The GAAPweb blog

Reaching the Top is all in the Maths

Finance is fast becoming the route to the top – that’s the clear message from the findings of our annual FTSE 100 CEO Tracker. Over the past 4 years, we have been looking at the career progression of serving Chief Executive Officers (CEOs) within the FTSE 100 Index. This year, the findings reveal that nearly half (49 per cent) have financial backgrounds, compared to 31 per cent in 2008, indicating a stronger focus on sound financial management post-recession. 

This trend for financial leaders looks set to grow. Over the past year, six of the nine (67 per cent) appointed FTSE 100 CEOs have financial backgrounds, including Andrew Harrison of Whitbread and Nicandro Durant of British American Tobacco.

These findings suggest that as the economy continues to improve, there is increasing demand for leaders who can navigate what remains a challenging operating environment.

But let’s take a closer look. To begin with, the downturn gave the number crunchers the opportunity to shine. During this time, many finance leaders held key roles at the decision-making table, helping organisations remain as efficient, effective and profitable as possible. This allowed many finance professionals to gain prominence and demonstrate their leadership skills to the wider business.

However, the downturn might not be the only driver behind this trend. The growth of the finance leader, as with accountants, may also be attributed to an increasingly stricter regulatory environment. No company likes surprises, so a greater part of a CEO’s remit is taking ultimate responsibility for regulatory issues, which were not as stringent a few years ago – a role much more suited to someone with past experience of technical accounting and finance. Furthermore, it can be reassuring, especially to shareholders, to have a leader with a core finance background who understands and can address these issues.

It is not only their fiscal skills that have made finance professionals more crucial to a company’s performance, but also their strategic insight and the communication of that to internal and external stakeholders. Commercial skills, including an understanding of how the wider business operates as well as its strategy and vision, are becoming increasingly important to a finance professional, with the finance function emerging from the backrooms and into the boardrooms.

Increasingly, CEO figures are taking a more collaborative approach and are first turning to the finance department – among others – before making any important, strategic decisions. Previously under-valued, traditionally back-office functions are becoming more important to the day-to-day running of an organisation. As a result, finance professionals have a new-found power in the business world; no longer is their role perceived as a matter of facts and figures or as the ‘go-to’ when things have already gone wrong. More and more organisations are realising how financial know-how can be a means to an end, rather than an end in itself.

Undoubtedly, a new voice is emerging from the finance function, one that has new governance and strategic responsibilities. It is more important than ever to have finance professionals capable of shouting louder about the numbers and offering real, strategic solutions to problems. For those looking to climb the career ladder, never before has the finance professional had such opportunity to stand out from the crowd.



Phil Sheridan is the managing director for Robert Half International’s UK operations where he is responsible for leading the organisation’s strategy and direction across more than 20 office locations. He is a member of numerous professional and accounting associations where he participates on steering committees and groups.

Industry Event: The College Finance Directors' Annual Conference and Exhibition

Tuesday 28th and Wednesday 29th June 2011

The International Centre, Telford

The College Finance Directors' Conference provides a unique opportunity for finance professionals in the sector to catch up on all the important issues affecting the business of Colleges, including government funding, fees, higher education, loan finance, international student recruitment, cost reduction, benchmarking, pensions, tax and audit.

The draft programme for the event has now been launched.

For more information please visit: www.aoccreateevents.co.uk/financedirectors2011

Top reasons to attend:

• 36 hours to get up to date on all the big issues affecting Colleges
• Colleges face an average 2% reduction in income in 2011. Find out some ways to deal with this.
• Learn the latest on Skills Funding Agency and Young People's Learning Agency plans
• A choice of more than 20 seminars on everything from capital projects to higher education fees
• Financial leadership in Colleges has never been so important. Learn how financial leaders are dealing with challenges

"The last 12 months has seen profound change for Colleges. The 2011 College Finance Director's Conference is your chance to prepare yourself for what's next."
Julian Gravatt, Assistant Chief Executive/Director of Research and Development, Association of Colleges

For more information about the event visit:

www.aoccreateevents.co.uk/financedirectors2011

Email: events@aoccreate.co.uk
Tel: 020 7299 6980

Conference sponsors:


       

Why sustainability matters to accountants

Over the last few years, the issue of sustainability has become more prominent in our industry. Planning for the future is not just about ensuring financial stability – a business can’t grow when the resources it depends on are diminishing.

As professional accountants, we have a key role to play in helping organisations ensure their business is sustainable. We can do this by integrating key performance indicators into our standard systems and processes, and use our accounting skills to collate and analyse data to monitor, manage and maintain sustainable development.

This is just one of many reasons why AAT is involved in the Prince’s Accounting for Sustainability Project. Set up in 2004 by HRH Prince of Wales, the project aims to develop practical guidance and tools to embed sustainability into an organisation’s decision-making and reporting processes.

We are representing the voice of small business in developing this reporting process to ensure it is practical for all organisations regardless of size or turnover. In addition, we see our role as educating our membership and providing guidance to the wider SME community. We believe this process is so crucial and are fully committed to embedding sustainable development and integrated reporting into the qualification and educational process.

As an organisation, AAT is also playing its own part in the journey towards a sustainable business model. In 2010, AAT’s Council set up a working group to research the best way to achieve this and sustainable development is now a key part of our business plan. Over the last few years, more and more of our services have been moved online, resulting in not only a reduction in printing and postage, but also greater efficiencies for the membership. We also reduced our carbon footprint in late 2007 by moving from premises split over eight floors to one-and-a-half floors, decreasing our square footage by over 3,000ft.

Sustainable development is really about making the best use of what resources we have available, rather than wasting them now at the expense of future growth. Sustainable development should be at the heart of every organisation in order to secure its future.


Tom Kelman has been Director of Finance and Corporate Resources at AAT since July 2005. Tom has worked in finance for over twenty-eight years covering both accountancy practice and industry and commerce. He qualified as a CA with ICAS in 1986 and became an MAAT before joining the AAT. Tom is also a member of the Association of Corporate Treasurers and a professional Pension Scheme Trustee.

Is 2011 the Year of Eurozone Recovery?

Two years have passed since the world’s economic output reached its low-point. It was predicted by one of the UK’s largest banks at the height of the crunch that “it would not be until early 2011 that any sign of (economic) recovery would take place”. 

However, the former Prime Minister Gordon Brown commented this week: “I sense that in the first few months of 2011 we will have a major crisis in the Euro area”. With this growing pessimism, it appears that 2011 could still be a challenging year for the banking market.

The support of “Europe’s failing economies”  presents a potentially huge problem to the banking sector on several fronts. Eurozone banks have lent great financial support to ‘prop-up’ the financially weaker economies. This unsecured lending has once again greatly over-exposed many of the large European banks, at a time when there is a growing scramble to comply with stricter capital requirements.

We can only make a calculated guess, based on patterns that emerged from the global credit crunch, as to what effect the Eurozone crisis will have in recruitment terms. Considering the crunch was centred on the financial markets, it wasn’t by any stretch the financial sector that ultimately felt the hit the worst. The jobs lost in finance were around 8% – relatively low compared to jobs lost in construction and manufacturing, which were down 27% and 17% respectively.

Gordon Brown has recently supported this prediction by suggesting that a failing Eurozone would have a wider effect than just on the banks, predicting a long-term crisis could create “an unnecessary and avoidable period of low growth and high unemployment, and diminishing living standards”. 

There is also a question mark over the expansion plans of Eurozone banks, which now might be more reluctant to take any risks. The problem in particular is that “Europe has lost ground to both the US and Asia”. Therefore the risk, with stricter Visa requirements coming into force, is that Europe will no longer be the destination of choice for highly-skilled migrants, with the continent losing candidates to the US and Asia, whose economies, for now, look more stable.

The Nationalised Irish Banks have been the subject of immediate focus the last month, although from looking at the likes of RBS and Lloyds it cannot be said that nationalisation has caused a negative impact on the recruitment needs of some of the largest Nationalised European banks. Indeed, it may be the case that any nationalised Eurozone banks are forced to increase recruitment amid restructuring plans. However, with Lord Turner commenting that the FSA may claw back the pay of failed banks bosses, it creates a danger that there may be a reluctance to take roles at the highest level of financial organisations, or indeed create a culture of over cautious decision makers that weaken the long-term competitiveness of companies in fear of taking a risk too far.

For 2011 to remain the year of recovery ultimately relies on a speedy resolution of the Eurozone crisis.



Consultant Sam Price currently works on the Banking and Capital Markets Contract Team at Marks Sattin. He places both part qualified and qualified accountants in contract positions across financial services, working with major and mid-tier investment and retail banks.