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Introduction
In CIMAs recent report, Finance Transformation: the evolution to value creation, we illustrated that finance functions in todays organisations are transforming into business partners with other parts of the organisation via a process of evolution. Such a role requires much less of an emphasis on cost efficiency and back office duties, and much more on finding ways of being outward-facing and creating value. It makes new demands on finance professionals while still requiring them to be both technically competent and in a position of independence. The report highlighted that finance functions require a portfolio of roles and finance professionals with a diverse range of competencies and skills. Both business-oriented competency and technical competency are indeed seen as being crucial to the business partnering role for the finance professional but their importance is not restricted to this role. Instead, business competency is vitally important across all finance roles independent of the adoption of business partnering.
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We saw that there should not be an expectation that there is a typical finance professional and that finance professionals will continue to be extremely diverse in their capacity to undertake new types of roles. We also reported that the changes taking the finance function towards the business partnering role do not necessarily encompass the elimination of more traditional roles, such as transactional processing work developments in IT have meant that this is far less onerous a task even than ten years ago nor, due to virtual collaboration, do they require physical relocation of finance professionals to the business units they partner. Instead the key changes are those that really create value via improving internal processes and focusing on products and services. Our consultations indicate it is possible that, having become involved in these changes, the finance function may continue down the evolutionary path and proceed to the next step: being a true business partner with a stake in, and responsibility for, those strategic and operational decisions into which it has an input. We can therefore see that identifying the type, developing and then maintaining these business competencies as a priority for finance professionals involves a shift in paradigm similar to the move towards business partnering itself. Indeed it is even wider reaching since all finance professionals both business partners and finance specialists will require better business and commercial skills going forward to provide the value that organisations expect from the finance function of the future. It is a shift that raises many questions, for example: What exactly is meant by business competency? Does its importance outweigh that of technical competency? What is the optimum balance between technical and business competency? How can this balance be established in an organisations finance function? How can an individual finance professional achieve the right levels of competency and maintain them throughout his or her career? How can organisations plan for the development of their finance staff to really add value to the organisation? What are the optimum ways in which organisations recruit and develop talent? What are the actions to consider for organisations and individual finance professionals? The CIMA Centre of Excellence at the University of Bath School of Management has been established to research, over a five year period and on a global basis, the answers to such questions, among others, and to determine best practice in the further development of the finance function. This is the second report arising from its first year of comprehensive work based on substantive global data and with input from more than 4,500 finance and senior managers to give an invaluable, objective view of the nature of the finance function in todays organisation, the path it has taken over a decade of rapid change and its likely future trajectory.
Executive summary
Finance professionals at all levels rate their business competency as being more important to their organisations than their technical competency, though the balance between the two competencies depends on the individuals role, duties and seniority, and on the size of their organisations. Interestingly, non-finance senior management continue to rate finance professionals technical skills more highly than their business skills in terms of the value they add to the organisation, the technical and financial skill-set and expertise being the finance professionals raison detre. While this suggests there may be misconceptions among non-finance personnel about the wider functions and roles of finance professionals, it highlights that anyone looking to work in finance may need to develop financial technical skills first and foremost. It also reinforces the fact that many employers have finance competency development as part of their recruitment, learning and development strategies. There is perhaps a need for finance professionals themselves to continue to recognise and value their technical skills. Finance professionals require a mix of skills and competencies and while technical skills are a critical requirement at the recruitment stage for organisations, there is definite evidence of a shift in requirements for business and commercial acumen across all finance roles. This interplay of competencies is not restricted to organisation-facing roles such as advisory or strategic roles, but is also in evidence across all role types including in general accounting and the specialist technical ones such as treasury, tax and audit. It is important to note that while this interplay of competencies is evident across all finance roles, the importance of different skill types varies markedly and is dependent on the respondents characteristics. Thus, business skills become increasingly important as one moves from the types of duty with the lowest business orientation (general finance/accounting) to those with the greatest (where individuals see their work as directly relating to other functions/units). Similarly, business skills (as well as technical skills) are more important for the more senior finance roles, and are more comparable to the skill-set required for senior non-finance personnel. Organisations are showing that, where the ideal finance candidate cannot be sourced, there is a preference for recruitment of people with the necessary technical skills first, the organisation then being prepared to train and develop the requisite business and management skills in post. It is important to note that the shift in importance of the more business-centric skills has not led organisations to look to recruit business people and train them into finance. It seems that the worldwide preference is for professionally qualified financial professionals first and foremost though the interplay of skill-sets cannot be ignored. This is reinforced in relation to the types of training option the research looked at by the fact that business post-graduate qualifications (such as MBAs) are the least in demand, deemed the least useful, by both finance management and non-finance senior management when they recruit for their finance functions. These skills are of course not just recruited into an organisation and both business and technical competency can be developed via training in post. Here we find that the attitudes of organisations have a number of inconsistencies. It is notable for instance that while organisations view learning through doing as being the most useful development and training activity, in practice this is delivered to non-senior finance personnel much less often than its usefulness would indicate and this is true also of other training methods that are rated as useful. Cost and the need for time off away from the day job clearly put many organisations off investing in training and development, in particular external training. Often the less valuable but cheaper and quicker training tools or activities may be used where return on investment is pushed towards the bottom of the criteria. We also see less enthusiasm among senior finance personnel for external education, including training for professional qualifications, than one might expect given the ongoing importance of technical competency. However, we see a large proportion of organisations buying these professional qualifications and skills at recruitment, rather than developing them in-house. Furthermore, respondents do still rate external education (including for a professional qualification) as important, and building on qualification through continuing professional development (CPD) is also seen as very valuable. This may indicate that there is a need to enhance the practical value of training and qualifications, particularly in the earlier years of training. Furthermore, it is possible to conclude that technologically-based methods of delivering training are not being used widely and are also not being found as useful as may have been expected given the vaunting of e-learning etc in recent years. This, however, is an area identified as having great potential in the future with scope for further development of the methods used.
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Executive summary
Finally we see a marked disparity between what support organisations plan to provide in terms of time off and financial support, such as course fees, and what non-senior finance personnel actually experience. Our consultations illustrated that often this is an area for organisations to focus and improve on in order to develop the value creation skill-sets through training. However, there are also other areas to focus on, namely that the organisation needs to ensure that such programmes and training opportunities are communicated and cascaded throughout the organisation. Often it seems finance staff are simply unaware of their employers training offerings. It is very notable, however, that organisations with a higher degree of business partnering deliver more training and development support. Companies that want to follow this transformation and shift into business partnering roles in their value creation journey need to evaluate the training and development policies and offerings carefully. Learning and development are not issues that are limited to the organisation however; individuals also need to take responsibility. The consultations illustrated a minority of finance professionals who have good intentions where training and development is concerned but cite lack of time, adding pressure on existing workload, encroachment into personal time or simply lack of will as restraining factors. Finance professionals need to take the lead in this time of transformation to ensure that they have the required interplay of business and technical skills to progress in their careers and to be the value creators of the future that organisations are demanding. While technical competency is still the starting point for recruitment of finance professionals they are nothing without technical accounting skills when it comes to the recruitment of future leaders and the choice between two similar candidates the research makes clear that personal characteristics are actually the key distinguishing criterion. We see that technical skills are still critical, as next in importance are professional finance qualifications above work experience. Interestingly degree-level education is not so much a distinguishing selection criterion, and post-graduate qualifications such as MBAs are rated the least important recruitment factor of those that were identified for rating. The most common compromise at the recruitment stage is that, if given a choice between a technically competent person who lacks business skills and a business-oriented person who lacks technical skills, organisations tend to select the technically competent one. While organisations rate business competency very highly, this compromise is perhaps made because technically competent people may hit the ground running and add value from day one, and can then be trained to gain more business and commercial skills. Consultations have illustrated that being technically competent is essential as these skills are fundamental to the core activities, so organisations will more often compromise on business skills in order to get the core foundation of technical skills that remain essential in the finance function. However, when looking at the areas in which existing finance professionals most need to improve in it is the business competencies communication, interpersonal skills and strategic skills that shortfalls are most keenly felt. The recruitment process is taking slightly longer and is involving slightly more compromises than before, but this is expected to ease as the global recession means fewer organisations are recruiting and more candidates are available. However, consultations illustrate a clear lack of people with the right mix of technical and business skills and the recruitment of such talent remains a challenge. On retention, we see that qualified staff do not leave their organisation because they feel there is a lack of development opportunities; the key reasons for non-retention are finance employees being lured away by higher salaries and promotions. The research would point to clear actions for organisations but also for individuals who are looking to get into finance roles and have leadership ambitions. Those who develop and possess a technical skill-set, in particular with a professional finance qualification, but who can also demonstrate business and management competencies will more often win out in the recruitment race. Training and development in these skills throughout a professionals career, as well as exposure to business experience, are critical to gaining this mix of competencies. We see that finance professionals in strategic and advisory role types, alongside management accounting ones, demonstrate the mix of competencies that is associated with those identified for leadership development. Moreover, it is these individuals who will be more attractive to organisations leadership programmes and who will, on the whole, be the finance leaders of tomorrow.
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Contents
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Research methodology
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12 From ledgers to leadership a journey through the finance function
1.1 Introduction
The research from the CIMA Centre of Excellence at the University of Bath School of Management has analysed what organisations need in terms of competencies and knowledge base for their finance professionals, as indicated both by the time spent and more importantly the importance placed on the various activities carried out within the finance function. Finances increasing focus on value creation and a higher level of business collaboration and partnering are achieved through activities of finance professionals carried out as part of their duties. How then does the split between more traditional technical activities and more business-facing ones alter as the finance function develops the collaborator and business partnering role? What is the impact on other finance and leadership roles? In this report we shall concentrate first on identifying the activities that feed the need for specific business and technical skills and competencies as perceived by finance professionals themselves, and then contrast this with the perceptions of the senior non-finance managers who drive organisational strategy. How the finance professionals time is spent Although the time spent on particular activities provides some measure of their importance to the individual who undertakes them, this does not necessarily accord with their importance to the organisations achievement of its objectives. This relationship is therefore critical in understanding finance effectiveness and also in both identifying and rating the skills and competencies required.
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Time spent on activities and their importance to meeting organisational goals The rankings for how professionals rate finance activities in terms of importance is shown in Figure 1.1. Figure 1.1 Importance of finance activities ordered by time spent on them (most time at the top)
Activities
Managing staff Communication and presentation Strategic financial planning Preparation and interpretation Project management Maintaining financial systems Treasury and financial risk External reporting Business advice MAS Strategic MA IT systems Leadership Accounting advice Tax Accounting standards Corporate governance Corporate finance Investment appraisal Internal audit Ethics VBM Business partnering Networks and alliances E-business Multinational accounting Green issues MAD Social accounting SOX 0 1 little/no importance 2 some importance 3 very important 4 critical importance
The research reveals that while time spent on activities broadly accords with the importance of the activities, for some the time spent is out of step with their importance to the organisation. For example: In general less time is spent on strategic financial planning than its importance indicates. Collaboration with the business via business partnering is seen as less important than the time it absorbs, albeit a relatively minor difference. It should be noted that the individuals perception of importance to the organisation of any given activity might be influenced by the amount of time that that individual spends on that activity, but where this is the case an even closer alignment between the two would have been expected.
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Each activity in which finance professionals are engaged as listed in Figure 1.1 can be classified into one of five general role types: Table 1.1 Role types and principal associated activities Role type Strategic and advisory Financial Principal associated activities Business leadership, advice and partnering Strategic techniques (financial planning, strategic management accounting etc) Strategic relationships (networks and alliances, mergers, acquisitions and disposals) Finance (corporate finance, treasury) External reporting (including accounting standards) Tax Preparation and communication of management accounting information Accounting advice Ethics and governance Internal audit Sarbanes Oxley and multinational accounting Green issues
Systems
Grouping these activities by role type and looking at how much time is spent on the role types reveals that: the regulation role is highly specialised (no time is spent on it by the majority of finance professionals) the financial role is moderately specialised the management accounting and systems roles are quite evenly spread being both specialised and frequently engaged in. For the strategic and advisory role certain activities are relatively commonly engaged in while the others are not: the provision of business advice and strategic management accounting and financial planning are relatively widespread activities the practice of business/thought leadership is relatively restricted the remaining activities in this category, including business partnering itself, are specialised, being undertaken by a minority of finance professionals. Furthermore, we see that there are two key factors determining whether a finance professional undertakes business partnering activities. The first is their seniority. Finance professionals who were identified as being in the senior finance group are much more likely to be spending time in the strategic and advisory role type than more junior personnel. This is backed up by many of our consultations where senior finance professionals see the need for experience and maturity in business partnering roles. The second factor is whether they have front office or back office duties. This is shown in Table 1.2.
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Table 1.2 Engagement in role type by finance professional duties Role type Finance professional duties General finance/ accounting Back office Professional finance/ accounting (internal audit, tax, or treasury/risk management) Finance/accounting support of operating units Front office Other functions/units (including line or general management and non-financial support activities) Strategic and advisory Management accounting
Financial
Regulation Systems
Those with front office duties are likely to spend more time, and those with back office duties less time, on business partnering activities.
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Technical competency encompasses two distinct skills (Table 1.4). Table 1.4 Technical competency Accounting skills Broad understanding of the technical issues and ability to keep up-to-date with new accounting rules and regulations Ability to keep up-to-date with new concepts, techniques, tools and technologies
IT skills
There is not a total divide between business competency on the one hand and technical competency on the other. While we can identify the two underlying competencies as business and technical and classify skills quite clearly for the most part, in fact change management and risk management skills both represent an intermediate competency. They fit into both because change and risk management require the application of technical (often IT) expertise in the context of business/organisational management as well as the exercise of more obviously business expertise such as negotiation, flexibility and communication. Despite the complexity and specialism of technical competency, what is interesting is that finance professionals attach greater importance to general business competencies above traditional technical skills in accounting and IT, whether or not the individual finance professional is acting in a business partnering role (Figure 1.2). Figure 1.2 Importance of skills to the finance professional
Skills
Communication Problem-solving Business Interpersonal Strategic Leadership Change management Risk management Technical accounting IT Unimportant Moderately important Important Very important Critical 3.746 3.656 3.617 3.524
4.2
4.20
4.19
Importance rating
Thus overall it is communication, problem solving, business and interpersonal skills that are all regarded as being very important (though not critical) by a finance professional, while technical accounting and IT skills are viewed as being no more than important. It appears then that the finance professional takes these technical skills as a given, while seeing business skills as significantly more important in their role. This is aligned to the rise in closer collaboration and partnering with the business that we see is a key trend for the finance function and where these skills are ever more important for finance professionals to undertake these key activities.
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1.3 Competencies needed for different roles, duties and degrees of seniority
The importance of business and commercial skills within finance is noted across the spectrum of finance roles, however there is clearly a difference in the level of this importance attributed for certain roles. While business competency is rated as more important overall by finance professionals, where the issue is the exact skills needed for a particular role or set of duties the balance between business and technical competency shifts subtly. When the roles that finance professionals fill in organisations are categorised into the five role types in accordance with the principal activities in which they engage (as detailed earlier in Table 1.1) we see that each role type has a different emphasis on the two main competencies, with a clear spectrum running from the strategic and advisory role (comparatively strong on business skills, less on technical) to the financial role (vice versa). This is shown by the relative positive and negative weightings attributed by finance professionals in Table 1.5. Table 1.5 Relative importance of competencies to role types Role types Competency Business Technical Strategic and advisory +5 -1 Management accounting +2 +3 Systems +1 +3 Regulation -2 +2 Financial -6 +5
The need for technical competency is relatively weaker in the strategic and advisory role type than that for business competency, but for all the other four role types there is a relatively stronger need for technical competency. As for business skills, while the need for these is relatively much stronger in the strategic and advisory role type, it is relatively weaker for all the others, notably in the regulation and financial role types. Thus the balance of competencies is very much role dependant: each role type encompasses a portfolio of activities and a mix of competencies and skills is needed for each. Interestingly while technical competency is more important for the management accounting role than business skills, this is the role where there is the closest balance in the need for both types of competency (Figure 1.3). As we will see in later sections, it is this best balance of skills that are evident in the management accounting role that are identified as those required for leadership. Figure 1.3 Correlation between role types and skills
Skills importance
Key 0.3 Business skills Technical skills 0.2
0.1
-0.1
-0.2
-0.3
Management Accounting
Systems
Regulation
Financial
Role type
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Rather than concentrating on role types, we can distinguish between finance professionals on the basis of whether they have back office duties (general and specialist finance/accounting) or front office duties (providing finance/accounting support to operating units, and also actually being part of these units). This analysis shows that business skills are seen as increasingly important by finance professionals as they move from back office duties with the lowest business orientation (general finance/accounting) to those with the greatest, where individuals see their work as directly relating to other functions/units. Again this is indicated by the relative positive, neutral and negative importance attributed to the two type of competency by finance professionals, set out in Table 1.6. Table 1.6 Relative importance of competencies to front and back office duties Duties Back office finance/accounting Competency Business Technical General -5.5 +2 Specialist -4 +1 Front office finance/accounting Support operating units 0 +1 Part of operating units +6 -4
Technical competency is seen as less important for the most integrated front office duties, where the finance professional is actually part of the relevant operating unit, but for all the other three duties technical skills are relatively more important. As for business competency, while this is relatively much more important in the most integrated front office duties, it is relatively less so for all the other duties very notably in general finance/accounting ones. Thus the balance of competencies is duty dependant as well as role dependant. As one would expect, the technical/business competency balance is also affected by the finance professionals degree of seniority. Both types of competency are relatively much more important for senior than for non-senior finance role groups. Also as one would expect, business competency is very important for non-finance personnel while skills in accounting and IT are relatively less important (see Table 1.7). Table 1.7 Relative importance of competencies to non-senior finance, senior finance and non-finance role groups Role group Finance Competency Business Technical Non-senior -2 0 Senior +2 +3 Non-finance +8 -7
It is interesting to note here that the other area where we saw an almost balanced positive need for both types of competency was in the management accounting role type. One could interpret this as suggesting that since senior roles and management accounting roles both require the closest balance of skills, it is the management accounting role that offers a good or best preparation for senior finance roles.
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Figure 1.4 highlights that in a small/medium-sized organisation finance professionals are generally in short supply and so their primary value to the organisation is in exercising their technical skills. In large organisations, they may specialise greatly in terms of the technical skills they employ but there is also greater demand for them to make use of more business oriented skills in performing their duties and these are more likely to involve front office duties and collaboration / business partnering roles. The declining importance of technical skills in large organisations as perceived by finance professionals reflects a decline in the relative importance of financial and regulation role types in such organisations, reinforcing the need and demand from the organisation for more business skills.
As such, business competency does not supplant technical skills with increasing levels of business partnering and collaboration, instead we see they increase in importance at about the same rate. The idea therefore that finance roles involved in closer collaboration with the business, such as business partners, need to have a greater focus on the business and softer skills with less requirement for technical accounting skills is not supported. Finance technical skills are still as important, reinforcing the need for interplay and even a balance of both competencies.
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Importance rating
UNIMPORTANT MODERATELY IMPORTANT VERY IMPORTANT CRITICAL
Overall management outside finance attach a much greater relative importance to technical accounting IMPORTANT (not IT) skills they dominate all others and appear to consider these as the core value skills that finance professionals bring to an organisation. It is interesting that while considered important, these were rated almost least important by finance professionals themselves (Figure 1.2). There is, however, consensus between finance professionals and non-finance personnel regarding the relatively high importance of communication, problem solving and interpersonal skills. The implication of this apparent disparity is that to a degree finance professionals take their technical competency for granted it is a given and concentrate on the development of business competency which is perhaps more of a challenge but which is also a skill-set they realise is becoming more of a requirement. At the same time they also see a need for a complex interplay of skills. Non-finance management perceive clearly that it is technical skills that set finance professionals apart and that add greatest value to the organisation. However, while technical competency is deemed as critical, management recognise too that business competency and commercial and management skill-sets are important. Furthermore, this need for both technical and business skills extends across all finance role types. The importance placed on business competency by finance personnel together with the requirement from non-finance management for an interplay of both technical and business competency illustrate clearly the shift in collaboration within the organisation, with finance bridging the technical and business areas and becoming value creators. This is supported by some of our consultations that point to the need for all finance professionals to have this mix; business partners require sound technical knowledge while the specialist roles (such as tax, treasury and reporting) equally need good business skills to interact better within the business and with other stakeholders. A minority view is that there is still some way to go for finance functions to be open with non-finance people in the organisation about what they do and how they do it. This lack of openness perhaps contributes to the notion prevalent among non-finance management that business competency is less critical, simply because they are unaware of how important it is becoming within the finance function. The suggestion is that perhaps finance could be more transparent in this area.
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Risk management is seen as their least important business skill by finance professionals (Figure 1.2) while non-finance management see it as the most important one after communication, problem solving and interpersonal skills. This is an interesting disparity that perhaps needs addressing; it highlights the key role that finance professionals are perceived as taking in managing risk, a role that many finance professionals themselves seem to regard as being a specialism that is relatively unrelated to their core work. Finance professionals strategic agility is felt to be very important by finance professionals but is seen as the least important of all their skills by non-finance management. Consultations clearly mark seniority as being a key factor here; in senior finance roles such strategic agility is acknowledged as critical. But there is a possibility that the requirements for finance professionals to be flexible and to think on their feet are simply not perceived by at least some non-finance management; the old stereotype of accountants being dogmatic bean counters has perhaps still not altogether gone away. The implications of these varying perceptions for finance professionals are two-fold: while there needs to be greater openness amongst them about what they do, how they do it and what value they bring, they may also need to place greater value themselves on their technical skills as it is these that are so highly rated by their non-finance colleagues and management. Where senior management were asked to rate the skills that most needed to be improved by finance professionals, there was not a clear consensus about any particular skill though there was some emphasis on the need to improve interpersonal, communication and strategic agility skills. This highlights a real development challenge for existing finance professionals, and reinforces the need for these skills alongside technical competency for those wishing to enter the finance field. Figure 1.7 Skills most in need of improvement by finance personnel
Skills to improve
Interpersonal Communication Strategic Technical Leadership Risk management Problem-solving Change management Business IT 0% 2% 4% 6% 8%
Citation frequency
The research so far points to the critical nature of technical skills in finance as seen by senior management. It is a mistake to be blinded by the need to be competent at business skills and so not to see the critical nature of technical competence it continues by and large to be the raison detre of finance professionals. There is however also an emphasis from non-finance management on having and improving business skills, in particular interpersonal, communication and strategic agility skills. What is important to note is that these requirements are seen across all role types; they are not just limited to business facing roles, such as business partners.
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1.7 Actions
The research, together with the consultations undertaken, highlights some interesting areas that would suggest calls to action for different stakeholder groups: For the person looking to start a career in finance, with ambitions to reach the senior tier, our analysis points to the need for a qualification that provides the technical core competence in finance but that also develops the business and commercial skill-set. For the finance professional who is looking to fast-track and progress into senior roles, the types of skill that need to be built and developed are clear: technical expertise is there already and so the focus should be on communication, interpersonal and strategic skills. In addition they should pursue the roles and activities that aid their development towards senior positions, namely those categorised as management accounting or strategic and advisory role types. Organisations planning the development of their finance functions and finance professionals need to integrate a healthy pipeline of suitable candidates to take on the roles of future finance leaders and drive value creation. The research would seem to suggest a variety of actions: Recruit people with professional finance qualifications that develop both technical finance competence and business and commercial skills. Train existing staff in a professional finance qualification to provide the technical competence. Develop career plans that are designed to expose staff to both the technical and the commercial and business skill-sets; placements in one of the strategic and advisory and management accounting role types could be one way to achieve this. Ensure that there are learning and development opportunities in place to support finance professionals in developing the business and management skill-set in particular communication, interpersonal and strategic skills. Identify retention strategies and actively target these at those staff who have attained technical and business competencies and experience, since they are likely to form the finance senior team of the future. Some of this group will move outside finance into the organisations senior management roles.
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26 From ledgers to leadership a journey through the finance function
2.1 Introduction
Clearly the research points to technical specialism as critical but with an ever increasing importance attached to business competency across all role types within finance. How is this being translated into action when the recruitment, training and development of finance professionals come into play? Having examined the types of competency that finance professionals require to fulfil their roles and duties within an organisation, we turn now to the question of how, and how far, the training and development of finance professionals enable organisations to achieve the required balance and to have value creation agents at the heart of the finance function. Here again, the views of senior finance professionals were sought separately from those of non-senior finance professionals and non-finance managers. The perspective of senior people who may be responsible for recruitment strategy and training and development, or who may be very far removed from it is different from those who are closer to the coalface.
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Senior finance professionals rated on-the-job experience (learning through doing) as the most valuable developmental tool overall. This is supported by our interviews and consultations with real life practitioners: exposure to on-the-job experience is highly valued. It is very notable though that no single method is evaluated overall as very useful, although amongst the more formal methods there is a slight preference for all external modes of delivery. That external education, including working towards a professional qualification or an MBA, is seen as less useful than other forms of training, development, education and knowledge sharing which must give pause for thought to all educators. Many in finance already have a financial qualification, and we will see later that many organisations prefer to recruit fully qualified 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 of qualifications, particularly in the earlier years of training though there is an acknowledged difficulty here in that qualifications have to provide a common curriculum which is not necessarily oriented towards any particular type of organisation. Current trends towards employing technologically based modes of delivery for education, training and knowledge sharing are not necessarily leading to improved usefulness: both types involving technology in delivery are among the three types ranked least useful. However usage of technologically based methods of delivery is relatively rare (see Figure 2.1), which means there is relatively much less experience of their use, and this goes some way to explaining their weak ranking in terms of usefulness. Consultations point to these types of learning and development services being on the increase as better solutions are developed and made available, and organisations begin to explore and use them. The degree to which training/development methods are used in practice is generally in line with their usefulness except that learning through doing figures lower in the usage ranking than its relative usefulness as seen in Table 2.1 would suggest (Figure 2.1). Figure 2.1 Usage of training and development methods
Training/development method used
External training In-house f-to-f External CPD Learning through doing External education In-house technologies Knowledge sharing External unsupported KS with technology 0% 10% 20% 30% 40% 50%
Proportion using
In relation to the low usage of learning through doing it may be that while such practical, hands-on and relevant training is extremely useful it proves difficult in practice to deliver. Many organisations do it successfully with rotations and secondments, but for this a wider training and development strategy and plan are required. Earlier research from the Centre of Excellence at the University of Bath School of Management suggested that another way is to encourage virtual collaboration and working in teams across the organisation via projects and information technology. These are often used to give hands-on experience, and they facilitate business partnering without requiring physical relocation in the business. The suggestion therefore is that learning through doing may in future become more prominent and use more virtual technology solutions. It seems there is a clear case for making the availability of learning through doing more widespread as a training and development method; the issue is how to do so.
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Over 40% of organisations use external short or one-off courses; this is the most frequently used method and is ranked second in terms of usefulness. But overall take-up of training and development methods does not seem to be high: the proportions using each method are surprisingly low, since in each case usage is confined to a minority of the sample. For instance, knowledge sharing, including situations where it is technology enabled, is rarely used although it is highly ranked in terms of usefulness and effectiveness suggesting this is an area for substantial development and action by organisations. It seems that in larger organisations in particular the idea of disseminating best practice is considered vital and effective.
Our aim is standardisation across the world if a region has an innovative idea, we need to spread it across the organisation. Director of finance function transformation team at a major MNC (hospitality industry) we identify ways of implementing excellence in what the finance function does and make sure this is shared throughout the business. Director in finance function transformation team at a major MNC (FMCG)
One line of thought from our consultations points to the possibility that some organisations may just go for the easiest approach to training and development by making simpler, more traditional methods available, for instance by adopting a list of short courses. Some claim that employers have training and development policies as motivation and retention tools which are not necessarily geared to the needs of the organisation or the employee. In addition the higher rated learning activities and tools require more planning, more time and more complex implementation, so employers may be put off from using them. These are short-termist approaches as the real value of training and development policies and offerings is to ensure that employees have the opportunity to gain the right mix of those business and commercial competencies that we have discussed. It is this interplay of skills that is key to the finance professional, and to the roles within the finance function as it goes forward in its transformation journey to real value creation. The potential return on investment for organisations which focus on the higher value training and development activities is therefore clear to see. The low usage rate of e-learning and technology based methods is notable because these are areas in which many organisations have made substantial investments for the development of solutions, yet they are used in practice by only between 13% and 23% of organisations. Given their low ranking in terms of usefulness that we saw earlier it is possible that the full potential of these methods has not yet been fully realised. Our consultations support the idea that many technologies are still relatively new and require different learning styles that are not favoured by all, in part due to lack of experience in their use. The appetite for virtual collaboration and working for business partnering that we also see in our consultations points to e-learning being an area for much integration and growth in the future.
2.3 The effect of training and development on the career development of non-senior finance professionals
Finance professionals who have recently experienced external education, such as professional qualifications or degrees, perceive it as having played a significant part in promoting their career development. While we have seen that external education is not rated particularly highly by senior finance professionals there is a much higher level of regard for it from non-senior finance professionals (Figure 2.2). This probably reflects the fact that they are likely to have more recently experienced external education, such as studying for their professional qualification. Certainly it appears that those who have undertaken such programmes perceive it as having played a significant part in promoting their career development, since not qualifying might have halted their career in finance early on.
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Usefulness
How the various training and development methods are rated for usefulness and for usage by non-senior finance professionals is interesting: they rate external education as being the most useful in Figure 2.2 but report it as being the least widely experienced method in practice. This highlights two important issues: first that non-senior finance professionals place enormous value on receiving proper support for the professional qualifications that they perceive as being held in high esteem by the market, and secondly that their demand for this support is not being met. There is a lesson here for the employers of finance professionals even if staff do not receive this form of training and development, this does not stop them from wanting it and valuing it. The implication is that an employer which offers such training support will always be in a better position to recruit and retain the best finance professionals than the employer which is not prepared to make such an investment.
Nature of support Paying for exam and course fees Allowing time off for study leave
Post-qualification CPD
Other support
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There is a large and significant difference here between what senior finance management claim is available by way of support, and what actual use is made of the various methods. For example: Allowance is made for CPD leave and/or fees by approximately 60% of organisations but only 32% actually report using CPD training. While 76% of senior finance management claim they support staff by paying for exams and course fees and providing study leave, only 29% of respondents have actually received such support. It seems that the facilities are available in theory and the policy of many organisations allows for support, but it is not necessarily applied in practice. Bridging this gap between policy and implementation is critical for organisations to ensure that key staff are retained and that their finance personnel add value to the business in the way that is planned. Where organisations do not provide support for training/development, the most common reason given by 42% of organisations is that it is too expensive. Three other reasons were also cited by more than 30% of these organisations: that all training is done in-house that only qualified people are recruited that training requires too much time away from actual work. The first two points are probably linked, in that external training is expensive and time-consuming so it may be a good idea to bring it in-house, but the last two criteria given raise a concern. A significant proportion of organisations seem to believe that by recruiting qualified finance people they may not have to invest in continuing training or development. As we have seen above, the changing requirements for skills and competencies within finance are a reality and these organisations may quickly find that their finance functions are not fit for purpose if they do not support their staff in acquiring these essential skills. The transition of their finance functions to becoming value creators will be compromised. Where support is offered by the organisation there is considerable variation in the time allowed for training/development as reported by senior finance management, depending on whether the employee is training for a professional qualification, is already professionally qualified, or is some other type of finance function employee (Figure 2.3). Figure 2.3 Time allowed for training by type of training and category of employee
Type of employee and training
Key Training: PQ Other: In-house Qualified: CPD Qualified: In-house Training: In-house Other: External training Training: Other external Qualified: Other external
0 2 4 6 8 10
Employee who is training for professional qualification Employee who is professionally qualified Other finance function employee
Employees training for a professional qualification have the most time allowed for that preparation (nearly ten days), but receive comparatively little other training. Qualified employees are allowed broadly similar amounts of time for continuing professional development and in-house training (about seven days for each), while other finance personnel receive a high level of in-house training (seven days) but comparatively little other training.
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It is notable finally that despite the reported usefulness of external training that we saw in Table 2.1, this form of training is allowed the least amount of time for all three categories of employee, cost again being the key factor. It would appear therefore that finance and human resources management need to monitor the return on investment in training and development closely. Limiting the most effective training or education activities may not be the most efficient strategy in terms of costs and benefits in the medium to long-term, since this entails limiting the skill-set of the finance function and possibly negatively affecting the retention of key people. In addition there is a small disparity between the time allowed for training and development as reported by senior finance management and the actual time received as reported by non-senior finance professionals. This again appears to highlight some inconsistency between training and development in principle and in practice and again represents an action call to employers. But while both employers and employees are generally in agreement on the need for training and development, it cannot be left to the employer alone to drive this forward. Our consultations illustrate that individuals must also take responsibility for their own development. Some are accused of not making time for development or simply of not having the will of not being bothered. As the shift in skills requirements continues, finance professionals need to take a much more proactive approach to identifying skills gaps and areas for their development. They then need to work with their employers to find out what support is provided by their organisations, setting realistic and achievable development plans for action. The increase in skills required is not restricted to advisory or senior roles, as we saw in section 1. As it affects all role types in the finance function the need for proactive management of their own training and development will affect most individual finance professionals.
EU/EEA excluding UK
Asia
UK
NAmerica
ANZ
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It is particularly notable that training for professional qualifications on average is the most supported education activity by employers throughout most countries. This reinforces the need for specialist technical qualifications in the finance function that we discussed in the previous section, but we see that the levels of support vary significantly, for instance six days on average are allowed for training for a professional qualification in the UK and Australia/New Zealand, falling to five days in the rest of the EU, four days in Asia and only one day in the USA.
1100
101250
251500
5012,500
2,50110,000
Over 10,000
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Figure 2.6 Time allowed for training by sector (reported by non-senior finance professionals)
Average number of days allowed
Key 5 CPD Other: External training 4 In-house training Professional qualification 3
Manufacturing
Other services
Public sector
Sector
2.8 Actions
There are some key conclusions and actions that may be drawn from the analysis above: Learning through doing and knowledge sharing are the most useful development activities, yet are among the activities that are least often applied and used, cost and time being cited as the primary barriers. The real return on investment is being missed by the many organisations that choose simpler traditional activities and avoid those that are most useful and provide most return. Real value may be missed, and in the long term this approach becomes more expensive and time-consuming, and brings less value to the organisation or individual. Professionals highly value their finance qualification but sometimes this is the training and development area that is least supported by organisations. A large proportion of organisations choose to recruit the talent and skills-set rather than develop and train from within. As skill-set requirements shift, organisations need to ensure that they have adequate plans to upskill existing staff. More time is allowed in principle for training than is actually experienced in practice, suggesting that the planning and execution of the organisations training and development strategy (beyond learning through doing) throw up problems which mean that the strategy is not always carried through in full. Constant monitoring, review and engagement are recommended. The research points to cost considerations and time restraints as key drivers of the perceived gaps in training support, but there are also possible limitations on the ability to communicate and cascade the availability and support of training opportunities throughout the organisation. Some employees are simply not aware of the opportunities their employer has available. Employers need to work harder and better at this dissemination. Individuals need to take responsibility for their own development. During our consultations senior finance management clearly see the need for individuals to be proactive, to make time for training and to be the drivers in the planning and implementation of activities for their development. Our consultations point to the need for the CFO and also the CEO to engage with and drive the training and development strategy, focusing on organisational and individual needs and using the whole mix of training and development tools to ensure full return on investment and to drive the function in providing value.
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3
36 From ledgers to leadership a journey through the finance function
3.1 Introduction
The Centre of Excellence at the University of Bath explored at length the changing nature of the finance function, especially its ongoing transformation into a business partner and value creator through its first report Finance Transformation: the evolution to value creation. The evolutionary but fundamental nature of this change would suggest that not only the competencies, skills and training of finance personnel but also how they are recruited and retained would be greatly affected. In this final section therefore, we shall look at issues surrounding recruitment of the next generation of finance professionals and, as importantly, at how to retain the best of the current generation.
It is clear that the individuals personal characteristics rather than their experience or education dominate other criteria. This does not mean that personal characteristics alone are sufficient to merit recruitment: the most attractive of potential recruits in terms of their intelligence, compatibility with other personnel etc. would still not be suitable without some relevant experience or education. Instead the ranking of the criteria should be seen in terms of their relative importance and usefulness in helping to distinguish between individuals who in most ways are equally good candidates. Possession of a professional finance qualification is more important than work experience, university degrees or masters degrees as a criterion for selection. This trend continues to be highlighted here, as it has been throughout the research in both the responses to our global survey and the interviews and consultations carried out. What is interesting is the apparent gap between this clear preference for a professional qualification and the trends we saw back in section 2.3. Here we reported that non-senior finance professionals rate external education, such as professional qualifications, as being the most useful training and development method but report it as being the least widely experienced in practice. This would indicate employers having a preference for recruiting already qualified staff and therefore limiting the need to make support available for such qualifications and training in post.
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Furthermore it is worth noting that of the organisations which claim they do not provide support for training and development, over 30% give the rationale that they already recruit professionally qualified finance people supporting the importance of the criterion at recruitment time. This suggests that these organisations do so with the view that no further development or training is required. We already know that the needs of organisations and the demands on the finance function change, affecting the skills and competencies that its staff requires. The implication is that relying only on recruiting in technical talent is a risky approach. Work experience gained outside the organisation is preferred to that obtained within it. Internally gained experience might be perceived as making the individual better suited to progress within that organisation since they are aware of institutional routines, organisational culture etc., but there is a perceived advantage to importing and buying in skills into the organisation since the external recruit embodies the lessons gained from experience in other organisations. Figure 3.1 Importance of recruitment criteria
Importance
3
Personal characteristics
Professional qualification
Businessrelevant degree
Any degree
Postgraduate
Recruitment criteria
Personal characteristics, experience and a professional qualification are all substantially more important in recruiting future leaders than all university degrees. It is striking that degree level education is seen as relatively unimportant, and though business relevant degrees are preferable to non-relevant degrees, it is even more surprising that a non-relevant degree (such as philosophy, say, or geography) is rated as more important than an MBA. Consultations show us that the ability to train undergraduates in a professional qualification is the key factor here. Post-graduates such as MBA holders, it appears, are less likely to have the technical skills required and may also be less likely to continue to study for the professional qualification in finance that organisations actually need. As such, there seems to be no widespread demand for finance professionals to have MBAs, nor for this qualification to be treated as a substitute for conventional professional qualifications in finance as is often touted. A possible reason for the reluctance to change in this way was encapsulated by a participant in one of our stakeholder consultations. financial MBAs instead of accountants? It wont work, Ive seen it. As soon as an MBA arrives all theyre interested in is taking over the world you cant get them to concentrate on the detail of finance. Finance Director of MNC subsidiary
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An organisations geographical location has often been assumed to make a difference in terms of how recruitment criteria are rated and thus on how career paths for finance professionals vary around the world. For instance there has long been a perception of a continental European tradition whereby individuals enter companies direct from education and receive training in accounting and finance from the employer, contrasting with the professional qualification route favoured in Anglo-Saxon countries. While we might expect these traditions to lead to different preferences in respect of professional qualification depending on location, in fact this does not appear to be the case (Figure 3.2). Instead there is remarkable consistency around the world, with the only significant differences in ranking being: in the EU and Asia, where post-graduate degrees are rated more highly than first degrees in North America, where external work experience is rated more highly than a professional qualification in the UK, where business relevant degrees are rated lower than non-relevant degrees in Australasia, where internal work experience is rated lower than a business relevant degree. Figure 3.2 Importance of recruitment criteria across regions
Criteria importance
Key Critical Personal characteristics Professional qualification External work experience Important Internal work experience Business-relevant degree Any degree Postgraduate
Not important
EU/EEA excluding UK
Asia
UK
NAmerica
ANZ
A professional qualification at the point of recruitment is rated as between important and critical by organisations in all countries except Japan, where it is seen as either not important or not relevant (Figure 3.3). The next lowest ranking for a professional qualification is in the US. This is backed up by finance professionals themselves; a clear majority feels that a professional qualification is essential to their role in all countries except Japan and the US. Japan does not seem to have a history or background in specialist professional education, and the US finance qualification seems to be acknowledged to be more focused on the accountant in practice with a strong tax and audit coverage, so it is seen as less useful for finance professionals in business. Overall, however, finance professionals with specialist finance/accounting duties and also those in senior finance positions rate a professional qualification as being more critical than those in more general roles and in more junior positions.
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Figure 3.3 Proportions stating that a professional qualification is essential to their role by country
Percent qualification essential
100%
80%
60%
40%
20%
0%
Japan
France
Sri Lanka
Germany
South Africa
Australia
Ireland
United States
India
Thus when planning to recruit someone who is expected to attain a senior position as a future leader, or who will continue in a specialist role, personal characteristics and a professional qualification are the top criteria that help an organisation to distinguish the best candidate, followed by quality of work experience.
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Being a good business adviser is not about what qualification youve got but what youll do even senior people can be well-qualified but poor managers and not committed to the job Where theres a choice, audit based qualifications are better for those involved in financial reporting as theyre more used to investigating numbers; for the business advisory role, CIMA people are better suited. Finance Director of UK public sector organisation .I dont care about which qualification, Ive recruited as many ACCA and CIMA people as chartereds. However, the person matters more than their qualification. Divisional FD of large, international SME (industrial services) Qualification is important for teaching a way of thinking as much as technical skills. Theres a strong preference for CIMA as management accounting is where skills are really needed in [our organisation]. Director responsible for development of finance professionals for a major UK government department
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Individuals who wish to enter finance need to equip themselves with a professional finance education, and it is clear that finance qualifications which also equip them with business management skills help them to excel within finance. Furthermore, both new recruits and those already in finance who want to progress into senior roles should invest in getting exposure to business and commercial experience and training to improve their skill-sets. The potential for a shift in preferences towards recruiting business people into the finance function could be something to track, especially at the top levels, and this is recognised by a limited number of senior people with regard to some roles. However, the majority concur that it is the technical skills that will remain in demand.
Its mainly accountants who fill the accounting and finance positions but in the future this could swing to business professionals accountants need to learn new skills like negotiation. At the top level [in each country in the organisation] about a third are not accountants. Director in finance function transformation team at a major MNC (FMCG) Lack of business acumen is still a problem. Were having to expose finance professionals to business situations [so they can learn], they arent joining with that acumen. Director in finance function transformation team at a major MNC (FMCG) Weve got enough people who can do the numbers and put the reports together but we havent got enough people who can put together a really commercial bid and negotiate with clients accountants used to dealing with the outside world and having negotiating skills are a scarce resource. Divisional FD of large, international SME (industrial services)
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60%
50%
40%
30%
20%
10%
Salary increase
Restricted promotion
Career change
Personal reasons
Lack of development
Career change is the third most frequent motivation for high calibre finance professionals to move on, and this factor is particularly pronounced in Japan and the rest of Asia, an area where we have seen training and development support is weaker. This could point to a certain stagnation in the finance professionals progression, thus prompting a change in direction. It appears therefore that training and development problems are not currently a significant issue in terms of retention of good staff. In part this is because organisations, medium and large ones in particular, have a relatively good track record of using appropriate retention strategies beyond simply raising salaries to match external offers, including: personal development planning formal talent management, for example structured training programmes employee engagement initiatives such as flexible working exit management strategies, for instance interviews/surveys of leavers. Personal development planning (PDP) is the most popular retention strategy in all sectors while formal talent management is relatively infrequently employed (Figure 3.5). However, none of the strategies is used by a majority of organisations, formal talent management is used by only 30% and alarmingly 25% of organisations have no retention strategies at all, an area for immediate action.
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50%
40%
30%
20%
10%
Exit management
Employee engagement
Talent management
Retention strategies
Retention strategies are used to different degrees around the world; with relatively high usage in the UK and Australasia, and relatively low levels of usage in the rest of the EU and North America (for instance 60% of French organisations have no retention strategies at all). Larger organisations make much greater use of retention strategies of all types, with only exit management strategies becoming less popular as size increases (Figure 3.6). Figure 3.6 Employee retention strategies by size
Proportion citing
Key 70% None of the above Talent management 60% Employee engagement Exit management 50% PDP
40%
30%
20%
10%
1100
101250
251500
5012,500
2,50110,000
over 10,000
44
Thus finance professionals generally do not appear to be so dissatisfied with their opportunities for personal career development that they leave their organisations. Where there are pressures arising from the changing role of the finance function and the individual finance professional, these have largely been dealt with by organisations internally via formal retention strategies in medium to large organisations and in certain parts of the world. We have seen in previous sections the changing need of organisations for a mix of technical and business skills, and we have also noted through our consultations the scarcity of people with this balance of skills and/or experience. This points to a proportion of existing finance people that do not have the required mix, in particular the business skills that will be more and more in demand. There is a risk that without personal will and the support of the organisation, through training and exposure to business situations, these individuals will become less fit for purpose, and recruitment and retention will in fact become even more difficult for both employers and finance professionals themselves.
3.6 Actions
Possible actions to note from the research and consultation for organisations: To aid in candidate selection, when planning to recruit someone expected to go on to a senior position or who will continue in specialist roles, personal characteristics and a professional qualification are the top criteria to look for, followed by quality of work experience. As for which qualification should be sought, while there is a preference for professional training in finance there is no clear preference for any particular professional qualification from our global survey. However, our consultations point to audit based ones being preferred for finance and regulatory roles and the CIMA qualification being preferred for the management accounting and strategic and advisory role types. Post-graduates such as MBA holders, may be perceived to be less likely to have the technical skills required and may be less likely to continue to study for the finance professional qualification that organisations seem to require. Candidates and existing staff with a balance of technical and business competency are still a rare resource, so organisations need to ensure that staff with a mix of these skills and experience are identified and engaged with, and retention strategies for them are applied. In particular the organisations should focus on competitive salary levels, provision of opportunities for career development, and training and development. For individuals working in finance, or wishing to get into finance, this area of research is consistent and supports the actions that we have seen throughout the report, namely: Choosing a professional qualification in line with your aspirations is a good place to start. Those looking at the financial role and at specialist finance/accounting duties could consider audit based qualifications; for those wishing to follow the strategic and advisory and management accounting roles, the CIMA qualification may be better suited. We see that experience is also important, as is continuous development. For those with ambitions of leadership within their career plan it is vital to gain further skills, in particular business and commercial ones. The skills within the strategic and advisory and management accounting role types are more aligned with those needed for seniority and leadership, so such roles should be carefully considered. To remain fit for purpose in the wave of finance transformation, those qualified and working in finance regardless of their role need to take proactive steps in ensuring that technical skills are maintained while focusing on development of softer business competencies. This is essential if they are to have a competitive edge at the point of promotion and new job selection.
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4
48 From ledgers to leadership a journey through the finance function
4.1 Conclusions
There is plenty of evidence that technical accounting skills are the core foundation of the finance function and the finance professional, but there is a prominent shift in the need for business and commercial skills alongside them. Finance professionals are keen to develop their business competency in line with their technical competency, both to meet the challenges of business partnering but also more generally to fulfil all the needs of the modern organisation. While the spirit may be willing however it appears the flesh is weak, with organisations on the whole giving out mixed messages about their commitment to training in principle and in practice, and not fully focusing on the real return on investment from these learning and development activities. This is disappointing for recruits and may mean that the full potential of employees is not being realised. Both elements of competency (knowledge and skill) being required to undertake an activity or role highlight the increasing importance of more business oriented roles in finance. The right mix of skills however is even more important as there is a strong message that business skills, particularly in communication and problem solving, are considered more and more vital across the board and across all roles in finance. Nevertheless, there is variation within and among organisations, and when considering how to deploy resources they need to be sensitive to the need to build the right pool of finance competencies. The mix of skills demanded depends on: The role of the individual those spending more time on strategic and advisory and management accounting activities, or working in business facing roles (whether from within the finance function or integrated within business units) need a greater emphasis on business skills and the interplay of technical and business competencies. The seniority of the individual business skills become more critical as more senior roles are undertaken. The size of the organisation with increasing size there is a tendency for business skill requirements to become more dominant, reflecting the increasing complexity of the business environment, the need for communication and the potential for outsourcing more routine accounting activities. Consequently, organisations should target their training and development activities, not by cost or time allocated, but where they will deliver most value for money or value for time in light of these demands. In terms of maximising value, the support organisations provided and the methods they adopt for training and development should be sensitive to some key issues: Learning through doing was clearly seen as the most useful approach and organisations should consider both whether their current approach automatically or routinely integrates this development method, and whether changes in organisational structure may constrain opportunities for development. For example, if accounting processes are outsourced it may nevertheless be seen as critical that future finance managers have experience of how they are performed, so getting such experience may require seeking secondment to the outsource supplier for a short period. The importance of standardising and globalising ideas and best practice was clear, particularly for larger organisations, but the opportunity of achieving this knowledge sharing through information technology (which can be a cheaper and faster method than running internal courses) seems not yet to have been fully taken up. There is scope for much wider adoption of such methods. A policy of organisational support for professional qualification is widespread, being justified by both the importance of qualification to the roles of the individuals in our sample and by the fact it is one of the most important recruitment criteria. Senior finance personnel also saw the CPD that follows qualification as important. It is only post-qualification that the individual can tailor their professional development to best meet the needs of their organisation and their chosen career path. Organisations should therefore support the individual in CPD activities but ensure the activities are meeting both the individuals and the organisations needs.
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Developing future finance leaders involves all the above approaches but it is recognised that there are limits to what can be developed in the individual by formal training and development processes these will be of limited success unless the organisation also identifies individuals with the appropriate personal characteristics, particularly in terms of their leadership, interpersonal and communication skills, to be developed towards that goal. Building on the results of this first research cycle, we see two other key issues for our continued and future research. First, the concept of the finance function as a portfolio of talents suggests an important line of research aimed at defining best practice in constructing the portfolio most suited to the organisations needs clearly an important issue for management. Secondly, research needs to be directed towards the likely trajectory of future developments. The first research cycle has necessarily concentrated on the current position and recent change and transformation, but whatever further change in the finance function is in prospect requires investigation, especially in the context of recent developments in the economic environment, the repercussions of which are likely to be felt for many years to come.
4.4 About the Centre of Excellence at the University of Bath School of Management
The CIMA Centre of Excellence at the University of Bath School of Management is undertaking a five year programme of research into the changing nature of the finance function and its implications for finance professionals. Its Director is Dr Philip Cooper, a Senior Lecturer in Accounting in the School. He is a chartered accountant and worked for 15 years in the City before returning to academia.
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5. Research methodology
The research on which this report is based involved both extensive stakeholder consultations and also a large-scale international survey. The consultations informed the design of the survey which was employed to acquire data on the current position in practice across a full range of organisations globally. It was conducted through a web-based self-administration format over the period October 2008 February 2009. Views were canvassed from individuals outside the finance function as well as those within it. To accommodate the differing perspectives of respondents, particularly as regards their role within/outside the finance function and seniority, and to target questions appropriately the respondents path through the questionnaire was structured according to previous answers. The survey was predominantly carried out in English but translated versions were also used for respondents in Japan, France and Germany. A total of 4,567 usable responses were generated in the survey and a summary of the characteristics of respondents and their organisations is given below. Survey sample characteristics Table A1.1 Finance specialism Duties General finance/accounting Treasury/risk management Tax Internal audit Specialist finance/accounting Finance/accounting support of operating units Operations Planning/strategy Project management Sales/marketing Purchasing/procurement Human resources Information technology General management Head office/central administration Other (e.g. academic, M&A) Other functions/units Consulting for other organisations Total Finance specialism Total 1,540 103 102 97 302 1,071 242 304 141 119 44 23 88 321 184 32 1,498 143 4,554
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Research methodology
418
33
400
3 64
1,03
960
1,5
20
678
75
55 7
1,726
391
Total = 4,567 Senior non-finance (CEO, director etc.) Senior finance (CFO, finance director, head/chief of accounting/finance) Financial controller/senior manager Accountant/management accountant Other finance professionals Other
Total = 4,567 1-100 101-250 251-500 501-2,500 2,501-10,000 Over 10,000 Not disclosed
56
611
561
86
1
48 5
2,334
215
38 8
56 3
539
603
0 65
269
Total = 4,567 Australia, New Zealand Asia Europe (excluding UK) Middle East, Africa North America UK Other
Total = 4,567 Manufacturing Utilities, resources, construction Trade, transportation, storage Information and communication Financial services Professional and consulting services Other services Public sector Other
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Table A1.6 Size number of employees within and outside respondents country 1 100 Australia New Zealand ANZ Hong Kong India Japan Malaysia Singapore Sri Lanka Other (11 countries) Asia Caribbean (4 countries) France Germany Netherlands Switzerland Other (12 countries) EU/EEA Europe, other (5 countries) Ireland South Africa UAE Other (28 countries) MEA Canada United States N. America United Kingdom Regional/International Missing data Total 21 9 30 7 62 92 25 8 16 14 224 9 75 64 2 5 10 156 4 77 16 11 30 57 11 329 340 621 0 1,518 101 250 17 6 23 6 32 8 22 7 11 5 91 2 22 14 0 0 1 37 0 39 10 6 17 33 5 62 67 263 1 556 251 500 14 2 16 2 19 10 10 4 10 3 58 1 5 20 2 3 3 33 2 27 2 1 19 22 3 42 45 183 4 391 501 2,500 26 9 35 3 31 17 17 4 15 6 93 2 14 24 2 5 8 53 2 45 15 6 18 39 11 62 73 409 2 753 2,501 10,000 20 5 25 0 13 6 12 3 7 9 50 0 15 18 3 4 9 49 2 21 18 5 17 40 5 50 55 434 2 678 Over 10,000 13 1 14 4 16 10 2 2 6 4 44 1 22 25 2 2 1 52 1 11 13 4 7 24 6 64 70 424 2 643 Total 111 32 143 22 173 143 88 28 65 41 560 15 153 165 11 19 32 380 11 220 74 33 108 215 41 609 650 2,334 11 4,539 28 4,567
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2010 CIMA All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, photocopying or otherwise without the prior written permission of the copyright owner. The opinions expressed in the publication are those of the individuals and not necessarily those of CIMA. While every effort has been made to ensure the accuracy of the publication, CIMA cannot accept responsibility for errors or omissions.
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