Finance transformation roles pathways to cfo

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Accountants for Business

Finance transformation roles: pathways to CFO

FINANCE TRANSFORMATION ROLES: PATHWAYS TO CFO 1

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.

Founded in 1904, ACCA has consistently held unique core values: opportunity, diversity, innovation, integrity and accountability. We believe that accountants bring value to economies in all stages of development. We aim to develop capacity in the profession and encourage the adoption of consistent 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 work to open up the profession to people of all backgrounds and remove artificial barriers to entry, ensuring that our qualifications and their delivery meet the diverse needs of trainee professionals and their employers.

We support our 162,000 members and 428,000 students in 173 countries, helping them to develop successful careers in accounting and business, with the skills needed by employers. We work through a network of over 89 offices and centres and more than 8,500 Approved Employers worldwide, who provide high standards of employee learning and development.

? The Association of Chartered Certified Accountants, October 2014

About Accountants for Business

ACCA's global programme, Accountants for Business, champions the role of finance professionals in all sectors as true value creators in organisations. Through people, process and professionalism, accountants are central to great performance. They shape business strategy through a deep understanding of financial drivers and seek opportunities for long-term success. By focusing on the critical role professional accountants play in economies at all stages of development around the world, and in diverse organisations, ACCA seeks to highlight and enhance the role the accountancy profession plays in supporting a healthy global economy.

ACCA's smart finance function campaign ACCA's smart finance function campaign showcases the good practices, challenges and opportunities corporate finance functions face. It explores how the quality of finance leadership, the adoption of breakthrough technologies, better people practices, and innovative thinking can transform the finance function.

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Contents

Introduction

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1. Path to CFO through shared service and outsourcing ? really?

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2. Career catalyst or the graveyard of ambition?

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3. Out of sight, out of mind?

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4. BPO as a source of CFO talent?

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5. Timing is everything

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6. One career door closes, another one opens

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7. Final thoughts

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About the authors

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The ACCA finance transformation, shared service and outsourcing advisory board 13

This report asks a simple question: are finance shared service and transformation roles valuable in the career path to becoming a CFO?

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Introduction

Can all pathways, particularly those through a corporate finance shared service role, lead to the position of CFO? ACCA's previous reports on finance transformation have dealt with models, technology, talent, efficiency, change and effectiveness. Yet, for finance leaders, what they do, and what it means for their career, especially if they aspire to a CFO position, is just as important. Is shared service and outsourcing as a discipline, as an assignment within the current financial value chain, of any value to careers? Does it attract the best and brightest finance professionals who want to be CFOs? Or are transformation roles a graveyard for those whom the organisation believes add value, but who are not expected to achieve the top finance job. It is time to be honest, brutal and very discerning about the benefits ? and challenges ? of following a career route through finance shared service and outsourcing.

Right now, a so-called urban legend positions finance transformation roles as a dead end for those who want eventually to occupy the top finance seat at the executive table. Perhaps that is because of the relative immaturity of the shared service finance model or perhaps finance transformers just have not had time to reach the top; perhaps it is because organisations need to amend their view of the capabilities now required to balance agility and risk, growth and compliance in increasingly complex market contexts. Or perhaps it stems from a lack of imagination, resulting in leadership development constructs that follow the more traditional pathway through controllership roles.

Can the organisation afford to relegate finance transformation professionals to a career graveyard in the face of rapid changes in markets, globalisation, technology, and management? Are the

skills that leaders pick up in finance transformation roles not similarly transformative for the organisation as a whole? Should the value ascribed to the skills and capabilities that shared service and outsourcing leaders bring to the table be reassessed?

Does finance career path myopia have a silver lining for those who take on transformation roles, creating a different, perhaps more exciting future for finance leaders? Does assignment to shared service and outsourcing roles open up new career pathways not previously available ? or at least not obvious ? benefiting both the individual and the organisation?

This report, informed by the ACCA finance transformation, shared service and outsourcing advisory board, looks into the pros and cons of taking on a finance transformation role.

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FINANCE TRANSFORMATION ROLES: PATHWAYS TO CFO

1. Path to CFO through shared service and outsourcing ? really?

Finance leaders on the ACCA finance transformation advisory board concur that the adoption of shared service and outsourcing models has inextricably changed the finance career trajectory. With over 80% of the Fortune 500 consolidating transactional finance processes in remote centres, the formerly vertical finance operations model has been upended. The traditional finance career equation has been disrupted.

Both organisational and personal benefits come from moving to finance shared service and outsourcing models. Organisations can standardise processes, reduce cost, and tap into the benefits that only scale and scope are able to provide. By moving offshore, finance services are able to access extensive new sources of talent and the finance organisation can potentially move up the value chain by freeing up management time and focusing on value-added roles such as business partnering, financial planning and analysis and strategy.

Similarly, there are some skills that finance professionals can hone only when finance moves to a consolidated model. Several capabilities ? managing remote and often cross-cultural teams, managing change, and developing a greater level of customer focus can be harnessed effectively through time served in many finance leadership delivery roles.

Nonetheless, the question remains: are finance shared service roles an obvious pathway to the CFO position?

Shared service operations ? and their leaders ? generally have value in the eyes of C-suite leadership. In fact, the ACCA advisory board believes that the vast majority of CFOs with successful shared service or outsourcing models would not go back to a vertical model. IBM's Sandy Khanna sums it by saying: `CFOs have embraced the fact that having an alternative service delivery model is really important for their own sanity'.

Yet are shared service functions a rich hunting ground for CFO material? The board attests that perhaps part of the problem is the relative lack of understanding of the skills finance professionals acquire by working in a shared service operation; perhaps it is because a higher value has traditionally

been placed on planning and reporting, and other typically retained finance activities. As Chris Gunning of Unisys says: `I think audit experience, compliance control, risk management, whether it's from one of your big four external firms or internally in the company can be more critical to the senior finance career path'.

Perhaps there is also a myopic view about where the pool of finance talent can actually be found. As Nigel Coffey of Pepsico puts it: `when it comes to selecting a CFO, I think the choice is a CFO who understands the numbers rather than who understands the back-office functions. There is snobbery in finance: the guys in the front of the house think they know the business; they think the guys in the back office don't really `get' the business. I would say that's a very imbalanced function because I think the guys in the back office often understand the business better than the guys in the front'.

Whatever the reason, it is apparent right now that there is often a dual career path for finance professionals ? a clear path to CFO through the so-called retained organisation with a distinctly different pathway through shared services.

`I think audit experience, compliance control, risk management, whether it's from one of your big four external firms or internally in the company can be more critical to the senior finance career path'.

CHRIS GUNNING, UNISYS

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2. Career catalyst or the graveyard of ambition?

Can time served in a finance shared service role enrich the finance career? Is it a viable option for country CFOs or those with aspirations for controllership? Could a finance career move into service delivery help develop new leadership qualities? Or is career ambition compromised by such a move?

Earlier in his career, PepsiCo's Nigel Coffey resisted a placement in the shared service organisation of the company where he then worked. `When I was asked to go into an shared service role, my first reaction was, "you must be joking". I called it the graveyard of ambition; there's no progression, no career. I said I'd give it two years contingent upon a guaranteed pathway back into the business. However, at the time I didn't understand the complexity and the nature of the challenge'.

With time served in a shared service role, finance professionals are able pick up skills that are difficult to attain in other finance roles. Julie Spillane from Accenture considers the CFO role as two sided, on the one hand focused on strategy and investor relations, and on the other a traditional finance operational leadership with greater internal focus. She sees time in a shared service role potentially beneficial for the latter. `When I think about shared service and

outsourcing experience I think it is extremely helpful for the CFO operational leadership role because you learn to be leaders of people, and how to organise and operate effectively'.

By its very nature, a shared service role can give access to the top CFO and can provide visibility for the person carrying out the role. Country CFOs, for example, who have spent time in a transformation arena may find that they suddenly have better access to the C-suite, more responsibility and vital global experience.

Country CFOs are not the only ones who could potentially benefit from a stint in a finance shared service role. Nigel Coffey succinctly confirms the value of a shared service rotation for ambitious controllers, saying that: `having some time in shared service is pretty essential if you're going to be a good financial controller because you need to understand those blocks that create the data that you're using'.

`I spent ten years as a country CFO and I never met or spoke to the global CFO. On my very first day in shared service I was presenting to the senior leadership team. As a shared service leader you get access to a much more senior layer in the organisation than you will ever get as an individual country CFO'.

NIGEL COFFEY, PEPSICO

Deloitte's Peter Moller goes further, stressing that time spent in a finance shared service operation could now be seen as essential for today's controller ? but not for the top CFO position.

The advisory board suggests that shared service experience alone will not make a finance transformation leader into a CFO. In fact the board is adamant that there must be a life before shared services, in more traditional finance roles. If you want to become CFO `you don't start off in shared services', declares Moller, `but you can use a position there to hone and supplement your finance skills'.

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FINANCE TRANSFORMATION ROLES: PATHWAYS TO CFO

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