Archives For CFOs

Palma Michel

By Palma Michel, former CFO headhunter and founder of the Mindful Leadership program at BeYoCo 

As our modern worklife environment is dominated by information overload, 24/7 connectivity, multitasking and back-to-back meetings, the ability and space to focus has become a rare good for CFOs.

While you are reading this, chances are high that your attention will be distracted by an incoming email, a text, a colleague, a thought about the budget meeting or a ringing phone. Research also shows that you will most likely follow the distraction and find yourself caught up in something else other than finishing reading this post.

In his latest book Focus, Daniel Goleman states that while the link between attention and leadership excellence remains hidden most of the time, it ripples through almost everything we seek to accomplish.

Scientific research also shows that deep thinking requires sustained attention; the more distracted we are, the more superficial and trivial our reflections are likely to be. The ability to control our impulses and focus our attention has even been found to be a better predictor of academic success than IQ.

The 2010 Science article “A wandering mind is an unhappy mind states that nowadays our attention is wandering involuntarily 46.9 percent of our waking hours. Neuroscience also shows that multitasking is a myth and actually makes us less productive, more susceptible to errors and increases stress. The results of this have shown to be decreased performance, wellbeing and productivity.

So what can we do to improve our ability to focus?

Janice Marturano, former General Counsel of General Mills and Founder of the Mindful Leadership Institute, states that improving focus starts when we begin to notice more and more that our ability to sustain attention even when we have time and even when we intend to be focused is becoming more and more limited.

Harvard Professor Ellen Langer advises to become a first class noticer by bringing a finely honed attention to every situation and a constant infectious sense of fascination with what is going on in the moment. According to Langer, first class noticers also question assumptions, previously relied-upon rules of thumbs and averages.

For neuroscientist Richard Davidson, contemplative practices such as mindfulness meditation can strengthen areas in the brain that are responsible for our ability to focus. The way he explains it, we all know that if we engage in certain kinds of exercise on a regular basis we can strengthen certain muscle groups in predictable ways; strengthening neural systems is not fundamentally different, it’s basically replacing certain habits of mind with other habits.

If you are still reading, well done, you managed to stay attentive.

Practical tips for improving your ability to focus:

  • Manage your technology instead of being managed by it: turn off instant email and text notifications.
  • The next time you receive an invite to a meeting, pause for a moment and reflect if you really need to be there and create space in your diary.
  • Cultivate a finely tuned attention to every situation by constantly applying a “fresh perspective” through questioning, inquiry and probing what´s going on in the moment.
  • Start training your muscle of attention through concentration exercises or contemplative practices such as mindfulness meditation.

“The talent agenda is vital” says Richard Moat FCCA, Chief Financial Officer at Eircom Group and Chair of ACCA’s Accountants for Business Global Forum, in this latest video about the changing role of the CFO.

He adds: “To be an effective business partner, finance people have got to understand the commercial realities of the business – have to have a strong commercial link as well as experience in finance.”

Richard also talks about how managing cost, rather than growth, is a big priority for CFOs today.

The Changing Role of the CFO report explains how the financial and business landscape is changing: greater uncertainty for the global economy, fluctuating energy costs, rises in commodity prices, currency fluctuations, government deficits and cost cutting.

A return to old school?

accapr —  19 February 2013 — Leave a comment

tall building, modern CFO

By Jamie Lyon, head of corporate sector, ACCA

In a recent global survey of finance leaders by the ACCA and IMA (Institute of Management Accountants), there was one stand-out data point of significant interest on the priorities of CFOs. The data suggests an entire balance of different priorities, some of which are entirely consistent with the finance leaders growing mandate, particularly around business insight and risk, while others were more akin to their traditional finance responsibilities; cost management, control and working capital. This isn’t entirely a surprise and is consistent with soundings we get elsewhere across different markets. This is also a probable underlying story of re-adjustment post-crisis.

Pre-crisis, many CFOs were in deal-making mode and, over the last five years, merger and acquisition activity has generally been one-way traffic; it’s only now that we’re starting to see a potential surge. Pre-crisis too there was much talk of the role of finance as a business partner. The partnering agenda and drive for insight hasn’t gone away but there’s a sense post-crisis that most finance departments earn their spurs first and foremost on ensuring the business is effectively controlled, that it meets its regulatory requirements and that it protects and maximises the funds it creates. The crisis brought into focus sharply a refocus on the finance fundamentals, the importance of sufficient liquidity and strong financial control. Part of the rationale here also relates to the broader call out now for business practices that drive long-term sustainable performance.

To this end, CFOs have a tough job on their hands, balancing the need to develop financial strategies that are beneficial over the longer term, knowing most eyes continue to be on quarter-by-quarter results… and that’s no easy call for today’s finance leader.

Check out the full survey results here….

The big picture fades

aksaroya —  28 January 2013 — Leave a comment

By Romano Dzinkowski, economist and business journalist

2012 brought CFOs in the US so much to get to grips with on financial standards and mandatory auditor rotation that precious little headspace was left for strategic direction of business.

bridge

2012 was a tough year for US corporate accountants. With heads down, eyes focused on managing risk, and more often than not buried in compliance and tax issues, there was little room for strategic growth for the finance C-suite. While most CFOs would claim their role is to be a true business partner and a critical forward-looking thinker on the C-level team, last year was full of distractions.

First, the US Financial Accounting Standards Board (FASB) issued up to 15 new exposure drafts (13 at the time of this writing) and seven freshly linked new standards. CFOs were also anxiously awaiting the final revisions to several big memorandum of understanding projects with the FASB and International Accounting Standards Board (IASB) – on financial instruments, impairment, hedge accounting, accounting for macro hedging, leases, and, last but not least, revenue recognition. Many finance folks were busy figuring out exactly what the proposals would mean for them.

Also on the standards agenda, the FASB and newly formed Private Company Council (PCC) proposed a new, simplified framework for modifying US GAAP for private companies. There was much debate on whether what many are calling a two-GAAP system would ultimately be good for corporate America as a whole. That argument continues.

Also in 2012, the coming of International Financial Reporting Standards (IFRS) was again a source of confusion for public company CFOs who would have liked some direction one way or another. An announcement regarding adoption (or not) was expected at the end of 2011, and again in 2012…but none was forthcoming. This has angered many US finance chiefs who would like a heads-up for their planning cycle and have already started going down the IFRS adoption path.

Against the backdrop of a fairly heavy accounting standards agenda came the threat of mandatory auditor rotation in the US, which many CFOs say would make their life much more complicated, not to mention expensive. The Public Company Accounting Oversight Board is now deliberating on what, if anything, it is going to do about changing the rules on mandatory auditor rotation in 2013. Currently, most votes are in the nay camp.

At the same time, COSO – the Committee of Sponsoring Organisations of the Treadway Commission – released a significant update to its original risk management framework, which many SOX 404 filers have adopted. The new model has been criticised for being prohibitively large for all but the bigger public companies with the resources to adopt it. COSO is revising the document; the hope is that the new framework will be ready for CFOs to start implementing in 2013.

So what does it all foreshadow for the role of the CFO this year and beyond? More of the same, says a recent ACCA/IMA study released in October 2012. CFOs, predicts the study, will continue to be challenged by the tug of war between their role as senior strategist and business partner and the ever-increasing demands of greater compliance,control and regulatory complexity.

This post first appeared in Accounting and Business International, January 2013.

Dare to be different

aksaroya —  21 January 2013 — 2 Comments

Errol Oh is executive editor of the The Star

There’s something about the unique mindset of accountants that sets them apart from other professionals – and a slew of recent studies from the profession bear this out.

Graffiti wall

Are accountants a breed apart? Do you need to possess certain characteristics to have a successful career in accountancy? What really goes on in the head of an accountant?

The first two questions are academic; change the profession and you can ask the same about engineers, doctors, salespeople, lawyers, architects, teachers or, yes, even journalists. But there’s a simple way to address the third question, thanks to a number of studies and surveys that pick the brains of CFOs.

Trawl through the findings and you will discover nuggets of insight and uniqueness that suggest that the mindset of accountants indeed different in some aspects. Because CFOs generally understand economics and finance well, they are more sensitive to signs of trouble. It is no surprise, therefore, that the Bank of America Merrill Lynch 2012 CFO Outlook fall update reports that never before has so much weighted on the minds of corporate finance chiefs.

In past installments of this survey of financial executives from large US companies, when respondents are asked to rate their economic and financial concerns, usually only two or three issues have stood out. This time, a majority of CFOs express concern about seven factors – a fact the report puts down to ‘the complexity and frailty of the US economy, as well as uncertainty about the upcoming US elections’ (interviews took place in July 2012).

When the BDO ambition survey 2012 asked more than 1000 CFOs of mid-sized companies planning foreign expansion to name countries that were considered risky to invest in, Greece landed in the top three; Iran heads the list, with 21% identifying it as the most risky for inward investment. The surprise is that the same proportion of respondents – 18% – mentioned Greece and Iraq. Syria and Libya come next, with 17% and 12% respectively.

Meanwhile, in a benchmark analysis of the finance effectiveness of more than 200 companies, PwC highlights some numbers that illustrate accountants’ high expectations. According to the firm’s report, Putting your business on the front foot, 80% of participants say the accuracy of their forecasts is critical to the running of the business, but only 45% believe the outputs are reliable. Over 90% of participants believe they have established governance frameworks to manage risk, but less than a quarter are truly confident that key controls are operating effectively. It is also worth noting that in the PwC-ACCA finance effectiveness survey 2012, which covers companies in Singapore, the majority of participants indicated that there was room for improvement in their risk management and control frameworks.

Is there a difference between government accountants and those in the private sector? To figure this out, a good place to start is Grant Thornton’s report, Charting a course through stormy seas: state financial executives in 2012. When respondents were asked to assess the level of trust and teamwork in their agency, almost half of executives and over a quarter of online respondents selected ‘neutral’. The report describes that as ‘that middle choice that avoided an opinion’. It adds: ‘It is unpleasantly surprising that so many executives could not or would not assess the level of trust and teamwork in their states’.

This post first appeared in Accounting and Business China, January 2013