The fluctuating pandemic has changed many organisations when it comes to the perception of the finance function—the stronger appreciation for finance professionals and their contributions.
At the same time, the finance function also needs to address new challenges rising out of the pandemic.
A recent report 'Finance functions: seizing the opportunity' — based on a joint ACCA-PwC survey of more than 3,000 finance professionals globally including around 300 from South East Asia (SEA) discerned both opportunities and challenges facing them,
FutureCFO recently spoke to Daryl Wang, Managing Director, Finance Transformation, PwC South East Asia Consulting and Pulkit Abrol, Director, ASEAN ANZ, ACCA. These two executives shed light on the challenges facing finance executives in SEA and how they could address those issues.
FutureCFO: What are the challenges facing finance & accounting professionals in SEA? How are these challenges different from those facing professionals globally?
ACCA’s Pulkit Abrol: In SEA, particularly, respondents flagged productivity and responding to changing regulations as dominant challenges they face (at the time of the survey, in March 2021). According to them, the move to largely untested hybrid working models has taken a toll on their productivity levels.
While many global finance leaders we spoke to when putting the report together thought productivity would suffer due to remote working arrangements, the reality was that productivity has remained high, and deadlines have consistently been met.
However, the industry's mental health was affected due to the pandemic's seismic pressures, and increased demands on the finance function further exacerbated the issue.
Not only are the existing finance professionals pressured by the situation, it is also noted in our other report, 'Ground-breakers: Gen Z and the future of accountancy', that the Gen Z underlined personal wellbeing and mental health as their top concerns, and they seek out organisations that enable them to balance their work and life.
PwC’s Daryl Wang: The point on sustained productivity and value add remains top of mind for finance leaders, particularly in optimising processes and balancing employees’ needs, especially for companies in high-growth industries.
While the pandemic has revealed the crucial need for digitalisation and underinvestment, the lack of coherent enterprise-wide platform for the finance function will impede their effectiveness and efficiency.
Digitalisation enables employees to focus on impactful outcomes such as value-adding activities to improve business insights and drive business decisions. We see an increased focus on technology and processes that captures data cleanly for clients, the change management will impact how smooth the transitions will be.
With the spotlight on the mental health of the workforce, finance leaders will start to see higher expectations from employees regarding their wellbeing. From PwC’s Hopes and Fears Survey 2021, we are seeing 65% of the Singaporean workforce are worried that automation is putting many jobs at risk. This adds to the pressure employees will feel at work, especially if nothing is done to help employees cope with the increased demands.
The immediate step is for finance teams to support the organisation in understanding its current position, develop an ESG agenda to deliver on its commitments, and measure progress on an ongoing basis.PwC’s Daryl Wang
FutureCFO: How should SEA’s finance professionals address those challenges?
ACCA’s Pulkit Abrol: With advent of remote working arrangements, finance professionals who were used to regular social interactions as a large part of their job had to dramatically shift their way of working. Along with the evolved expectations on the finance function to provide perilous advice for the organisation, the industry's mental health will be one of the lasting impacts of the pandemic. One that will play out in the next few years and that organisations need to constantly be aware of.
Organisations must rethink their employee engagement strategies and ensure robust mental health and wellbeing programmes are in place to address any issues. When developing such programmes or support systems, organisations need to recognise that this issue is not transitory but part of the longer-term impact of the pandemic, so that the support should be flexible and continuous.
In addition, organisations can offer a flexible working culture, empowering people to choose how, where, and when they work.
From negotiating a reduced-hours contract to juggle personal commitments or taking an extended lunch break to fit in an exercise session, the option to work flexibly can greatly benefit mental wellbeing.
PwC’s Daryl Wang: To sustain productivity and gain better insights, there are various areas to focus on:
Technology. It’s undoubtedly vital in optimising productivity for the finance function. Organisations can categorise their technology into three groups: fit-to-standard systems; systems of differentiation; and systems of innovation.
As organisations localise or solution-design their systems, they need to critically challenge themselves on why the “standard practices” would not work for them. The general rule of thumb should be to customise or go “bespoke” to build capabilities that provide a competitive advantage or ensure stronger compliance.
Operating model. We see successful organisations adopting more agile and collaborative structures, shifting away from the traditional silo-based, command-and-control structure. The agile teams have a clear focus on shared organisational purposes, measurement of goals and clear accountable roles that encourage both inter and intra department collaboration.
Process. As part of digitalising finance, foundational work such as process standardisation and data harmonisation must be done. Additionally, proper governance must be set up to maintain them. The finance function being downstream of the entire business can leverage this to benefit the organisations.
They have a complete overview of the processes, and are the stewards of the organisation’s financial assets through effective controls—they know the desired outcomes, love the details, and have the skills to fix the issues.
As businesses seek to transform into data-driven organisations, the finance function can play a strategic enabler role in enterprise data governance, establishing clear data ownership and addressing data issues at the source.
People. To ensure that the organisation can function at high productivity, finance functions need to intentionally plan for evolving workforce needs such as hybrid working modes, upskilling or reskilling, employee wellbeing and business experience.
From negotiating a reduced-hours contract to juggle personal commitments or taking an extended lunch break to fit in an exercise session, the option to work flexibly can greatly benefit mental wellbeing.ACCA’s Pulkit Abrol
FutureCFO: What are the key areas of opportunities that finance functions can leverage?
ACCA’s Pulkit Abrol: To continue remaining relevant, the finance function needs to continue to build on the progress made for the past 18 months and take a central role in helping define business strategy and direction.
The pandemic has presented an opportunity for professionals to show their importance in the organisation. Now they need to seize that opportunity to further strengthen its role by leveraging on six areas of action:
- Redefine the focus of finance to include broader performance metrics for natural and human capital
- Invest and leverage on technologies to create and support an enterprise-wide data model
- Use predictive analytics based upon this model to drive more holistic business decision-making.
- Enhance business partnering and analytical skills to ensure that finance can fulfil this new role across the organisation and continue to improve collaboration both across it and with external parties
- Drive for greater efficiency, productivity and standardisation across processes and common platforms
- Through these actions, establish finance as the central point within the organisation for achieving sustainable and responsible growth and enhancing the organisation's reputation.
PwC’s Daryl Wang: While global and SEA respondents rated environmental, social and governance (ESG) the lowest concern for them at the time of the survey, we see that this view has since shifted.
ESG reporting is becoming an increasingly important topic around the boardroom table as stakeholders and investors seek to understand the impact of organisations on all aspects of society.
The focus on ESG has also introduced new challenges for companies looking to raise capital from institutional investors. These institutional investors are increasingly exploring new investment evaluation frameworks and approaches to responsible ownership (as highlighted in a survey conducted by the Official Monetary and Financial Institutions Forum).
There is now an additional criterion that their invested assets need to contribute positively to ESG agenda—for instance accelerating action for net-zero emissions economy, besides the traditional investment returns, safety, and liquidity requirements. This presents an enormous opportunity for finance functions to strengthen their relevance in capturing and measuring financial and non-financial information.
This also presents an opportunity for the finance function to extend its role into new areas of ESG reporting.
The finance function must fully understand the concept of ESG reporting and be at the forefront of driving it. The function also needs to realise that issues have to be addressed now and not after the pandemic.
The immediate step is for finance teams to support the organisation in understanding its current position, develop an ESG agenda to deliver on its commitments, and measure progress on an ongoing basis.