This article was first published in Edition 8 (January 2014) of Accountancy and Futures, ACCA's research and insight journal.
As businesses face increasingly complex global and competitive markets, so the demands that they place on their CFOs and finance teams are increasing. Businesses require high-performing finance teams and CFOs who can play leadership roles, managing their multiple responsibilities as both steward and business partner. These themes emerged strongly during ACCA’s International Assembly in London in November 2013, attended by senior finance leaders from around the world.
‘Increasingly CFOs have to deliver on a wide range of fronts, and the role of today’s CFO and the finance organisation is under significant scrutiny,’ said ACCA president Martin Turner. Globalisation has, he said, resulted in a more complex, volatile and competitive business environment, and sustainable growth is often hard to find. The risks that organisations face have increased, while a wider range of stakeholders are applying greater scrutiny of organisational performance. ‘The role of today’s CFO is focused on supporting the strategy of the organisation and creating sustainable wealth,’ Turner said.
Yvonne Yang FCCA, finance director for Asia Pacific MSC Software Corporation, agreed that professional accountants must adapt to meet changing business requirements. ‘Accountants are still seen as technical finance experts focusing on their core accounting and finance responsibilities, and reporting is typically retrospective,’ she said. ‘But in this new world, as CFOs we need to be more forward looking, aware of the broader risks the business faces. And we need to be more outward looking, aware of developments outside the organisation and understanding how they may impact us. We need to understand the evolution needed to bring greater value to the organisation and help it create sustainable wealth in the future.’
As CFOs evolve ‘from the bean counting to the bean sprouting’, they need even wider vision, said Jeffrey Thomson, president and CEO of IMA (Institute of Management Accountants), ACCA’s global strategic partner. ‘In their expanded role in strategy and sustainable growth, the CFO’s line of sight is fourfold: hindsight, oversight, insight and foresight.’
Hindsight, he explained, involves ‘looking back to learn from history’ – understanding past financial results, for example. Oversight is ‘a traditional CFO role in terms of financial performance and resource monitoring and ensuring a healthy financial profile,’ while insight involves a ‘move into the expanded skill set that we as professional associations must help address’. Finally, foresight is where the CFO plays a leading role in helping to shape a successful future through developing a ‘curious and adaptable mindset’.
In order to meet the increasing demands on them, Yang noted, CFOs and their finance teams need a broader range of skills – especially soft skills. Yang identified technical, commercial and technology, as well as stakeholder management ability and strong communication and influencing skills. She said that communication and influencing skills are particularly important as individuals rise to senior finance roles and need to communicate with fellow professionals in the business and with external stakeholders, particularly investors. ‘How well they can communicate an understanding of the organisation’s strategy and operation, and can influence these counterparties, is crucial,’ she said.
Teuta Bakalli FCCA, former CFO of financial services business Pepper Europe, identified one trend that has changed the skills required: the development of shared and outsourced services. Offshoring creates a different dynamic in the way that people interact. ‘Managing a team when you are not in the same room or the same location requires a different skill set,’ she said. ‘Technical skills are always necessary; they are our bread and butter and I don’t think we can ever move away from that. But [outsourcing] creates new challenges in terms of how you integrate your team when people are based in different time zones, with different language barriers.’ Effective communication is the only ‘silver bullet’ for such situations, she said.
Encouraging high performance from finance teams is also a priority for Bakalli. ‘It’s about trying to energise them, introducing passion,’ she said. She highlights the need to focus not only on key performance indicators but also on key risk indicators: ‘Always think of a three-dimensional box,’ she suggested. ‘We have to be a strategic partner and help the business in growing the top-line revenue, but equally [our role is about] managing risk and profitability.’
Organisations are recognising the need to develop new capability to ensure that the finance team adds value. ‘We have seen a much greater focus on ensuring finance professionals have access to the right development opportunities in many businesses, to coaching, mentoring and experimental learning programmes,’ Yang said. ‘And we have seen a better understanding of the importance of developing transparent career paths across the organisation so that professional accountants understand how they can develop their careers and the necessary skills and capabilities they will need to develop.’ The importance of succession planning and knowledge transfer across the organisation is also being recognised, as Yang concluded: ‘To be successful, we need to have broad experience, working across regions, across different cultures, in order to add value to the organisation.’
Sarah Perrin, journalist