Firstly, allow me to express my thanks to the Asian Strategy and Leadership Institute (ASLI) and ACCA for inviting me to deliver a few words at the inaugural Regional CFO Summit 2010. May I also extend my congratulations to ASLI and ACCA for constantly organising events for the dissemination of knowledge and progress in this sector.
Today’s forum certainly zeroes in on a topic that is gaining in popularity and relevance – namely, the ascension of the chief financial officer or the CFO to the top ranks of corporate organisations, and the benefits that he or she can contribute in the CFO’s expanded role of strategy and leadership.
Personally, I believe that the higher demands being placed on CFOs are a direct consequence of the exceptional times that we live in. The effects of the recent global crisis are forcing economies and businesses to reexamine their prevailing models and to reinvent them to become more responsible and efficient. Austerity, frugality, conscious are the slogans of the new mentality that has emerged post-recession. People are tired of the excesses of greedy corporations – which were at the root of the crisis in the first place and caused a financial meltdown – and this mindset is fueling a return to the fundamental values of integrity optimistically, the implementation of better governance and good behavior at both the enterprise and sovereign level.
If adding value, good governance and innovation are among the new job specs for CFOs, it is clear that the CFO is no longer just the traditional finance personnel. He or she is no longer a pure number-cruncher but a jack of all trades and disciplines.
This multidisciplinary CFO is not only the guardian of finance. He or she is also a top-level strategist, being empowered to value adding and identify value drivers which can grow revenue and profits in sustainable ways. Recent findings from the 2010 IBM Global CFO Study supported this. IBM surveyed over 1,900 CFOs and senior finance executives from around the globe and found that “Playing their part in the wider corporate strategy is now the top priority for CFOs who no longer rank cost reduction at the top of their agenda.”
IBM’s study noted that the efficiency of the “new” CFO will pivot around how well he utilises information. How does the CFO gather, digest and deliver complex information and messages fast, accurately to both internal and external stakeholders, and act on said information to enable decision-making, is a vital ability given that we live in the Age of Information and interconnectivity.
Looking at the CFO Forum programme, it is clear that the first two sessions in today’s forum will address the different dimensions of the CFO’s changing role – and assess whether incumbents today measure up and how they can grow to fit the new requirements. Subsequently, CFOs will get an insight into the global economic trends, in particular an assessment of the risks of the dreaded double-dip recession. Getting a balanced view of the global economic outlook is essential if CFOs are to provide accurate strategic and financial advice to their companies going forward.
Apart from technical skills and wide business experience in his sector of choice, the route to success for the new breed of CFOs lies in gaining the professional and personal skills to manage relations and optimize networks for better results. A recent survey by global executive search firm identified three key competences for successful CFOs. The first is the ability to influence and collaborate with the CEO. Along with leadership skills, the CFO will thus have to learn strong strategic thinking skills in order to serve as an effective business partner.
The second competence is to build strong relationships with investors, opinion leaders and other influential stakeholders – as well the board. The CFO will have to walk a fine line between building this web of collaborations, while ensuring genuine objectivity and independence.
The third key competence for top CFOs is the ability to deliver business results. Good strategic-thinking CFOs will adopt a cautious but entrepreneurial approach to risk. Beyond just reporting on historical performance, CFOs will be able to build business models, and project forecasts based on anticipated trends supported with high-quality financial information and useful value indicators.
As the guardian and watchdog of finances, it is up to the CFO to ensure compliance in form and spirit with financial reporting standards, which is one of the cornerstones in high quality financial reporting. This should be an ongoing process and not left until financial statements are audited at the end of the financial year.
Ladies and gentlemen,
CFOs can also contribute to improve corporate governance through serving actively on boards as vigilant independent directors. Today, boards suffer a surfeit of quality problems and one solution would lie in improving the calibre of people in charge, or the so-called tone at the top.
Independent directors play a significant role in upholding governance, both locally and regionally. Here in Malaysia, a lot of attention has been called recently to enhancing the calibre and enlarging the pool of independent directors to improve board performance and eradicate existing governance weaknesses.
To solve this problem and get rid of the rot, initiatives taken to overcome the shortage of competent and qualified corporate directors in Malaysia. The Security Commission has stated that it will be working closely with the Minority Shareholders Watchdog Group (MSWG) and the Malaysian Alliance of Corporate Directors (MACD) to explore ways to centralize the repository of competent and qualified people who can serve as directors. Indeed, I understand that ACCA Malaysia has signed an MOU with MSWG to enable the selection of qualified accountants – which would include CFOs - as independent directors. Of course, for this process to work effectively, there should be clear guidelines for eligibility for candidates to be admitted to the proposed pool of directors. In addition, a thorough and open vetting process at the selection stage itself is fundamental if this initiative is to take off.
Putting the right person in the job - or in this case on the board, who is a talented individual with an underlying sense of honesty and responsibility is the key to high-quality corporate performance. Likewise, putting the right person in the CFO position is also critical to high-quality corporate performance.
I hope that today’s forum will offer you some fresh new insights into exactly how the CFO – as the co-captain of enterprise and business vessels – can become this beacon to guide businesses through risk-laden waters to achieve a more stable and prosperous outcome.
On that note, ladies and gentleman I take great pleasure in declaring the Regional CFO Summit 2010 open.
Thank you.
No comments:
Post a Comment