Wider still and wider.
| Author | Allen, David |
| Position | Brief Article |
David Allen identifies a critical skills gap just waiting to be filled by ambitious financial managers
One of the features of the old command and compliance style of management was functionalism. When the primary focus was on supply and tactics, a key question, for example, was "How can we minimise the cost of what we do?". The answer was to hire the best engineers, and set them a target expressed in terms of this year's cost as a percentage of last year's. This raised demand for cost and works accounting.
Today's trust and commitment style is more customer orientated and strategic -- we may choose to incur higher costs, if it means we can tailor the product and boost customer loyalty. The trade off is often between short-term cost reduction and long-term volume enhancement. In this environment, the assessment of net present value is vital, and financial management is much in demand.
Not long ago, I drew the attention of the board of a manufacturing company to the difference between accounting (passive, backward-looking) and financial management (proactive, forward-looking). The accountants in the organisation were aware of the difference, but they were so bogged down with the former that they were only available for the latter in the last three days of each month. This hardly encouraged cutting-edge competence.
The chief executive argued that he needed quick and competent financial management. He found that the company had a surplus of accountants who were good at looking backwards, and a shortage of those who looked forwards. The firm set about shifting the balance with considerate redeployment and positive recruitment policies.
I spoke to the chief executive again recently, and was intrigued to find that he was still short of financial managers. The recruitment campaign had been successful, but as soon as someone was recognised as a good financial manager, they were earmarked as a business unit general manager because the company had a devolved approach characteristic of the trust and commitment management style.
CIMA's gradual shift away from cost and works accounting to management accountancy is one obvious response to this trend. Of the two spheres in our profession -- management and accountancy -- the importance of the former seems to be growing steadily. The key to general management is to see it not as a collection of separate modules, but to focus on interdependencies.
The chart (below) has been used by businesses to provide a...
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