As part of our series exploring the trends most likely to shape the profession over the next decade, we look at the impact on strategic planning and performance management
This article was first published in the October 2016 international edition of Accounting and Businessmagazine.
Before any organisation can achieve its vision, it needs a clear strategy and defined metrics to measure its performance. Strategic planning and performance management are therefore vital. Professional accountants play key roles in these areas, including implementing performance management systems, evaluating an entity’s strategic position and applying change management solutions. Political and economic volatility, globalisation and new business models and processes enabled by digital technologies are creating an increasingly fast-paced business environment. Organisations and the professional accountants working in them therefore need to be agile, flexible and future oriented, according to ACCA’s research report, Professional accountants – the future, which draws on extensive feedback from ACCA members gained through workshops around the world.
Responding to change
CFOs are already seen by ACCA members as becoming more proactive, acting as leaders and agents of change. They are thinking and acting more strategically, looking beyond the finance function and the organisation, taking account of the wider business environment. They are also building wide-ranging relationships inside and outside their organisations as they monitor emerging trends and develop strategic plans.
The enabling and decision-making support role of professional accountants is also evolving. Alongside backward-looking internal accounting metrics, product-profitability analysis and periodic financial reporting, there is growing demand for information to support smarter decision-making. Professional accountants need to analyse more strategic performance indicators and evaluate extensive external information including cost trends, market share, competitors, suppliers and ‘big data’. They need to provide more forward-looking information and almost real-time insights.
Digital technologies are having an impact – as enablers and liberators – but they are not without risk. Many workshop participants expect more transactions and more complex business processes to be automated, replacing entire tiers of lower and middle management. Professional accountants need to assess emerging technologies for their potential business impact.
Professional accountants must take an outward-looking perspective that extends beyond numbers and a holistic view that goes beyond the organisation. Playing a strategic role increasingly requires at least a basic knowledge of non-financial areas such as brand management and marketing, for example. Workshop participants think that professional accountants need to explore opportunities for synergies and strategic alliances with organisations in other business sectors. They also need to think innovatively about exploiting technology for process improvement.
Changing demographics, such as the growth in part-time knowledge workers and multi-generational workforces, will also have an impact. The evolving environment will create specific challenges for the traditional models used for training and development. Outsourcing to offshore locations will result in fewer opportunities for newly qualified accountants in most developed countries, while increased automation will limit opportunities in mid-tier roles. Professional accountants will need to find new ways to gain the breadth of experience and expertise they need to support career progression.
Changing finance models, such as the growth of outsourcing and offshoring, are also increasing the need for professional accountants to develop new management and relationship skills.
Planning for action
Participants in ACCA’s global workshops see finance being transformed by the shift from backward-looking financial analysis to more holistic and forward-looking planning, forecasting and performance management. As boundaries between analysis, decision support and decision-making become blurred, so professional accountants need to become more involved in taking decisions themselves. Workshop participants therefore believe that professional accountants need competencies that enable them to contribute to broader business conversations.
They need to become more proactive, partnering with the business and developing and managing relationships with a broad range of stakeholders. Professional accountants will need to be able to build alliances with others, present their arguments in a compelling way and deal constructively with opposition and confrontation.
Success for such professional accountants will also depend on their ability to follow developments in the wider business environment and understand emerging trends in areas such as culture, demographics, politics, law, international relations and technology. They will need a sound knowledge of digital technologies and how these could impact on business strategy, business models, delivery mechanisms, supply chains and customers.
Strategic planning and performance management roles will require professional accountants to understand the importance of human resource management, as well as broader day-to-day resource management issues around internal finance, budgets, capital investment and people. They will need capability in strategic management accounting, including expertise in creating forward-looking models to help to improve resource management and decision-making. Data analysis and project management skills will also be vital.
Alongside the top 10 competencies, workshop participants identified additional skills and attributes that professional accountants in strategic planning and performance management roles will need to develop over the next five to 10 years. These include the ability to take a more entrepreneurial approach to risk and its management and to understand environmental regulations, sustainability and integrated reporting.
‘Accountants should not sit and wait. They should lead the change.’
Roman Fink FCCA, CFO, ČSOB Penzijní společnost, Czech Republic
‘You need to be business savvy and analytical. You need to be able to translate data into information, which will enable decision-making in a timely manner.’
Lukman Bin Ibrahim FCCA, former deputy CEO, Proton Holdings, Malaysia
‘Accountants need to be less focused on what happened last year, what happened last month, and more aware of the strategic position of the company, where it is now, where it wants to be in the future – and not just the end of the year.’
Helen De Spretter FCCA, DEFRA, UK
‘By 2020 everything will be about technology. As finance professionals, we will need to have a broader range of IT skills.’
Edem Kugbey FCCA, head of internal audit, Food and Drugs Authority, Ghana
Top 10 competencies in strategic planning and performance management
- Contribute to the broader business conversation
- Follow developments in the wider business environment
- Corporate strategy
- Holistic performance management
- Knowledge of digital technologies
- Strategic management accounting
- Strategic human resources
- Data analysis
- Day-to-day resource management
- Project management