ASPIRING future CFOs should put up their hands up for business-facing roles in which they lead change, drive growth, and coach fellow executives. But what about day-to-day accounting functions? Is it still important for senior leaders to master traditional financial reporting and controls?
In an environment where shared services centres, business process outsourcing and offshoring are increasingly the norm, this is a critical question. Experience in traditional financial roles is arguably crucial for developing great CFOs – yet many such roles are being outsourced. What are the implications for talent development going forward?
This topic sparked vigorous debate at a dinner I hosted recently in Tokyo for 25 Japan-based CFOs – some with global roles, and others with country or regional responsibilities. Several of them were concerned that outsourcing would remove key finance roles from their companies’ talent pool… and they emphasized that finding the right financial talent is already a challenge.
Outsourcing of finance functions is common practice among American firms large and small. In Asia, on the other hand – where each country typically has different reporting and regulatory requirements – there is greater likelihood that future CFOs will have been exposed to end-to-end financial roles. In fact, some of the CFOs at my Tokyo dinner expressed relief that outsourcing has been far less widespread in Japan than in the US and other Western markets.
In the discussion round the table in Tokyo, there was agreement that a great CFO must have broad experience of financial controls. The question was: how do they gain that experience in today’s environment? While running a shared services centre is one option in a future CFO’s career development, this is usually seen as a less attractive posting than a country CFO role or other business-facing position.
I’d love to hear readers’ views and creative solutions to these challenges – either on this website, or on my LinkedIn page. I certainly don’t have all the answers.
But my strong opinion is that when companies make a strategic outsourcing decision, they’d do well to consider the broader, long-term implications on talent development. If they choose to outsource or offshore large parts of the finance function, how will they foster the flow of talent so that future financial leaders have the full range of experience to be effective custodians of financial performance? Or by default, will they be grooming future CFOs with a more narrow functional toolkit?
I don’t pretend to know the answers to these questions. But if a talented young finance professional were to ask me for career advice, I’d be clear about one thing: to be an all-encompassing CFO, you need the full range of experience. And if you can’t find that experience in an insourced function in your company, you’ll need to think laterally about how and where you can hone this aspect of your professional development.
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