Talent Management: Do You Really Need CPAs in Finance?

As head of research and advisory for finance practice in Southeast Asia for US-listed advisory CEB, Brian Tsui has worked with many CFOs on consultancy engagements and research projects. “After thousands of interviews and thousands of survey responses, what we realise is that the old management playbook doesn’t work anymore,” he reports.
 
Tsui spoke to CFO Innovation’s Cesar Bacani about the Asian finance function’s journey to business partnering, the impact on talent recruitment, retention and development, and other issues. Excerpts:
 
CEB works with a number of big organisations in Asia and globally on finance transformation. What do you tell your clients about improving finance function productivity?
From a CFO’s standpoint, there are a number of things that we recommend them to do. One is to give people ‘guided stretch roles.’ The key word here is ‘guided,’ because you’ve got to make sure the objective is clear. How do these new things contribute to their development objectives? Otherwise it would just be another overtime hour.
 
Assuming the CFO has the time to be doing that. 
When it comes to coaching, it’s got to be work-embedded. Some examples we have observed in this region is the CFO doing joint travel with direct reports, who actually participate in customer or supplier meetings.
 
When you do your CFO country roadshows, bring one or two of your high [potentials] with you. So you’re actually baking mentoring and coaching into your everyday workload. This is the only way where, at the CFO level, you can actually find time, when everyone is just so busy.
 
And when it comes to coaching, every CFO needs to be very careful because most coaching is not effective. You have to make it interesting and memorable.
 
How can CFOs make coaching memorable?
Everybody loves stories. So we suggest to a lot of clients that they use what we call narratives. Use personal examples, use interesting analogies. Ask the right questions when you do coaching, and also break down past success rates.
 
So, ‘We have been so successful last year when we implemented ERP or when we acquired this company. Why were we successful?’ Try to [analyse] that success for your direct reports so it can be replicated. And then mobilise your direct reports to coach [their own direct reports].
 
We don’t necessarily think it has to be a class or formal training. What we give them are some simple tools they can use. CFOs have a lot to learn because a lot of them have CPA backgrounds. We’re not expecting [many of them] to have business-partnership DNA.
 
The other thing is, you’ve got to redefine people’s job description. If you think business partnership or collaboration is very important going forward, it’s got to show up on people’s job description. It’s got to show up in the performance management system.
 
How well finance performs as a business partner is not showing up in assessments?
Guess what, 80% of the performance evaluation of accountants is on their technical know-how; 20% is sort of the catch-all section for all the non-technical skills. Is that enough? And for most companies, that 20% is not well articulated. So from an accounting standpoint, what am I supposed to do? If you want us to be a better business partner, what does that really mean?
 
If you think about the finance department as a whole, it’s probably time for people to introduce some proper performance metrics. We see a lot of benchmarks on what performance metrics to use. A lot of those metrics are old-school efficiency-based: days to monthly close, number of internal controls, headcount to revenue ratio . . .
 
These efficiency measurements are obsolete?
They’re still good. What we suggest is to expand those metrics to introduce more quality of productivity metrics. So for example, forecasting accuracy. Everybody files cash forecasts, but do they show up on the efficiency metrics? There’s data quality. In the past five years, we have data overload, information overload, but what is the quality of those data? Another example would be internal customer feedback.
 
Are companies also redefining job descriptions so being a business partner is emphasised?
If you look at [job advertisements], you are starting to see that. Some make business partnership, communications, front and centre of the job description. I think CFOs should make that expectation upfront, so they attract the right people.
 
It’s important for the CFO to set the right expectation that every single finance professional within the team has to have that business partnership vision. It’s not good enough to just put a bunch of good numbers out for the business people. We’ve got to help our business partners interpret those numbers. I think that’s a misconception that business partnership is FP&A’s job. It’s not. Treasury, tax – they are all interacting with business units.
 
Another observation that we have seen here is that people are looking beyond the traditional sourcing channels, typically BBA and MBA programmes. We see more and more companies being more creative. Other than going to campuses, they go for industry journalists, equity analysts, or even drawing people from the frontline [to finance].
 
But these non-CPAs would need to have CPA qualifications eventually?
Not necessarily. A lot of CFOs would tell you, financing and accounting are learnable; leadership is not. So we see more and more people willing to hire non-CPAs [who demonstrate innate leadership qualities].
 
They expect you to know basic accounting, or do basic finance accounting, but you don’t necessarily have [to be a CPA]. Going forward, we just don’t see that being a hard-and-fast requirement.
 
Maybe the CPA qualification would get you an interview. But we argue that it’s not really the technical skills [that will get you the job]. It will be your innate skills, your thinking skills, analytical skills, leadership skills.
 
What about existing staff, though, who may be equipped with the technical skills but not necessarily the innate skills that you’re talking about?
If value-add or business partnerships is not in people’s DNA, one quick win would be to empower the team with the value-add process. What that means is, you’ve got to break down the business unit engagement process into distinct actionable steps.
 
I’ll give you an example. If finance wants to influence capital expenditure, how do we do that? The first step could be to engage the right business partners so finance can earn a seat at the table. Typically, finance is by-passed in these important decisions.
 
The second step is [to help them dissect] business unit problems by active listening, and how to reframe questions to ask of the business unit. Finance people don’t necessarily ask the right questions. And then lastly, how do you deliver your recommendation in a language the business unit would understand?
 
Give you people something like this three-step process, so they are very clear on what to do. ‘This is how I’m going to go about it, when I engage with my business partner next time.’
 
So if the people who do transactions can also be business partners, then productivity will increase without adding headcount.
This is what we recommended. But again, when you position this to your people, it can’t just be a productivity play. It should be presented as adding value to their career. People are doing all these new things not only for the company, but for themselves. In that sense, the personal and professional goals are aligned.
 
But if I’m being asked to do more, if I’m adding more value to the company, I should be paid more.
It’s true that budgets are very tight, but we’re still seeing promotions within finance. Some CFOs are actually using the number of promotions as a performance metric for himself or the department. So in that sense, from the talent management standpoint, I can promote this number of people because they passed the quality bar of effectiveness.
 
The other part is, from a CFO’s standpoint, you just have to be a very engaging leader. You’ve got to go out and tell your people: ‘This is what we need to do if we want to survive as a company. The bus is leaving; we got to get on the bus before the bus leaves.’
 
Overemphasise the ‘why’. When CFOs ask for new things, they talk about the ‘what’ and the ‘how,’ and not enough on the ‘why.’ What we have observed is that if you over-invest in building your internal elevator pitch, in explaining the why to your people, they are more receptive.
 
How important is money in this equation?
Money is always an important component, but it’s not [the most important].
 
You need to make jobs interesting. A lot of people actually love stretch roles. You’re 25, 26, you’re already leading strategic projects for your company, under the proper guidance of the CFO, who is the right hand person for the CEO. For a lot of people, those are good opportunities.
 
Now, some people will leave anyway; you’ve got your annual expected attrition rate. The important thing is to retain your best people. First you have to define who the best people are. We see a lot of companies revising the definition of high potential employees. It’s probably not those technical accountants who are so shy about picking up the phone to make a business appointment.
 
Another example to retain people is to leverage your most engaged and loyal people to influence their peers. It’s very effective if the guy sitting next to me is telling me: ‘Hey, this is what we need to do, this is why we have to do it, this is how I’m doing it.’
 
If non-CPAs are being seen as finance function material, why can’t CFOs look internally and invite IT specialists, engineers, sales people to move over to finance?
We are seeing some examples of that . . . We see some big companies starting small pilots, bringing in one or two commercial people, one or two engineers, on trial basis.
 
They are not only [capable of learning] about finance from the existing staff; they can also influence others in the organisation to get a better understanding of the business value drivers, of what finance as business partner really needs from the business. So it’s really two-way . . .
 
And some in finance probably are moving over to the business side as well.
Yes, finance is also [supplying] talent to the rest of the organisation. Indeed, one big local company uses that as one of the quality metrics [in assessing] finance performance. Business actually wants my people, so that is a good testimony of their value [and that of the finance function].
 

You’re losing someone, but then you gain a business partner at the frontline. If people aspire to do something else, to move up the corporate ladder, why not?  

 

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