really tough message is: you
have not done anything other than the job you aredoing right now in your proessional lie, and youare a specialist who cannot break out o that mouldanymore. You are stuck or the next 25 years, and
that is a very long time to look ahead.
16 FroM ledGers To leAdershIP a juny tug t inanc unctin 2012 upat
8/3/2019 Ledgers Leadership
18/56
2. the CompetenCies requiredoF FinanCe proFessionals
In this report we shall concentrate rst on identiyingthe activities that eed the need or specic business
and technical skills and competencies as perceived bynance proessionals themselves, and then contrastthis with the perceptions o the senior non-nancemanagers who drive organisational strategy.
hw fc f
However, the degree is highly dependent onorganisational location.
Further analysis shows that members o a centralisednance team spend a higher proportion o their
time on accounting operations and managementaccounting (46.6%) than do those in decentralisedroles (32%).
However, this is stil l an appreciable proportion otime being spent in these areas or the integratedproessional. The CIMA view here suggests that as
large organisations enjoy economies o scale theycan process and report more eciently. However,
these organisations also become more complex tomanage and need the management accountants
support to provide better insight or decision makingand help manage risk and perormance.
The time spent on particular activities provides somemeasure o their importance to the individual whoundertakes them; however, this does not necessarily
accord with their importance to the organisationsachievement o its objectives. This relationshipis thereore critical in understanding nanceeectiveness and also in both identiying and
rating the skills and competencies required.
t cv c
Figure 2.1 shows how respondents ranked a rangeo activities or issues in terms o how important they
elt these were to their organisations success.
We can see that many o the top ranking activities byimportance (communication, presentation, business
advice, interpretation and so on) are those we would
A w av n in sctin 1, nanc incaing cu n vaucatin an a ig v buin cabatin an patninga aciv tug t activiti nanc pina cay ut apat ti uti. hw tn t pit btwn m taitinatcnica activiti an m buin acing n cang a t nancganiatin vp t cabat an buin patning ?
Personal time allocation
Financ pina n avag pt twing a t pincipa aa in wic titim i pnt:
24%Managmnt accunting aninmatin anayi
20%Managmnt uppt an pmancmanagmnt
19% Managmnt uppt
16%ot g ta managmnt anaminitatin
11%Accunting an managmntinmatin ytm
10%statuty an xtna nanciapting an pciait activiti
17
8/3/2019 Ledgers Leadership
19/56
expect to see in a unction with an orientation
towards the business. These are activities whichrequire business competencies.
In order to better illustrate the competencies
required and their importance we have colourcoded these activities or issues under broad headingswhich relate to the ollowing role types:
strategic and advisory
regulation and governance
management accounting, inormation and advice
nancial accounting
systems
other (managing sta etc).
These role types and the principal activitiesassociated with them are listed together in Table 2.1
(over) but we can see each o these activities or issuesand its importance here in Figure 2.1.
The colour coding in Figure 2.1 highlights thatnance is a team game requiring people with thecompetencies to ll a broad port olio o roles:
strategic and advisory or business partneringroles are obviously important
people management is ranked as the mostimportant activity
the preparation and communication omanagement inormation are key roles
nancial accounting and systems roles are clearlyimportant too.
2some
importance
3very
important
4critical
importance
Grand mean
Average importance rating
Investment appraisal
Multinational accounting
Value based management
E-business
Networks and alliances
Ethics
Sarbanes Oxley compliance
Mergers, acquisitions, divestments
Social accounting
Green issues
Strategic management accounting
Treasury and financial risk
Accounting standards
Leadership
Implementation andmanagement of IT systems
Corporate finance
Internal audit
Tax
Business partnering
Corporate governance
Communication and presentation
Preparation and interpretation
Managing staff
Project management
Business advice
Maintaining financial systems
Accounting advice
Strategic financial planning
Development and implementation ofmanagement accounting systems
External reporting
1little/no
importance
Activities
Figure 2.1: io c o cv d o oo cc
Ky
statgic an aviy
rguatin
Managmnt accunting
Financia
sytm
ot
18 FroM ledGers To leAdershIP a juny tug t inanc unctin 2012 upat
8/3/2019 Ledgers Leadership
20/56
B cc cc
The term business competency embraces a range
o broadly business or commercial-oriented skills(Table 2.2). Technical competency encompasses
two distinct skills (Table 2.3).
There is not a total divide between businesscompetency on the one hand and technicalcompetency on the other. Change management
and risk management skills or example bothrepresent an intermediate competency.
Despite the complexity and specialism o technicalcompetency, what is interesting is that nanceproessionals attach greater importance to general
business competencies above traditional technicalskills in accounting and IT. This is true whether ornot the individual nance proessional is acting ina business partnering role (Figure 2.2).
Thus overall it is communication, problem-solving,business and interpersonal skills that are all
regarded as being very important (though notcritical) by a nance proessional, while technicalaccounting and IT skills are viewed as being nomore than important.
This certainly is reinorced by the activities thatare rated as most important within the nance
organisation as we saw earlier in Figure 2.1. Herewe saw communication, presentation, interpretationand business advice activities rated very highly.
It thereore appears that nance see the areas orimprovement and development aligned with theactivities that are deemed as most important orthe unction to carry out.
It appears then that the nance proessional takesthe technical skills as a given and the base, while
seeing business skills as signicantly more importantin their role. This is aligned to the rise in closercollaboration and partnering with the business thatwe see is a key trend or the nance organisation.
taBle 2.1: ro y d c ocd cv
r typ Pincipa aciat activiti
statgican
aviy
Business leadership, advice andpatning
Strategic techniques (nancialpanning, tatgic managmntaccunting tc)
Strategic relationships (networksan aianc; mg,acquiitin an ipa)
Financia
Finance (corporate nance,
tauy)
External reporting (includingaccunting tana)
Tax
Managmntaccunting
Preparation and communication managmnt accuntinginmatin
Accounting advice
rguatin
Ethics and governance
Internal audit
Sarbanes Oxley andmutinatina accunting
Green issues
sytm
Information technology
Financial and management
accunting ytm e-business
19
8/3/2019 Ledgers Leadership
21/56
taBle 2.2: B cocy
taBle 2.3: tchc cocy
Moderately important Important Very important Critical
Importance rating
Communication
Problem-solving
Business
Leadership
Interpersonal
Change management
Technical accounting
Strategic
IT
Risk management
Unimportant
Skills Grand mean
Figure 2.2: ioc o k o h fc oo
Intpna ki Tam-wking, cnfict managmnt an infuncing/ngtiating
Buin ki G untaning t ganiatin bjctiv, patin, maktnvinmnt an tica iu
laip an pjctmanagmnt ki
laing t, managing uc an gating ctivy
statgic agiity Fxibiity an tinking n yu t
Cmmunicatin kiWittn, a an pntatina ki, an cmmunicating ctivy witnn-nanc pp
Pbm-ving ki Taking a citica an mtica appac wn pbm ving
Cang managmnt ki Aing an aciitating cang
rik managmnt kiUntaning t uc ik, an vauating ik an mt ti cnt an mitigatin
Accunting kiBa untaning t tcnica iu an abiity t kp up t at
wit nw accunting u an guatin
IT kiAbiity t kp up t at wit nw cncpt, tcniqu, t antcngi
Ky
Buin ki
Tcnica ki
20 FroM ledGers To leAdershIP a juny tug t inanc unctin 2012 upat
8/3/2019 Ledgers Leadership
22/56
Cc fff , f
The importance o business and commercial skillswithin nance is noted across the ull spectrum o
nance roles, however there is a clear di erence inthe level o this importance or certain roles. Whilebusiness competency is rated as more important
overall by nance proessionals, the exact skillsneeded or a particular role or set o duties sees thebalance between business and technical competencyshit subtly. We see that the mix o competencies
required is very much dependant on the type o role.
t f fc Each type o nance role has a dierent emphasison the two main competencies, with a clear spectrumrunning rom the strategic and advisory role(comparatively strong on business skills, less on
technical) to the nancial role (vice versa).
The need or technical competency is relatively
weaker in the strategic and advisory role than thator business competency. But we see that or all theother our roles, management accounting, systems,
regulation and nancial, there is a relatively strongerneed or technical competency.
As or business skil ls, while the need or these is
relatively much stronger in the strategic and advisory
role type, it is slightly weaker or all the others notably in the regulation and nancial role types.
Thus the balance o competencies is very muchrole-dependant: each role type encompasses aportolio o activities and a mix o competencies
and skills is needed or each.
Interestingly while technical competency is slightly
more important or the management accounting roletype than business skills, this is the role where thereis the closest balance in the need or both types ocompetency (Figure 2.3).
As we will see later, it is this balance o skills thatare evident in the management accounting role
that are also identied as those required or nanceleadership. This thereore provides an opportunityor the Chartered Global Management Accountantto advance in their careers.
t f bck ffc v fffc
Rather than concentrating on types o role, we candistinguish between nance proessionals on the basiso whether they have back oce duties (general and
specialist nance/accounting) or ront oce duties(providing nance/accounting support to operatingunits, and also actually being part o these units).
This analysis shows that business skills are seen asincreasingly important by nance proessionals asthey move rom back oce duties with the lowest
Correlation withskills importance
Strategic &Advisory
ManagementAccounting
Systems Regulation Financial
Activity type
0.3
0.1
-0.1
-0.2
-0.3
0.2
0
Figure 2.3: Coo bw o y d k
Ky
Buin ki
Tcnica ki
21
8/3/2019 Ledgers Leadership
23/56
business orientation (general nance/accounting) to
those with the greatest, where individuals see theirwork as directly relating to other unctions/units.
Thus the balance o competencies is duty-dependant
as well as role-dependant.
lv f
As one would expect, the technical/businesscompetency balance is also aected by the nanceproessionals degree o seniority. Both types o
competency are relatively much more important orsenior than or non-senior nance role groups. Alsoas one would expect, business competency is veryimportant or non-nance personnel while skills in
accounting and IT are relatively less important.
It is interesting to note here again that the other
area where the research saw an almost balancedneed or both types o business and technicalcompetency was in the management accountingrole. One interpretation suggests that since senior
nance roles and management accounting rolesboth require the closest balance o these skills,it is the management accounting role that oers a
good or the best preparation or developing seniornance proessionals.
sz f
In SME organisations nance proessionals aregenerally in short supply and so their primary value tothe organisation is in exercising their technical skills.
In large organisations, they may specialise greatly interms o the technical skills they employ but there is
also greater demand or them to make use o morebusiness-oriented skills in perorming their duties.These are more likely to involve ront oce dutiesand collaboration/business partnering roles.
The declining importance o technical skills in largeorganisations, as perceived by nance proessionals,
refects a decline in the relative importance o thenancial and regulation roles in such organisations.This reinorces the need and demand rom the
organisation or more business skills.
Cc f cv f b
With the increased level o collaboration andbusiness partnering that has been driven by nancetransormation, it is not unexpected to nd that
nance proessionals perceive the need to relymore on the exercise o business competency.In addition, however, we see that the need ortechnical competency also increases in importance
as business partnering increases.
As such, business competency does not supplant
technical skills with increasing levels o businesspartnering and collaboration. Instead we see theyincrease in importance at about the same rate.
The idea thereore that nance roles involved incloser collaboration with the business, such as
business partners, need to have a sole or greaterocus on the business and soter skills with lessrequirement or technical accounting skills isnot supported. Finance technical skills are still
as important, reinorcing again the need or aninterplay and a balance o both competencies.
22 FroM ledGers To leAdershIP a juny tug t inanc unctin 2012 upat
8/3/2019 Ledgers Leadership
24/56
t c vw w-fc
vw cc f
fc fSo ar we have considered the perceptions o nanceproessionals themselves in relation to the two typeso competency that they exercise. The view o non-nance management (shown in Figure 2.4), nances
customers, is a lit tle dierent however.
Overall management outside nance attach a much
greater importance to the technical accounting skills they dominate all others.
Non-nance management appear to consider theseas the core value skills that nance proessionalsbring to an organisation. It is interesting that whileconsidered important, these were rated almost least
important by nance proessionals themselves. Thereis, however, consensus between nance proessionalsand non-nance personnel regarding the relatively
high importance o communication, problem-solvingand interpersonal skills.
Finance proessionals take their technical competency
or granted and concentrate on the development o
business competency which is perhaps more o achallenge but which is also a skill set they realise is
becoming more o a requirement. At the same timethey also see a need or a complex interplay o skills.
Non-nance management perceive clearly that it istechnical skills that set nance proessionals apartand that add greatest value to the organisation.However, while technical competency is deemed
as critical, management recognise too that business
competency and commercial and managementskill sets are important. Furthermore, this need or
both technical and business skills extends across allnance roles as we have discussed beore.
The importance placed on business competencyby nance personnel together with the requirementrom non-nance management or an interplay o
both technical and business competency illustrateclearly the shit in collaboration within theorganisation. With nance bridging the technicaland business areas to become better value creators
and supporting decision making.
This is supported by some o our consultations that
point to the need or all nance proessionals to havethis mix; business partners require sound technicalknowledge while the specialist roles (such as tax,treasury and reporting) equally need to develop
business skills to interact better within the businessand with other stakeholders.
A minority view is that there is still some way to go ornance unctions to be open with non-nance peoplein the organisation about what they do and how they
do it. This lack o openness perhaps contributes to thenotion prevalent among non-nance management thatbusiness competency is less critical, simply because
they are unaware o how important it is becomingwithin the nance unction. The suggestion is thatperhaps nance could be more transparent in this area.
Finance proessionals strategic agility is elt to bevery important by nance proessionals but is seen asthe least important o all their skills by non-nancemanagement. Consultations clearly mark seniority as
being a key actor here; in senior nance roles suchstrategic agility is acknowledged as critical.
2 3 4
Importance rating
Technical accounting
Grand mean
Communication
Problem-solving
Business
Interpersonal
Leadership
Change management
Risk management
Strategic
IT
1
Skills
Figure 2.4: ioc o fc oo k o o-fc
Ky
Tcnica cmptncy
Buin cmptncy
1 = nt vant
3 = imptant
5 = citica
23
8/3/2019 Ledgers Leadership
25/56
The implications o these varying perceptions or
the Chartered Global Management Accountant aretwo-old: while there needs to be greater opennessamongst them about what they do, how they do itand what value they bring, they may also need to
place greater value themselves on their technicalskills as it is these that are so highly rated by theirnon-nance colleagues and management.
sk v
Where senior management were asked to rate the
skills that most needed to be improved by nance
proessionals (as shown in Figure 2.5), there was noclear consensus about any particular areas althoughthere was some emphasis on the need to improve
interpersonal, communication and strategic agilityskills. The areas ranked highest also help to urtherdemonstrate the need or nance to work and
communicate more and better with the organisationand input to the strategic and leadership areas.
It is these areas that nances customers are
highlighting or action and improvement.
This highlights a real development challenge orexisting nance proessionals, and reinorces the need
or these skills alongside technical competency orthose wishing to enter and prosper in the nance eld.
When we look at nance personnel, and the skillsthey identity as key to progress in their career wend similar skills listed or development.
The more junior nance sta recognise that thebusiness skills are key ones to develop in order to
progress so the prominence o business skills isconsistent with their association with more senior roles.
The interpersonal skills are top-rated in termso the need or development, possibly suggestingthat a ocus in personal engagement and motivationmay have been neglected by nance sta and
their employers.
As would be expected, non-senior nance personnel
are more likely to indicate the need to develop skills.However, it is notable that this recognition alsoextends to technical skills. This suggests that theneed to keep developing technical accounting skills
is perceived to continue up to senior levels career
progression depends not just on the development obusiness and management skills.
This nding reinorces the notion o lie-long learningas a key requirement o the proession and addsto the earlier ndings that nance leadership
roles continue to require technical nancial andaccounting skills.
15%10%5% 20%
Proportion needing to develop
Change and management skills
Interpersonal skills
IT application skills
Financial accounting skills
Problem-solving skills
Business acumen
Management accounting skills
Communication skills
0
Risk management skills 15.6%
Strategic thinking and agility 17.1%
Leadership skills 17.8%
Personal development skills 19.7%
IT appreciation skills 14.9%
14.6%
14.4%
12.9%
12.5%
12.4%
10.6%
7.2%
6.4%
Figure 2.5: sk dvo d o h fc oo
to fv k o d o ov by fco d by o
rank ski t impv
1. Intpna
2. Cmmunicatin
3. statgic
4. Tcnica
5. laip
24 FroM ledGers To leAdershIP a juny tug t inanc unctin 2012 upat
8/3/2019 Ledgers Leadership
26/56
25
s c
The research, together with the consultations
undertaken, highlight some interesting areasthat would suggest calls to action or dierent
stakeholder groups:
For the person looking to start a career innance, with ambitions to reach the senior tier,our analysis points to the need or a qualication
that provides the technical core competence innance but that also develops the managementand commercial skill set.
For the nance proessional who is looking toast track and progress into senior roles, the
types o skill that need to be built and developedare clear: technical expertise is there alreadyand so the ocus should be on communication,interpersonal and strategic skills. In addition they
should pursue the roles and activities that aid theirdevelopment towards senior positions, namelythose categorised as management accounting
or strategic and advisory roles.
Organisations planning the development o theirnance unctions and nance proessionals need to
integrate a healthy pipeline o suitable candidates to
take on the roles o uture nance leaders and drivevalue creation. The research would seem to suggest
a variety o actions:
Recruit people with proessional nance
qualications that develop both technical nancecompetence and business and commercial skills.
Train existing sta in a proessional nancequalication to provide the technical competence.
Develop career plans that are designed to expose
sta to both the technical and the commercialand business skill sets; placements in one othe strategic and advisory and management
accounting roles could be one way to achieve this.
Ensure that there are learning and development
opportunities in place to support nanceproessionals in developing the business andmanagement skillset in particular the areasto drive eective collaboration and decision
support; as communication, interpersonal andstrategic skills.
Identiy retention strategies and actively targetthese at those sta who have attained technical
and business competencies and experience, sincethey are likely to orm the nance senior teamo the uture. Some o this group will move
outside nance into the organisations seniormanagement roles.
8/3/2019 Ledgers Leadership
27/56
26 FroM ledGers To leAdershIP a juny tug t inanc unctin 2012 upat
talKing headJim morrison, CFo, teKnor apex
Jam e. Min i t CFo Tkn Apx Cmpany, a pivaty manuactu patic cmpun aquat in Pawtucktwit aciiti in t Us, eup an Aia. Jim i n t Ba dict t r Ian scity Cti Pubic Accuntant,an v a Cai t Buin an Inuty excutivCmmitt t AICPA. h a an MBA m Xavi Univity,an a B.A. in Accunting m t Univity Miui.
The nance unction has undergone a signicant
transormation over the past ten years. We havemoved closer to the business, and are now consideredpart o the decision making team. Anyone predicting
the end o the nance unction did not oreseethis development.
The transormation begins with a clearly thoughtout organisation plan. This plan needs to set asidenance proessionals as business analysts, and give
them the mandate o creat ing value. You cant justsay to somebody in nance while youre doing yourcurrent job, you need to be a business partner and bythe way, could you nd some time to be an analyst?
You have to establish and support that position.
A key stage in the transormation o the business
analyst is to physically place them in the hearto the business team. I they are going to be abusiness partner they need to be sitting with themanagement team. The nal stage is to create the
desire to have business unit goals that are alignedwith corporate objectives.
T tu vau t buin anayiunctin cm in t cat t utu
ut an pmanc. A t nanc
pina, yu bcm t ky g t
pn ciin impacting t utu.
The basic analysis support unction involvesbudgets, capital decision analysis, and measuring
business perormance. But the true value o thisunction comes in the orecast o uture resultsand perormance. As the nance proessional,
you become the key go to person or decisionsimpacting the uture.
It is important that the business analysts broaden
their perspective and understanding o businessprocesses. So when a question comes up, whether aproject proposal or a technical accounting issue, the
analytical approach is to start connecting the dotsto the other areas that will be aected. Continuedexposure to all the dierent unctions in the businessgives one this capability, but the best analysts
quickly identiy the critical impact areas, thevalue levers. I think this helps you see the resulto actions in one small area and how changes can
aect the wider business.
While there is a transormation, the business analyst
must remain true to their proession. There is aear among some that the lines may begin to blur inance works too closely with operations. But thatwont happen i we acknowledge our ethical roots
and ensure that decisions we are promoting are orthe benet o the total company and its stakeholders.This objective and non-biased approach will continue
to build credibility within the organisation, andpromote the nance proessional as a catalyst orvalue creation. I tell my team that everyone shouldthink o themselves as a CFO o their area, because
the CFO always asks what is the best decision thatwill benet the company long-term.
Reporting lines are important. In my view, thebusiness analyst needs to have a strong dotted lineto the business manager they support. Withoutthis they will never attain business partner status.
However, to protect the integrity and independenceo the nance proessional, a direct line backthrough nance is preerable. The nance unction
is usually going to remain the career ladder ochoice, and that connection should not be severed.
8/3/2019 Ledgers Leadership
28/56
27
While the business manager should have input on
the perormance rating o the business analyst, thenancial head should have the nal judgement otheir perormance.
All this involves a learning curve, and I have alwaysbelieved that or a nance person to be considered apartner, they have to be accountable or the business
perormance. I tell the nance people they are just asimportant as anybody because they are going to helppeople around the business make good decisions;they are going to help them see where they are going
o target and where they are on target.
Frankly, the people that I have right now the
business analysts that are on the operationalteams are rewarded just like their counterpartsin those business teams: 20% o their bonuses
based on corporate perormance, 30% on thebusiness perormance, which is usually an EBITnumber, and 50% on personal targets. So they aretotally accountable.
T tanmatin t nanc
unctin a ut in binging vau
t t buin. Financ pina
tay a m iky t b n n t
nt in binging a caity t ciinmaking, away wit an y t t utu.
Clearly thats even more important given the stateo the economy. I have seen business managers
listening ar more to their business analysts nowbecause the environment is so complex and volatile.The result is that those managers are now morelikely to ocus on strengths and to quickly address
the problem areas.
The transormation o the nance unction has
resulted in bringing value to the business. Financeproessionals today are more likely to be seen onthe ront line, bringing a clarity to decision making,
always with an eye to the uture. Its an exciting timeto be a nance proessional.
8/3/2019 Ledgers Leadership
29/56
28 FroM ledGers To leAdershIP a juny tug t inanc unctin 2012 upat
3. training and deVelopment oFFinanCe proFessionals
Having examined the types o competency that
nance proessionals require to ull their roles inan organisation, we turn now to their training anddevelopment. We look at what is most useul and
what support is actually provided. We also note that
learning through doing is very useul although it isprobably seldom delivered in a structured manner asa orm o training.
taBle 3.1: u o d dvo hod (o o)
W av n tat t ac pint t tcnica pciaim a citica t nanc pina but wit an v-incaing imptancattac t buin cmptncy ac many typ witinnanc. hw i ti bing tanat int actin wn t cuitmnt,taining an vpmnt nanc pina cm int pay?
Uunank
Typ taining an vpmnt mt Activiti invv
1. laning tug ingJb tatin/c-catin, cacing/mnting,cnmnt, xpu t tp managmnt
2. extna taining cu upptby t ganiatin st n- cu
3.extna cntinuing pina vpmnt(CPd) uppt by t ganiatin
Activiti t maintain a pinaquaicatin
4.In-u ucatin an tainingac-t-ac
lctu, mina, ma pgam
5. Knwg aingdicuin gup, tuy gup an Actinlaning (ma gup aning tmting t icu ac t xpinc)
6.extna ucatin cu uppt byt ganiatin
Wking twa a pina quaicatin an MBA
7.In-u ucatin an taining uingtcngy
Bn aning (itanc aning tugTV/nin, uppt by taitina mtuc a mina), cmput-ba aning
8.extna activiti nt uppt byt ganiatin
Taining/ucatin cu CPd activiti(a abv) untakn by t mpyntiy at ti wn xpn
9. Knwg aing uing tcngy Bt pactic intant, intnt cat m, bg
8/3/2019 Ledgers Leadership
30/56
29
A substantial majority o the survey sample has
experienced the range o training and developmentmethods tested and all were ound useul in theirdevelopment. In order to best support organisationsand nance proessionals ormulate their development
strategies and plans, the research has explored thesemethods and analysed their ratings and use withinthe best perorming organisations.
t v: f
The types o training and development methodsevaluated in the research are set out in Table 3.1 on
the previous page, ranked according to how useuleach one was rated by senior nance proessionals.In act only our methods were rated useul(coloured green) at all; the remainder were
rated not useul (coloured blue).
Senior nance proessionals rated on-the-job
experience (learning through doing) as themost valuable developmental tool overall. This issupported by our interviews and consultations with
practitioners: exposure to on-the-job experience ishighly valued.
It is very notable though that no single method isevaluated overall as very useul, although amongstthe more ormal methods there is a slight preerenceor all external modes o delivery.
That external education, including working towardsa proessional qualication or an MBA, is seen as
less useul than other orms o training must givepause or thought to all educators. Many in nancealready have a nancial qualication, and we will
see later that many organisations preer to recruitully-qualied people, so this rating may not seem
particularly important or relevant.
However, consultations point to a need to do more
to enhance the practical value o qualications,particularly in the earlier years o training thoughthere is an acknowledged diculty here in that
qualications have to provide a common curriculumwhich is not necessarily oriented towards anyparticular type o organisation.
Current trends towards employing technology-based modes o delivery or education, trainingand knowledge sharing are not necessarily
leading to improved useulness. However usageo technologically-based methods o delivery isrelatively rare, which means there is relatively muchless experience o their use and this goes some way
to explaining their weak rank ing. Consultationspoint to these types o learning and developmentbeing on the increase as better solutions are
developed and made available, and organisationsbegin to explore and use them.
The degree to which training/development methodsare used in practice is generally in line with theiruseulness except that learning through doing gures
lower in the usage ranking than its relative useulnessas seen in Table 3.1 would suggest (Figure 3.1).
In relation to the low usage o learning through
doing it may be that while such practical, hands-onand relevant training is extremely useul it provesdicult in practice to deliver. Many organisations doit successully with rotations and secondments. But or
this to be eective a wider training and developmentstrategy and plan are required.
10% 20% 30% 40% 50%
Proportion using
External training
In-house f-to-f
External education
External CPD
In-house technologies
External unsupported
Learning through doing
KS with technology
Knowledge sharing
0%
Training/developmentmethod
Figure 3.1: u o d dvo hod
Ky
Uu
Nt uu
8/3/2019 Ledgers Leadership
31/56
30 FroM ledGers To leAdershIP a juny tug t inanc unctin 2012 upat
Learning through doing may in uture become more
prominent and use more virtual technology solutions.It seems there is a clear case or making the availabilityo this type o development more widespread; theissue is how to do so. One way is to encourage
virtual collaboration and working in teams acrossthe organisation via projects and using inormationtechnology. These are oten used to give hands-onexperience, and they acilitate business partnering
without requiring physical relocation in the business.
Over 40% o organisations use external short or one
o courses; this is the most requently used methodand is ranked second in terms o useulness. Butoverall take-up o training and development methods
does not seem to be high: the proportions using each
method are surpr isingly low.
For instance, knowledge sharing, including situationswhere it is technology-enabled, is rarely usedalthough it is highly ranked in terms o useulnessand eectiveness suggesting this is an area or
substantial development and action by organisations.
It seems that in larger organisations in particular
the idea o disseminating best practice is consideredvital and eective.
One line o thought rom our consultations pointsto the possibility that some organisations may justgo or the easiest approach to training anddevelopment by making simpler, more traditional
methods available, or instance by adopting a listo short courses. Some claim that employers havetraining and development policies as motivation
and retention tools which are not necessarily gearedto the needs o the organisation or the employee.
In addition the higher rated learning activities
and tools require more planning, more time and
more complex implementation, so employersmay be put o rom using them. These are short-
termist approaches as the real value o training anddevelopment policies and oerings is to ensure thatemployees have the opportunity to gain the rightmix o those business and commercial competencies
that we have discussed.
It is this interplay o skills that is key to the nance
proessional, and to the roles within the nanceunction as it goes orward in its transormation
journey to real value creation. The potential returnon investment or organisations which ocus on the
higher value training and development activities isthereore clear to see.
The low usage rate o e-learning and technology-based methods is notable because these are areas
in which many organisations have made substantialinvestments or the development o solutions, yetthey are used in practice by only between 13% and23% o organisations. Given their low ranking in
terms o useulness that we saw earlier it is possiblethat the ull potential o these methods has not yetbeen ully realised.
8/3/2019 Ledgers Leadership
32/56
Figure 3.2: u o d dvo hod o o-o fc oo
31
t ffc f v c f -
fc fFinance proessionals who have recently experiencedexternal education, such as proessional qualicationsor degrees, perceive it as having played a signicantpart in promoting their career development.
While we have seen that external education isnot rated particularly highly by senior nance
proessionals there is a much higher level o regardor it rom non-senior nance proessionals (Figure3.2). This probably refects the act that they are
likely to have more recently experienced externaleducation, such as studying or their proessionalqualication. Certainly it appears that those whohave undertaken such programmes perceive it as
having played a signicant part in promoting theircareer development, since not qualiying might havehalted their career in nance early on.
The clear superiority o experiential based learninglearning through doing over other methods is againclear. The nding reinorces the 78% o respondents
who agree that secondments to other parts o thebusiness as the best development method.
How the various training and development methodsare rated or useulness and or usage by non-senior nance proessionals is interesting: they rateexternal education as being the second most useul
in Figure 3.2 but report it as being the least widelyexperienced method in practice.
This highlights two important issues: rst thatnon-senior nance proessionals place enormous
value on receiving proper support or the proessionalqualications that they perceive as being held inhigh esteem by the market, and secondly that their
demand or this support is not being met.
There is a lesson here or the employers even
i sta do not receive this orm o training anddevelopment, this does not stop them rom wantingit and valuing it. The implication is that an employerwhich oers such training support will always be in
a better position to recruit and retain the best nanceproessionals than those not prepared to make suchan investment.
2.42.2 2.3
Usefulness
2
Learning through doing 2.65
External education
Knowledge sharing
2.31External CPD 2.24
External training 2.20
In-house f-to-f 2.17
Knowledge sharing using technology 2.13
In-house using technology 2.10
External unsupported 2.10
Training methods
2.31
2.31
Ky
3 = vy uu
2 = uu
1 = nt uu
8/3/2019 Ledgers Leadership
33/56
32 FroM ledGers To leAdershIP a juny tug t inanc unctin 2012 upat
o f v
Organisations can support the training anddevelopment o nance proessionals in a numbero ways and to meet a number o training objectives
(Table 3.2), but there appears to be a chasm betweenwhat support organisations claim to provide in theoryand what they actually do, or are perceived as oering,in practice (as rst seen on page 29 in Figure 3.1).
Although respondents would work or dierentorganisations, there are signicant dierences
between the levels o support which seniorrespondents say their organisations provide andthe levels which other respondents report that
they experience. For example:
Allowance is made or continuous proessional
development (CPD) leave and/or ees byapproximately 60% o organisations but only 32%o our sample actually report using CPD training.
While 76% o senior nance management claimthey support sta by paying or exams and courseees and providing study leave, only 29% o
respondents have actually received such support.
It seems that the acilities are available in theory andthe policy o many organisations allows or support,but it is not necessarily applied in practice. Bridgingthis gap between policy and implementation iscritical or organisations to ensure that key sta are
retained and that their nance personnel add valueto the business in the way that is planned.
Where organisations do not provide support ortraining/development, the most common reason given
by 42% o organisations is that it is too expensive.
Three other reasons were also cited by more than
30% o these organisations:
that all t raining is done in-house
that only qualied people are recruited
that training requires too much time away romactual work.
The rst two points are probably linked, in that
external training is expensive and time-consuming so itmay be a good idea to bring it in-house, but the last twocriteria given raise a concern. A signicant proportion
o organisations seem to believe that by recruitingqualied nance people they may not have to investas much in continuing training or development.
As we have seen in previous sections, the changingrequirements or skills and competencies within
nance are a reality and these organisations mayquickly nd that their nance unctions are not
t or purpose i they do not support their sta inacquiring these essential skills. The t ransition o
their nance unctions to becoming value creatorswill be compromised by the apparent lag in theirdevelopment policies.
taBle 3.2: pc o oo ovd o ocyd cc ( od by o fc )
Taining bjctiv Natu upptoganiatin pviing
uppt in picy (%)
oganiatin pviing
uppt in pactic (%)
Pinaquaicatin
Paying xam an cu 7629
Awing tim tuy av 76
Pt-quaicatinCPd
Paying activiti 5832
Awing tim activiti 60
ot tainingcu
Paying 7840
Awing tim attnanc 78
ot uppt 29
8/3/2019 Ledgers Leadership
34/56
33
It would appear thereore that nance and human
resources management need to monitor the returnon investment in t raining and development closely.Limiting the most eective training or educationactivities may not be the most ecient strategy in
terms o costs and benets in the medium to longterm. This entails limiting the skill set o the nanceunction and possibly negatively aecting theretention o key people.
iv b fv
But while both employers and employees are generally
in agreement on the need or training and development,it cannot be let to the employer alone to drive thisorward. Our consultations illustrate that individualsmust also take responsibility or their own development.
Some are accused o not making time or developmentor simply o not having the will o not being bothered.
As the shit in skills requirements continues, nanceproessionals need to take a much more proactiveapproach to identiying skills gaps and areas or their
development. They then need to work with theiremployers to nd out what support is provided bytheir organisations, setting realistic and achievable
development plans or act ion.
The increase in skills required is not restricted toadvisory or senior roles, as we saw in section 2.
As it aects all roles in the nance unction the needor proactive management o their own training
and development will aect most individual nanceproessionals.
o b zf
The bigger the organisation the more time is allowedor all orms o training, but especially in-housetraining as the benets o economies o scale in
training provision are enjoyed. Cost is again thekey actor here as training cost per head reduces inlarger organisations.
Furthermore, we see that having consistent training and
development programmes or many sta and acrosslocations becomes more important to organisationsas they grow. This leads to higher use o in-houseprogrammes where the training can be controlled anddelivered consistently to groups and in multi-locations.
But size has less eect on the time allowance orundertaking a proessio
Recommended