Gasette This issue - Government Finance Profession - HM Treasury

CIMA surveyCIMA’s Charles Tilleyoutlines the findingsfrom an institutesurvey of worldbusiness leadersFacing the challengesHEAD ONDOUGLAS FLINT, chairman of HSBC andone of CIMA’s most prominent members,recently summed up the current businessenvironment with the comment: “I don’tthink we’ve ever been in a period of ourlifetimes where things have been moreuncertain.” With this focus in mind,CIMA and the American Institute ofCertified Public Accountants (AICPA)decided to ask business leaders aroundthe world how they view the globalchallenges and what their priorities willbe over the next few years. The resultwas our new report, Rebooting business:valuing the human difference.Almost 300 business leaders from over20 countries were surveyed. This wasfollowed up by 17 in-depth interviewswith CEOs, chairpeople and otherbusiness leaders who, between them, areresponsible for over 2m jobs and marketcapitalisation of $1trillion.So what did we find? There is nodoubt that reducing costs is still a priority.But at the same time there has been aclear shift in focus. Central to ourfindings was the fact that the humandimension of the business (such ascustomer and supplier relationships,talent development, intellectual capital) isa core value. Some 68% acknowledgedthat most of their organisationalvalue is non-financial. They seepeople’s ideas, skills, knowledge andrelationships as more importantthan traditional, financial sources ofvalue. Our conclusion was that theneed to measure and manage thehuman dimension has never beenmore critical – and we need theright people with the right skills todo this.So why are firms still placing somuch emphasis on financial value?The majority of our business leaders(69%) felt that the financial marketsare holding businesses to ransom asmany investors show little or no interestin the longer term. There are otherproblems, too. Many respondents (76%)said the current reporting systempromotes excessive focus on financialsand 28% felt there are also challengesfrom existing and new regulations.So, what is the solution? Firstly,integrated reporting has an essential roleto play. Integrated reporting shows thelinks between an organisation’s strategy,governance and financial performanceand the social, environmental andeconomic context within which itoperates. This is an initiative that is being• Rebooting business:valuing the humandifference can be foundon the home page of thenew CGMA sitehttp://www.cgma.org• Public sectorperformance: a globalperspective can be foundat: www.cimaglobal.com/publicperformanceled by the International IntegratedReporting Council, an organisation thatthe AICPA and CIMA work closely with.By reinforcing the diverse connections,integrated reporting can help businessesto make better decisions and enableinvestors and other stakeholders tounderstand how an organisation is reallyperforming. It can also help to overcomethe current over-focus on financialreporting and put in place better ways ofmeasuring the non-financial value of acompany.In conclusion, the CEOs in our surveywere adamant that they need help in‘connecting the dots’ to give a clearpicture of how the organisation isrunning and where the opportunities are.This points to the core strengths ofmanagement accountants.In a global business environment, it isessential that organisations employfinance professionals who can operateon a global scale. At the end of January,CIMA and the AICPA jointly launched anew designation: the Chartered GlobalManagement Accountant (CGMA). Thisnew designation is designed to ensurethat management accountants are fullyequipped to meet the challenges aheadboth in terms of developing businesssustainability and extracting value fromthe human dynamic on bothnational and internationalplatforms.While the AICPA/CIMA report isfocused on the private sector, it isessential to address the issuesfacing the public sector as well.Although the public sector is basedon a very different framework. Ittoo must take on a new paradigmif it is to remain fit for purpose.A second CIMA report, Publicsector performance: a globalperspective, looks at the commonchallenges faced by most publicsector organisations and outlinessolutions to some of the biggestchallenges ahead – including the issue ofaligning policy to outcomes.Combined, these two reports providea powerful impetus for organisations ofall types to re-evaluate their operationalfocus. At the heart of this paradigm shiftis the management accountant. In anenvironment where change is the onlyconstant, management accountants havethe agility and adaptability to guide andsupport critical decision making and todrive forward strong, sustainableperformance.• Charles Tilley is CEO of CIMAspring 2012theGASETTE 21