7
STEP 6½: IMPROVE BY MAKING A COMMITMENT
A dream can become real only after you make an emotional commitment to the dream
If you want to be promoted or take on more influential responsibilities, you must make a commitment to apply what you have learned. If you are still unconvinced that you need to improve what you do and how you do it, this final step may very well persuade you that the world of accounting is changing dramatically.
After reading this chapter, you should be able to
take the last step toward improving your role.
explain to your team how the world of accounting is changing.
utilise other resources available to you.
employ the Plus/Delta to document what works and what needs improvement.
GROWING PAINS
As you come to the end of this book, you may begin to feel overwhelmed by what is required to transform into a Key Financial Strategist. Please realise that many others have gone before you and have successfully made the transition to redefine their role. The best place to start is with a personal commitment to improve and grow. The pain of change that you may be feeling comes from your own ego, and is something that you must deal with and not ignore.
This chapter contains best practices for you to use in your commitment to grow out of your job. Just as the quote at the beginning of this chapter reminds us that there is a difference between a dream and a goal, keep in mind that your commitment is integral to this process.
Despite any trepidation that you may feel, remind yourself often that once you have made the transition to become a Key Financial Strategist, the rewards you receive will be tremendous and far outweigh the difficulties you may see ahead of you.
Exercise: Mistakes Made by Controllers and CFOs
Your friend Brian made many of these most common mistakes. At your next coaching session, as a way of reminding yourself that you are also fallible, you tell Brian about the mistakes you have made during your professional life.
I made the mistake of
_________Not taking on the role that the company needs me to perform.
_________Not recognising the power and influencing aspects of my role as the conscience of my organisation.
_________Not creating a team approach, but instead trying to do it all by myself.
_________Not becoming an equal participating member of my firm’s leadership team.
_________Not recognising the value and importance of corporate culture in making things happen.
_________Not becoming a sales person for my team, my needs and my team’s contributions.
_________Not growing as an articulate communicator and tough negotiator.
_________Not looking toward the future of my organisation and the changes in the management accounting profession.
_________Not adding value to my firm in numerous, visible and measurable ways or touting these accomplishments to the executives.
_________Not creating a network with other controllers or CFOs with whom I can share ideas and offer or get support.
Which of these have you made more than once?
Which of these have you learned from and changed your ways?
No. 3 Big Mistake of the CFO
Not addressing your workload killers
Another pitfall that the CFO should acknowledge is those areas that utilise a tremendous amount of your team’s time and energy. By proactively planning for and addressing the following productivity sapping events, you will be able to keep your team and yourself on track.
Mergers and acquisition activity
Year-end closing
Inventory taking and costing
Peak sales season activity and transactions
Sales promotion initiatives
Budget development
Annual planning process
Employee education, including job cross-training
Externally imposed deadlines for compliance purposes
Personal time off
Meetings infinitum
TODAY’S MANAGEMENT ACCOUNTING LEADER REALITIES
The following are five realities that you must face in order to make yourself and your team more effective. The “we” in these realities refers to you and your team as well as the management accounting profession.
Unless we change our thinking, tomorrow looks just like today.
Without a clear vision of tomorrow, what we expect tomorrow will not change from today.
If we raise our expectations, we alter our future vision.
Our skills and knowledge grow obsolete at an ever-faster rate.
A management accounting team advances in only two ways: (a) the solutions we provide and (b) the connections we sustain.
Our Skills and Knowledge Grow Obsolete at an Ever-Faster Rate
You must devote the necessary time and resources to training and educating your staff. The skills you and your team acquired as recently as three years ago are now outdated. Even if your employer does not provide you with funds for training, you must find ways to ensure your people are trained.
A Management Accounting Team Advances in Only Two Ways: The Solutions We Provide and the Connections We Sustain
Management accountants may be very good at finding solutions and very poor at maintaining connections. This is an area on which you must focus much of your attention. These connections include
stepping outside your office and meeting with people, face-to-face, on a regular basis;
making allies with your peers on the executive or management team; and
becoming part of a networking group.
Solution 1 —Get Out of Your Office
As a CFO or controller, you should spend 25% to 35% of your time meeting with those you serve, including major customers, investors, creditors and, of course, your peer managers.
Solution 2—Let Employees Out of the Department
Your employees should spend 10% to 15% of their time outside the management accounting department meeting with those they serve, for example, vendors, customers, bankers, service providers, coworkers and peers.
Solution 3—Create a “Stop Doing” List
In Good to Great,1Jim Collins offers good advice that will help your team get things done.
Many of us lead busy but undisciplined lives. We have ever expanding “to do” lists, trying to build momentum by doing doing doing-and doing more. And it rarely works. Those who built good-to-great companies, however, made as much use of “stop doing” lists as “to do” lists. They displayed a remarkable discipline to unplug all sorts of extraneous junk.
We spend so much time working on “ what is due next” in management accounting that we rarely make an effort to discern what we should stop doing.
Accounting’s Stop Doing List
Titles and specialties
Paper pushing
Report issuing
Analysis and spreadsheets
Hand holding customers who make the same mistakes repeatedly
Relying on faulty processes
Interim GL closings
One-off reports or analysis
Treating errors as isolated events
SIGNIFICANT TRENDS IN MANAGEMENT ACCOUNTING THAT IMPACT THE CFO AND CONTROLLER
Trend No. 1
Exercise: The cost of processing Transactions is approaching Zero
Characterised by
| Finance Process | Cost in the Average company | Cost in the Worst company | Cost in the World Class company |
| A/R remittance processing | $0.67 | $13.68 | $0.01 |
| P/R check processing | $1.91 | $10.93 | $0.36 |
| A/P invoice processing | $2.93 | $6.80 | $0.35 |
| Tracking fixed assets | $4.05 | $19.10 | $0.16 |
| Expense report processing | $6.05 | $25.75 | $0.27 |
Labour cost per transaction |
|||
Source: AICPA and the Hackett Group
Trend No. 2
Everyone Demands Instant Gratification
This is characterised by
the Internet.
staying connected to the office 24/7.
rise in use and popularity of social media.
instant downloads of all media.
wide-spread usage of G3 and G4 smart phones.
satellite radio.
executives who can get information on demand anywhere anytime, yet have to wait 10 days for the management accounting team to issue reports.
Trend No. 3
The Management Accounting Group Will Spend Less Time Processing and More Time Consulting
This is characterised by
decentralisation of controls and management reporting.
demand for real-time financial results.
world-class companies are able to close within one day.
finance must track, measure and report on nonfinancial data.
time spent processing transactions must be reduced below 35% from its current 77%.
Trend No. 4
The Management Accounting Group Will Be Ever Smaller and Less Permanent
Examples from U.S. organisations are characterised by the following:
The average finance group is between 33% to 70% smaller than it was 30 years ago for a company of the same size.
The typical manager’s span of control is approaching 75 employees, up from 5 employees in the 1970s.
For every U.S. worker who loses his or her job, there are 25 employees who would leave their jobs if they could afford to do so.
CEOs will continue use downsizing or rightsizing as a permanent management tool.
Trend No. 5
A Finance Professional’s Employment Will Not Be Full-Time or “Permanent”
Examples from U.S. organisations are characterised by the following:
Today’s college graduate will have 5-8 different careers and spend 20% of his or her time unemployed before retiring.
U.S. companies are relying on “ just-in-time” employees to meet any growth in employment.
Contingent workers make up between 25% to 33% of the U.S. workforce, and some experts predict that this number will grow to 50% in certain industries. (Contingent workers are part-time employees, contractors and leased employees.)
91% of businesses use temporary employees, which has resulted in the temporary industry growing tenfold over the past decade.
30% of all new jobs created are part-time and lower pay scale positions.
American businesses are outsourcing finance and administrative work in record numbers.
Trend No. 6
Movement Toward a Pay-for-Performance Compensation System
Examples from U.S. organisations are characterised by
wage increases to professionals that barely keep up with inflation.
employers demanding that employees provide positive proof that they are earning their compensation.
profit-sharing plans and stock options are replacing annual raises.
dramatic growth in self-directed pension accounts and disfavour towards defined benefit accounts.
a “what have you done for me lately” mentality widespread amongst executives and managers.
Trend No. 7
Management Accountants Required to Have a Base of Knowledge Broader Than Accounting or Finance
Examples from U.S. organisations are characterised by the following:
Almost all management accounting is done using technology that did not exist 10 years ago.
The profession requires a five-year degree in order to become a CPA.
During a merger the employees retained are those who have skills beyond accounting.
Continued outsourcing of low-value work like A/P and tax preparation.
By the year 2020, more than 50% of all American workers will need some retraining because their skills have become obsolete.
A novel technology’s life cycle is less than 18 months.
The next generation of workers knows more about technology and social media than the people they work for.
Trend No. 8
Reliance on Task Forces and Project Teams
This trend is characterised by the following changes:
Work is perceived as a series of projects staffed by employees whose expertise is required to bring them to fruition.
Due to poor communication, management more heavily relies on cross-functional task forces and project teams to accomplish work.
CEOs and the human resources team seek out management accountants who can work well with others.
More employees fall into the just-in-time category.
The ever higher cost of travel prevents employees who work together from meeting face-to-face.
Increasing numbers of organisations have locations spread across the globe.
Global businesses operate in multiple time zones simultaneously.
Trend No. 9
Increase in Need for Compliance and Governance That Does Not Waste Resources
This trend is characterised by
regulatory compliance and complexity.
current and past scandals regarding financial reporting, stock options and pro forma earnings.
more and more reliance on technology instead of people to make decisions and process transactions, leading to lack of awareness of work quality.
Answer These Questions
How will these trends affect your company in the future? How are they affecting it now?
How will these trends affect you and your team?
How will these trends affect your career?
Do you see other management accounting trends?
Which trend will have the biggest impact on you? Why?
How can you best start preparing today for tomorrow?
STRATEGIES FOR COPING WITH THE PAIN OF THESE CHANGES
Strategy No. 1—Climb on board, support these changes and learn from them.
Strategy No. 2—Treat your employees like volunteers, especially with respect and dignity.
Strategy No. 3—Go out and get practical experiences outside management accounting.
Strategy No. 4 —Commit to lifelong learning.
Strategy No. 5—Take your skills seriously, but not your title or position.
Strategy No. 6—Remind yourself often that you are replaceable.
BEST PRACTICE—INSTILLING A PERSONAL COMMITMENT
Formalising actionable goals is an important best practice to consider. Figure 7-1 outlines a simple, but effective leadership action plan commitment document.
Figure 7-1: Your Commitment to a Leadership Action Plan
Exercise: What is Your Next step?
Now that you have plenty of information about how to add value to your organisation while boosting your career, it is time to determine your next steps. Complete your own action plan below.
How do you envision your role as controller or CFO six months from now?
What are you willing to do to improve your role as a shaper of your team’s and organisation’s corporate culture?
What will be the long-term payoff of the changes you will implement?
What specific resources will you need in the future?
Coach_____________
Mentor_____________
Specific training_____________
More support_____________
BEST PRACTICE—INSTILLING CONTINUOUS IMPROVEMENT WITH PLUS/DELTA
The Plus/Delta Analysis is an excellent learning tool for every meeting, project or performance evaluation (see figure 7-2).
The Plus/Delta Analysis is a summary of what is worth repeating and what needs improving. It spawns rapid improvements, shortens learning curves and increases accountability.
Figure 7-2: The Plus/Delta Tool
PLUSES + (THINGS THAT WORK AND SHOULD BE KEPT) |
DELTAS Δ (THINGS THAT SHOULD CHANGE OR BE BETTER) |
Steps of the Plus/Delta
Announce to everyone involved with the improvement effort the purpose of the Plus/Delta.
Spend time gathering a list of things that worked well and list them on the “Plus” side. Keep building this list until it is complete or there are no more suggestions.
Spend time gathering a list of things that people would like to see changed and list them on the “Delta” side. Keep building this list until it is complete or there are no more suggestions.
Before the next session or meeting, address the changes that were recommended and accommodate those that cannot be changed.
Start the next meeting by reviewing the most recent Plus/Delta.
Remind everyone that you will continue to pursue items from the Plus list that are working well.
Inform the team of the changes that will come from the Delta list.
Explain which changes cannot be implemented, then brainstorm alternatives.
Continue to use the Plus/Delta tool at each meeting, event or gathering.
Notice and celebrate how improvements quickly take place.
This is good documentation to retain for demonstrating to others that you are being proactive in addressing employee suggestions for improvement and are listening to your best resources. Even better, it models for others what it takes to be an agent of change.
Endnotes
1 Collins, Jim. Good to Great. HarperBusiness. 2001.