The title says it all: “From Ledgers to Leadership: A Journey Through the Finance Function.” Drawing on input from more than 4,500 finance and senior managers around the world, the report by the U.K.’s CIMA Centre of Excellence at the University of Bath School of Management focuses on the nature of finance in today’s organisations and where it is going in the future.
The key takeaway: Companies still value technical accounting skills, but there is an emerging shift in that more and more of them also want finance professionals to possess business and commercial skills. The CFO and finance staff should not only take care of accounting and financial reporting; they are also expected to act as business partners in the enterprise.
“If you’re a marketing director without financial experience, having that person beside you who can really give your plans that hard-edge rigour that finance brings just gives your projects far more credibility in the business,” explains Andrew Harding, who is executive director of CIMA
(Chartered Institute of Management Accountants). Based in London, he was recently in Hong Kong and spoke to CFO Innovation
’s Cesar Bacani.
This trend towards business partnering that the CIMA study detects, is it a function of the size of the company? Multinationals probably want it, but perhaps SMEs do not?
The largest businesses are doing it, because it’s an effective way to drive the business forward and to increase accountability and improve decision-making. The very small businesses, in many ways, have always done it because they don’t have a large number of staff; the finance people are embedded [in business management], it just happens.
It’s that group in the middle that needs to make the change. They don’t have much access to cutting-edge change. They’re not leaders in the change management and that kind of thing. They will get there, but it’s that middle group which are moving more slowly.
I’ve had my share of dealing with accountants, and it’s struck me that they tend to act as “Doctor No,” focusing on things that should not be done, rather than telling me what I should do to make things work.
That’s what happens when you have very heavy rules-based system. The finance business partner actually has to explain, to be understood and make things happen. Rather than being the person saying no, the finance business partner becomes the enabler, and I think that’s a big part of finance transformation, that move from controlling to enabling . . . Finance transformation is about moving from being Doctor No to being Doctor How.
Does this mean that professional accountancy qualifications like CIMA are no longer needed, that those who want to become finance professionals are better off getting an MBA, for example?
I think that’s going to be a real problem. If you try to be a business partner without technical skills, I don’t think you can do it. What you’re doing as a business partner is you’re actually providing that technical support. The reality is that non-finance people are frightened of finance, they’re frightened of numbers. The idea of business partner is someone to work alongside them, to empower them, to help them with their analytics, their decision-making. If finance professionals don’t have that level of technical competence, not only would it be very difficult for them to do that job, but the manager who’s relying on that support, that person next to them, actually won’t have confidence in them. And if they don’t have confidence in them then you can forget it, something’s very wrong.