Ledgers Leadership

8/3/2019 Ledgers Leadership

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From ledgers to

leadershipa juny tug t nanc

unctin 2012 Upat

Cgma report


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Contents

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tk : V r, CFo, inttra 7

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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.


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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:


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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.


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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.


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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.


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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.


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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.


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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.


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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.


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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


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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


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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


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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


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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.



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


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.



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


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



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


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



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


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.



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


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



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.


27/56


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.


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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.


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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


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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


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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.


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


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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


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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

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