Given the only thing that finance directors can be certain of is that
everything will change, how do they go about planning continuous professional
development which will meet the future needs of their team and their business?
Firstly, developments in international financial reporting standards and
Sarbanes Oxley will not be going away – which, while it may not be a comforting
thought, does help with planning a lot of CPD units.
Secondly, if an FD is to determine the type of training their team will need,
they must establish what they, as FDs, are expected to deliver within the
This can range from the core role of recording information and reporting it,
to controllership – budgeting and ensuring that payments can be made, through to
helping to determine which products are profitable, defining strategy, and which
markets, products or services a company should sell.
Over the last few years the pendulum has swung towards recording and
controllership. The amount of knowledge FDs need to have is immense, ranging
from corporate social responsibility issues, shareholder guidance and
international standards to corporate governance, pensions and whistle-blowing.
But directors and their teams are also under more scrutiny, with increased
assessment by internal and external audit, institutional investor reviews,
clarity index and countless other surveys. This helps to explain why training
has been so focused on technical topics.
The pressures have not just been to obtain technical knowledge, however. FDs
are also meant to add shareholder value and become business partners. This takes
highly effective personal skills.
The recent ‘Enron’ trial of Jeffrey Skilling has also served to highlight the
importance of ethics. IFAC has issued a new standard requiring all accountants
in business to demonstrate ethical qualities. This will lead to an increased
focus on professionalism where there is pressure to demonstrate that core values
are maintained throughout an accountant’s career. It will involve training – to
the extent that ethics can be taught. It will be more a case of nurturing.
Are you ethically fit?
It will certainly require an assessment of whether the finance team is
ethically fit and can cope with difficult judgement decisions where there might
be a number of ‘right courses of action’. Professional bodies will have a role
to play in ensuring that accountants maintain a broader public interest
perspective and are not overwhelmed by company culture, as appears to have been
the case in Enron.
But the pendulum is unlikely to continue to move towards more and more
technical training requirements. It is likely there will be increasing
recognition that the FD’s role is to create value and to help drive strategy,
which will affect the nature of finance training, putting more emphasis on
personal effectiveness skills.
But remember regulation and scrutiny is not going away. New international
standards of auditing are now being adopted in the UK – which will fundamentally
change the external auditor’s approach to auditing. FDs need to understand these
changes to ensure the audit runs smoothly.
Soon even more companies will have to apply international accounting
AIM listed companies will shortly need to comply with the rules, and UK
accounting standards are also being aligned to the international versions, so
organisations will need to apply the international requirements. But are FDs
and the finance teams in all these organisations ready? This is a radical change
from what UK accountants are used to. Technical training will be essential in
But how will finance directors and their teams stay on top of all these
requirements? Some FDs are privately telling us they are no longer sure if they
are complying with all regulatory and compliance requirements because there are
simply too many of them.
The key point here is that the FD doesn’t necessarily have to know
everything. This is where personal effectiveness skills come in. In our
experience, when an accountant starts their career the skills/knowledge mix is
70% technical knowledge and 30% personal effectiveness. By the time they reach
FD level this mix has almost reversed. In future, training for finance staff
will recognise this.
Technical knowledge will remain the bread and butter of FDs, but training
will change to reflect the type of knowledge required by FDs and the team.
Personal effectiveness skills will become increasingly important as finance
teams specialise and FDs become more involved in the business. This should free
directors to become more entrepreneurial.
Out of the classroom
Training is likely to be less classroom-based which better suits technical
training. FDs and senior finance people are also more likely to be trained
through coaching – 360 degree feedback to enhance personal effectiveness,
through discussion groups and learning from peers.
Professional bodies can also help. Our research carried out with over 100 FDs
from around the world showed that management, leadership and strategic skills
were considered to be the key skills.
So the good news is that future training should not involve a continued push
to absorb more and more technical material. Training will be more focused with
each team member understanding how they fit into the finance team.
Training is likely to focus on ensuring FDs have the following skills:
• Leadership skills enabling the FD to be involved in strategy and to
ensure the finance team understands its responsibilities
• Team management: ensuring technical requirements are covered by specific
team members and that team members receive adequate training for their roles.
This will require the implementation of individual training needs analysis
• Influencing and negotiating: ensuring that corporate governance and
reporting requirements are addressed by the business
• Analytical skills: understanding the principles driving technical
requirements without necessarily knowing all the details. Being able to ask team
members, who are experts, probing and relevant questions to ensure technical
requirements are being followed. The high level helicopter view will become more
important. The FD skill will be to use their judgement effectively.
• Communication skills: being able to clearly communicate within the finance
team and the business, as well as externally
• Business awareness and strategic thinking ensuring the FD understands the
Stephen Heathcote is director of learning and development at ACCA
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