The future CFO role. Preliminary research results from an ACCA

Transcription

1 The future CFO role. Preliminary research results from an ACCA and IMA study November 2014

2 This short excerpt provides preliminary results based on a survey of 1631 ACCA and IMA members in 2014 on the future of the CFO role.

3 The future of the CFO role We asked ACCA and IMA members around the world how they saw the role of the future CFO evolving. Their answers are a window on how the CFO function is responding to a changing world, irrespective of enterprise size, ownership structure, industry or geographies. In fact, this is a remarkably consistent story of a corporate function that continues to evolve to meet the changing needs of the enterprise, regardless of different demographics. So where is the CFO role heading? This short briefing presents some initial findings from our most recent research.

4 #1 Key point: Volatility and risk shape future The top influences impacting the CFO Role Economic volatility Risk challenges Technology and information Growing regulation Access to capital/funding 37% 33% 35% 30% 27% 31% 45% 43% 43% 41% 0% 10% 20% 30% 40% 50% Future Today External environment dominates CFO thinking. Volatility will continue to be a big challenge for finance chiefs. Challenges on growth and proliferation of risk will also dominate agenda in a future environment. Recognition of the growing importance of the technology agenda, and no let up expected on regulatory pressures.

5 #2 Key point: Strategy support is front and centre The priority for the CFO now and in the future. CFO helping formulate, validate and execute strategy as well as traditional finance support activities such as securing access to capital and investor relations activity. 95% of CFOs believe it is important for future CFOs to have core experience in financial and management accounting Pathways to finance leadership report ACCA and IMA 2013 Further pivot towards strategy support to support growth in a complex and volatile environment. How can finance chiefs ensure they do not lost sight of the stewardship or efficiency agenda? Strong governance of the enterprise remains essential.

6 #3 Key point: Value driver understanding is key Broader business knowledge needed by future CFOs Value drivers of the business Broader industry and industry trends Business risk landscape Technology and digitisation agenda for the business Business regulatory environment 27% 26% 37% 46% As the CFO leadership role pivots further towards supporting enterprise growth understanding the activities that drive value for the organisation is central. 71% Significant consistency to other ACCA and IMA studies. Understanding the activities that have most value on business value was also identified as the number 1 leadership priority for CFOs1 in improving finance business partnering practices. In practice, significant challenges remain on visibility of drivers and where finance resource is targeted, and metrics being reported on 2. Business knowledge needed reflects the influences impacting future role (see #1). 1 Financial Insight: challenges and opportunities Financial insight: challenges and opportunities 2014

7 #4 Key point: Technology seen as key enabler Finance technology: aspiration and reality? As more companies embrace digital and data insights provide competitive advantage, technology and information is seen as a key influence on the future CFO role (#1) and cited as a key knowledge areas (#5). Spreadsheets ERP Performance Reports Dashboard Management Predictive Analytics Value Use Scenario Analysis Previous ACCA research has questioned whether finance technology has been truly transformational for the CFO function to date? 3. CFOs report a difference between aspiration and current reality. Challenges reported 4 with multiple ERP, poor data and information quality, lack of sophisticated analytics tools, poor data classification, inflexible reporting and significant workarounds. 3 Is finance technology delivering on its promise ACCA Financial insight: challenges and opportunities ACCA and IMA 2014

8 #5 Key Point: CFO relationships continue to go commercial. Most important CFO relationships now and in the future CEO The board Business unit heads Investors Banks/creditors Audit committee Risk committee Regulators Chairman Customers 20% 15% 18% 22% 16% 20% 15% 13% 14% 13% 10% 8% 9% 8% 51% 50% 39% 39% Future 64% 75% 0% 20% 40% 60% 80% Now Focus on supporting enterprise growth means relationships most important to delivering strategy stand out. Evolving enterprise structures and changing C suite may lead to the emergence of higher priority c suite roles that future CFOs need to engage with (e.g. COO?). Customers are rated more important to the future CFO than some traditional relationships such as auditors or tax authorities. MANAGING A BREADTH OF STAKEHOLDERS IS A KEY SKILL AND IT APPLIES ACROSS THE BOARD, NOT JUST TO THE LARGE LISTED BUSINESSES. EVEN FUTURE CFOS SETTING UP START UPS WILL NEED TO BE ADEPT AT ENGAGING WITH DIFFERENT STAKEHOLDERS BECAUSE YOU ARE TRYING TO BUILD A BRAND, YOU NEED TO RAISE FUNDS, YOU NEED TO BE ABLE TO REMAIN AGILE AND SO ON. IT S AN ESSENTIAL SKILL FOR FUTURE CFOS TO MASTER UK CFO PATHWAYS TO FINANCE LEADERSHIP REPORT ACCA AND IMA 2014

9 Consistent priority skills identified regardless of enterprise size in terms of turnover or nature of ownership. Finance skills needed by business size (turnover) 60% Less than $5 million 50% $5 million to $9.9 million 40% $10 million to $14.9 million #6 Key point: CFO Talent equation evolves Most important finance skills needed by CFOs Talent equation for the CFO role continues to transition, orientated towards finance skills which support strategy delivery; less priority placed on specialised technical skills. 30% 20% 45% 38% 38% $15 million to $24.9 million 44% 10% 36% 35% 31% $25 million to $49.9 million Strategy formulation, validation and execution 54% Financial insight and analysis Financial planning Risk management Finance operations and transaction process improvement 20% 23% 0% 10% 20% 30% 40% 50% 60% 0% $50 million to $99.9 million Finance technology Management consulting External auditing Finance shared services / Global business services / Treasury function Tax function Business financing / funding / capital structures Financial controllership Risk management Investor relations Corporate finance / Mergers and acquisitions (M&A) / Financial insight & analysis Finance operations and transactional process Financial planning Strategy formulation, validation and execution Statutory reporting $100 million to $999 million $1 billion $25 billion More than $25 billion

10 Current data on most relevant finance skills is also highly consistent with previous research on skills needed by future CFOs in Data suggests an emphasis on a planned corporate approach to the talent pipeline is required. Development interventions most rated for future CFOs Broader management skills most prized in the future CFO as follows: Effective succession planning Exposure to coaching or mentoring practices Mobility to and from finance Strategic workforce planning Transparency of career paths for future CFOs 47% 46% 37% 34% 31% 0% 50% 5 Pathways to finance leadership report ACCA and IMA 2013 But changing finance delivery models and continued growth of shared services raise questions on which environment future CFOs will come from.

11 #7 Key point: Ethical and passionate finance leadership essential The behaviours most valued for future CFOs Truth, honesty, integrity Passion and commitment to the business Empowering the team, being prepared to Objectivity and Independence Confidence and being prepared to take risks 26% 42% 41% 47% 53% CFO function has a core responsibility to ensure appropriate stewardship across the business, and a healthy culture is a prerequisite of good governance and sound risk management. Recent ACCA 6 report suggests good behaviour helps protect value, and is essential to achieving sustainable growth. This data points to a CFO function that understands that the right behaviours are as essential as technical capacity and management capabilities. Data suggests finance chiefs need the right mind set. Previous research on finance business partnering 7 concluded that passion for the business and a desire to influence the commercial agenda of the enterprise are highly prized attributes. 6 Culture and channelling corporate behaviour, ACCA and the ESRC Financial Insight: Challenges and Opportunities 2014

12 #8 Key point: Size matters the future is a streamlined and technology driven CFO enterprise which is strategy focused Focus of future finance function The future risk focus of finance functions The finance department will be much more focused on broader business risks rather than finance risks in the future. Agree or disagree? Strongly agree 5 Agree 4 3 Disagree 2 Strongly disagree 0% 10% 20% 30% 40% 50% The future finance function will be focused primarily on strategy support rather than delivering standard finance activities. Agree or disagree? Strongly agree 5 Agree 4 3 Disagree 2 Strongly disagree 0% 10% 20% 30% 40% Level of automation in the future Many standard finance processes will be automated in the future. Agree or disagree? Strongly agree 5 Agree 4 3 Disagree 2 Strongly disagree 0% 10% 20% 30% 40% 50%

13 Demographics Revenue 6% 17% 13% 9% 20% 8% 8% 10% 9% Less than $5 million $5 million to $9.9 million $10 million to $14.9 million $15 million to $24.9 million $25 million to $49.9 million $50 million to $99.9 million $100 million to $999 million $1 billion $25 billion More than $25 billion The full report will be published in January 2015 Thank you to the ACCA and IMA members who completed this survey

14 About ACCA ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants. We aim to offer business relevant, first choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management. We support our 170,000 members and 436,000 students in 180 countries, helping them to develop successful careers in accounting and business, with the skills required by employers. We work through a network of 91 offices and centres and more than 8,500 Approved Employers worldwide, who provide high standards of employee learning and development. Through our public interest remit, we promote appropriate regulation of accounting and conduct relevant research to ensure accountancy continues to grow in reputation and influence. As the first global accountancy body entering into China, ACCA now has over 23,000 members and 48,000 students, with 8 offices in Beijing, Shanghai, Chengdu, Guangzhou, Shenzhen, Shenyang, Hong Kong SAR, and Macau SAR. Founded in 1904, ACCA has consistently held unique core values: opportunity, diversity, innovation, integrity and accountability. We believe that accounting professionals bring value to economies in all stages of development and seek to develop capacity in the profession and encourage the adoption of global standards. Our values are aligned to the needs of employers in all sectors and we ensure that through our qualifications, we prepare accountants for business. We seek to open up the profession to people of all backgrounds and remove artificial barriers, innovating our qualifications and delivery to meet the diverse needs of trainee professionals and their employers.

15 The information contained in this publication is provided for general purposes only. While every effort has been made to ensure that the information is accurate and up to date at the time of going to press, ACCA accepts no responsibility for any loss which may arise from information contained in this publication. No part of this publication may be reproduced, in any format, without prior written permission of ACCA. ACCA November 2014.