The finance department and finance specialist role are alive and kicking as a separate function with a distinct role in organisations, confounding expectations that they would both be integrated into the mainstream, according to a ground-breaking research paper ‘Finance Transformation: the evolution to value creation’ launched by CIMA (Chartered Institute of Management Accountants) today
The report is based on research by the CIMA Centre of Excellence at the University of Bath School of Management and reflects the informed opinions of over 4,500 finance professionals and senior management, both finance and non-finance, around the world, including 173 Indian respondents. While their views are aligned to high-profile reports that have argued outsourcing, IT developments and a shift towards “business partnering” would occur, they fly in the face of the notion that the finance role would lose its separate identity as a result.
When it comes to recruiting for the finance department it is striking to note the preference, in India and around the world, for a professional finance qualification over general postgraduate business qualifications.
In India, 74% of respondents thought that their finance function needed to change further to maximise its contribution. Despite the continued survival of finance as a distinct function, the research does show that collaboration and business partnering are gaining acceptance globally: finance functions increasingly want to focus on value creation, and in doing so balancing their traditional focus on cost efficiencies. This shift is often being achieved virtually with professionals working as business advisors and partners to better support the organisation through cross-functional projects and practices. It shows an evolution rather than a revolution in both the way finance and its professionals have seen their roles changing over the past decade. Changes to the finance function in Indian organisations over the last 10 years have tended to be centred more on business process re-engineering and increased product focus than in other countries and somewhat less on other internal processes and cost reduction than elsewhere.
Both finance professionals and their non-finance management colleagues see the value of maintaining the finance function and professionals as independent; both share concerns that fuller integration could compromise their objectivity and their capacity to uphold standards. A sentiment that may well have increased in light of the current crisis.
The research highlights that finance has evolved to include a portfolio of roles and skills – the need for roles in specialist finance, business partnering and even general transactional accounting is evident. At present, over 53%, the majority of Indian finance specialists, work supporting other operating units in their organisation or are directly working within other business units highlighting the focus in collaboration and support. The remaining professionals are found in either general finance or accounting roles or specialist areas such as tax. And senior management plan to continue recruiting finance-qualified, rather than general business, candidates. However accountants must recognise that finance is becoming a more customer-facing function with a growing emphasis on value creation, and an increased need for more general management skills and commercial acumen. Those that do not adapt may be the first casualties of this evolution.
Robert Jelly of CIMA says:
“It is significant that international businesses are looking for a new breed of finance professional, yet in the current climate they still see the need for finance professionals to maintain their independence. We need to ensure, through top quality training, that the finance profession in India and around the world is equipped to provide the value-creating skills that organisations are crying out for while at the same time maintaining the ethical capacity to oversee corporate governance. Tellingly, when it comes to recruiting for finance, post-graduate business degrees are rated beneath professional qualifications.”
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David Powell from AstraZeneca, Chair of the CIMA Centre of Excellence at the University of Bath School of Management, says:
“If the finance profession could be said to have a global strategy, then over the past decade that has been to simplify and reduce the cost of transaction processing and to re-invest the savings in value creating Business Partnering. Like any good strategy, it is important to have a feedback loop and this innovative research programme provides organisations with an opportunity to assess where they are on the journey.”
Notes to Editors
1. The Chartered Institute of Management Accountants, founded in 1919, is the world’s leading and largest professional body of Management Accountants, with 171,000 members and students operating in 165 countries, working at the heart of business. CIMA members and students work in industry, commerce and not-for-profit organisations. CIMA works closely with employers and sponsors leading-edge research, constantly updating its qualification, professional experience requirements and continuing professional development to ensure it remains the employers’ choice when recruiting financially-trained business leaders.
CIMA is committed to upholding the highest ethical and professional standards of members and students, and to maintaining public confidence in management accountancy. CIMA is proud to be the first professional accounting body to offer a truly global product in the fast-moving area of Islamic Finance.
According to independent research conducted by the University of Bath School of Management, CIMA’s syllabus and examination structure are the most relevant to the needs of business of all the accountancy bodies assessed. See the CIMA Difference report for further information at www.cimaglobal.com/thecimadifference. CIMA has been awarded Superbrand status in the UK for a third year in a row this year and for the first time in Sri Lanka.
For more information about CIMA, please visit www.cimaglobal.com.
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2. The School of Management has consistently achieved both top research and teaching ratings in the UK's Higher Education Funding Council for England (HEFCE) assessments. In the most recent Research Assessment Exercise (RAE 2008), the School was rated 5th in the UK. Bath is one of a select number of international business schools who has been accredited by EQUIS, the European Foundation for Management Development's (EFMD) quality inspectorate and its MBA programme has been accredited by the Association of MBAs (AMBA) since 1976.The School is ranked in the top UK business schools by The Times and The Guardian.
As a research-led institution, the centrality of research to teaching is an essential feature of all our programmes. The School offers a full range of programmes from undergraduate to postgraduate up to PhD level and post-experience programmes including the world-ranked Bath MBA. The School also provides tailored executive development programmes for middle and senior management.
The School of Management has a faculty of 90 teaching and research staff, including visiting academics, with a support team of around 70 managerial and administrative staff. Research income has averaged £2 million per annum. There are approximately 2,100 students in total on certificated programmes, comprising some 200 MBA students, 340 taught Master’s students, 180 full- and part- time research students, 400 Postgraduate Certificate students and over 1000 undergraduates following BSc degrees. The School also runs joint undergraduate programmes with Departments in the Faculties of Engineering and Design, Science, and European Studies and Modern Languages.
