So what’s holding back finance executives from becoming higher-level strategists and business partners? The slew of corporate governance regulations that followed on the heels of scandals at WorldCom, Enron, Parmalat, and others has forced many companies to devote considerable time and energy to beefing up internal controls. That burden has naturally fallen on finance staff.
Sarbanes-Oxley in the United States is the most far-reaching of the new governance regimes, but the impact isn’t limited to companies in the United States. Requirements around the world, including in Asia, are also being tightened. And where they aren’t, many companies are voluntarily choosing to improve their corporate governance and risk management because they find that investors are demanding it.
In its survey, CFO Asia asked its readers to identify two items from a list of 27 finance tasks which were taking more time today compared to three years ago and which two were taking less time. Interestingly, the clear winner in terms of taking more time was the category “Implementing and improving controls” (see “Time Warp“).
Gautam Banerjee, chairman of PricewaterhouseCoopers in Singapore, believes that during the bull run of the 1990s many companies — along with their finance teams — began to ignore governance issues as they became swept up in the euphoria of growth, deal-making, and soaring stock prices. The period since, he says, has been a welcome time of “deferred maintenance” of internal controls and risk management.
At Cisco, Barker agrees. “During the 1990s, the pendulum between the extremes of being a financial policeman on the one hand and a business partner on the other had swung to one extreme,” he says. “In the years since, it has swung to the other extreme. Ultimately, I think it will settle somewhere in the middle.”
This shifting role of the CFO is illustrated clearly by the changing qualities that companies are looking for when hiring a new finance chief. Guy Day, managing director in Hong Kong for Ambition, a recruitment firm specializing in finance jobs, notes that the qualification of choice when hiring CFOs is no longer an MBA, but has reverted to being a CPA.
“There’s a certain irony,” observes Day, “that while corporate governance pressures are raising the profile of many CFOs within their firms, those pressures are also keeping them boxed into their traditional roles. It can be very frustrating.”
Time-savers in the Long Run
A second trend limiting the strategy ambitions of finance staff is the ongoing restructuring efforts of many companies. Enterprise resource planning (ERP) systems and shared service centers are hardly new, but lots of companies are still only in the early stages of rolling out these ideas, says Matthew Podrebarac, a Shanghai-based partner in consultancy Accenture. Asia, he adds, is a region characterized by “hyper-growth”, so the need to streamline back-office processes in order to provide “a standardized platform for managing growth in a controlled way” is greater than ever.