The business world is experiencing an extraordinarily challenging period. The multiple pressures exerted on executives in terms of global competition, increasing regulation, climate change and growing expectations from consumers has resulted in a call for a new business paradigm. At the end of last year, the AICPA joined forces with the Chartered Institute of Management Accountants (CIMA) to find out how business leaders intend to tackle these issues over the next few years.
The results of this research were made public on Jan. 31 to mark the launch of the organizations’ joint Chartered Global Management Accountant (CGMA) designation. Published in the form of a report titled Rebooting Business: Valuing the Human Dimension, the findings reveal with great clarity why global business has never had such an urgent need for management accountants.
We all see and recognize that the world’s economy is going through a dramatic period of change, both economically and environmentally. Douglas Flint, group chairman of HSBC Holdings, hit the nail on the head when he declared in our report: “I don’t think we’ve ever been in a period, in our lifetimes at least, where things have been more uncertain.”
So what are the current challenges faced by global business leaders? Key trends captured in our CGMA survey of nearly 300 global CEOs show that investor demands have led to a short-term culture and fixation on the financials (see Exhibit 1). Respondents feel there is an urgent need to start considering the full value of their organization. This means they need the right people to measure and grow that value.
The main theme running through the research is the absolute need for the breed of financial professional that is able to offer a multidisciplinary approach combined with a much broader perspective. Businesses are facing increased levels of complexity, and the current environment means there is much less room for error. This means that the focus on the quality of the decisions taken by companies and all organizations is paramount and must be driven by the right people. CEOs are adamant that they need help in “connecting the dots” to give a clear picture of how the organization is running and where the opportunities are. This all points back to the core strengths of the management accountant.
Another key element covered by our joint research is that of transparency. CEOs are aware that being transparent offers a competitive advantage but find it difficult to draw the line between being open and handing across valuable information to competitors. Being transparent is a priority going forward, and skilled professionals who understand how organizations can act transparently and ethically are needed to harness the potential value.
What is the most critical theme to come out of our research? Senior business leaders agree that it is understanding and unlocking the value of the human dimension that is most critical to an organization’s success. James Singh, executive vice president and CFO for Nestle, put it succinctly: “We have to move beyond the financials. We have to move beyond the numbers. ... We must understand where the business is creating value, where it is destroying value.” Interestingly, CEOs feel that customers and employees are almost three times more important to shaping their future business agenda than the financial markets and twice as important as government and regulators.
Investing in the right talent is seen as critical to driving future growth for most of the global CEOs surveyed. But from the research I have outlined in this column, it is the kind of talent they are looking for that is most exciting. Business leaders need people with the crucial skills to succeed in these challenging times. There is an unmet need and opportunity for skilled people who can bridge the gap between business, strategy and finance. The AICPA and CIMA saw this need for a global quality standard of management accountancy— the CGMA—powered by prestigious accounting organizations with global reach.
If further proof is needed, 80% of CEOs in our survey indicated that a candidate with this designation would be more appealing to their organizations than those without it, and 75% said that they would want their existing finance employees to obtain it. As I said at the beginning of my column, global business has never had such an urgent need for management accountants. So, I believe that, in these difficult economic times, CGMAs will be recognized as the business professionals who will drive the economy forward.
Charles Tilley is chief executive of CIMA.
To comment on this article or to suggest an idea for another article, contact Kim Nilsen, executive editor, at firstname.lastname@example.org or 919-402-4048.
More from the JofA:
Find us on Facebook | Follow us on Twitter | View JofA videos