ACCA Hong Kong summit focuses on leadership

This article was first published in the January 2016 China edition of Accounting and Business magazine.

The stereotypical image of the chief financial officer – poker-faced and buried in piles of spreadsheets – rarely applies any more. Providing financial analysis and insight is still a key part of the CFO’s job, but the role now entails much more. The modern CFO needs to be a business leader who takes on challenges outside the traditional comfort zone of finance or accounting.

Just a decade ago, not many CFOs had executive roles but now more than half of them do. Modern finance professionals oversee multiple functions ranging from human resources to legal, information technology, consumer services and more, said speakers during the ACCA Hong Kong CFO Summit last November. CFOs are expected to support and develop corporate strategy and guide key business initiatives. 

Entitled ‘Asian Groundbreakers – The New Leadership Imperative’, the summit brought together 150 CFOs, financial controllers and other top finance executives. A panel of international, regional and local speakers discussed how to prepare for future roles and career paths – including how to become the next CEO – while cultivating an environment marked by diversity of culture, gender and age. 

The modern CFO has come out from behind the curtain to become a power player within the C-suite. ‘Of course, you still need to make sure that numbers are not lying, but I think part of the profession is to also care for the moral fibre of the corporation you serve,’ said Raymond Ch’ien Kuo-fung, chairman of both MTR Corporation and Hang Seng Bank at the time of the summit. (He retired from MTR last month.) ‘You have to strike a balance. Or do you dare to go up to the CEO and say ‘We should do things a bit differently’?’

One of the first things finance professionals need to consider is knowledge. CFOs should know how other business divisions operate, which customers are important and understand the needs of their industry. ‘Knowledge is essential,’ said Ch’ien. ‘Only by filling the knowledge gap and by being able to integrate knowledge, we help ourselves and our companies stay ahead of the competitors.’

Embrace diversity

One way to smooth out the learning curve and inspire innovation among corporate leaders is for organisations to embrace diversity. At a practical level, this translates into a need to recruit people from different backgrounds. Regulators also encourage greater gender diversity. A recent consultation paper in Hong Kong, for example, recommends the introduction of gender diversity disclosures for companies. 

‘The benefit is quite obvious. First, as men and women think in different ways, women can bring different insights and different ideas, to explore a problem,’ Smita Sanadhya, CFO at Microsoft Hong Kong, told delegates. ‘Second, look at your consumer base. As your products tap more female and family-related areas, gender diversity can help you understand different needs of consumers.’ 

One area that is lagging within companies is age diversity, which is unique in that there is a rather clear line separating different age groups. Most business leaders are older baby boomers or Generation Xers, while younger professionals tend to fill more junior positions, particularly in large organisations. Nevertheless, the most successful CFOs are adept at taking multiple points of view and perspectives into account, aware that a ‘my-way-or-the-highway’ attitude may be the best way to lose young talent. 

‘In the interview, I look into their values rather than other technical level skills,’ said Wilfred KP Wong, founder and managing director at Resolutions HR & Business Consultancy. ‘If their core values are similar to our corporate culture, then you spend less time to tailor that talent to fit your company and unlike other skills that can be learned later, DNA can hardly be changed.’

Expectations have changed, too. ‘The key difference with Gen Y is that we now live in an era of instant feedback and gratification, so they want to see immediate results,’ said Andrew Blake, who manages the commerce finance division at Robert Walters, an HR consultancy. ‘There is more of a short-term focus on progression and on wanting their role to be interesting and satisfying from the start. In the past, people may have been more willing to bide their time and prove their worth before progressing through the organisation,’ he added.

Just as important, however, is to recognise the value of long-serving staff who have not made it to senior management positions but can adjust to the rapidly changing working environment. ‘We usually undervalue these people, who are mature, dedicated and loyal people,’ said David Man, head of finance transformation and operations at AIA Group. ‘They bring history, culture and legacy of an organisation, and can pass it on to the next generation of people that we bring into the team.’

Built-in constraints

For the modern CFO, becoming a business leader is important. The question, however, is whether that is enough to make the shift from CFO to CEO. This shift is much harder than just a change of title. 

The problem is that the accounting and finance profession comes with built-in constraints. Some CFOs are disciplined and outcome-oriented finance professionals, often more cautious than their peers within the C-suite. 

‘I do think the CFO has the advantage of being a good leader,’ said Patrick KW Chan, executive director and CFO of Sun Hung Kai Properties. 

‘Accountants are often accused of being conservative and risk-averse, but at times such characters may save the company,’ said Paul Mok, group financial controller of Orient Overseas Container Line. ‘This could indeed be counted as our competitive advantage. To strike a balance between being risk-loving and risk-averse, it is more important that the accountants steer the company into taking calculated risks in a risk-intelligent manner, commensurate with the risk appetite of the company.’

‘Our profession requires us to observe and follow rules and regulations. But when it comes to business, we are always encouraged to think out of the box. You have to be innovative, creative, but that may not be our strength,’ said Chan. ‘CFOs have to spend so much time doing analysis, while interacting with people is not their main function. I am not trying to undermine CFOs, but there must be a transformation process. On the contrary, I believe everyone can be a CEO only if he or she wants this “lonely and isolated” job.’

Ultimately, a growing number of CFOs have other ambitions. ‘In 10 years, maybe there is no CxO anymore. Instead, there will be a group of people making decisions together, hand in hand – CEO and CFO,’ said Bonnie Chan, CFO at IBM China/Hong Kong. ‘In addition, 10% of our work may be related to daily operations and routine tasks, while 90% will focus on strategies development, outgrowing the competition and bringing values to the company.’

Pearl Liu, journalist