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Corporate Finance

More Work, But No More Money

Corporate finance teams must learn how to provide more guidance as well as their traditional governance responsibilities, but they won't be getting any more resources

Companies are larger and more complex than at any time in their history, and to cope they are asking employees to work in different ways.

One of the most recognizable results of this change has been the type of work that corporate functions are called on to perform. In short, functions must move from providing “governance” of established, formal, repeatable processes (ensuring people are hired in accordance with company policy, that they are paid on time, that the company’s accounts are accurate and don’t break the law, and so on) to providing “guidance” on the decisions their colleagues are called on to make.

This shift is true of all corporate functions. For example, those in HR might be asked to provide more guidance on what skills a line manager will be looking for in their employees five years from now, or those in IT might need to design new processes to implement a piece of cutting edge technology found by a line manager.

More Guidance…

In Finance this means help with more analysis of all sorts of financial and operational data, and it’s a shift that hasn’t been easy for the world’s finance functions. While business partners generally rate Finance as effective when it comes to governance activities, most don’t see Finance providing effective guidance to the business (see chart 1).

Business partner response on Finance's capabilities

Chart 1: Business partner feedback on Finance’s capabilities  Percentage of business partners rating Finance as “effective” or “very effective”; n=891 individual business partner responses  Source: CEB analysis

And, if they’re not good enough now, then finance functions have got a mountain to climb in the years to come. CEB data show that 83% of finance executives expect the scale and scope of the “analytics” they provide to increase significantly in the next five years, and that will change the way CFOs and their senior teams need to think about hiring and developing staff. In the ocean of data that any large company now produces, it’s the task of finance staff to isolate what is relevant, and show why.

While providing good guidance will separate high-performing finance functions from the rest across the next decade, they can’t neglect the governance mandate either (see chart 2). The past decade alone has seen some big changes made to the legal requirements for accounting and financial reporting, such as fair value measurements, the US Financial Accounting Standards Board’s (FASB) GAAP codification, the Dodd-Frank Act, and more.

And upcoming changes such as the new revenue recognition standard or the global push for increased tax transparency will require further adaptation. So it’s no wonder that CEB data show 89% of executives today are worried about corporate regulation changes.

The growing productivity challenge in finance

Chart 2: The productivity challenge in Finance  Illustrative  Source: CEB analysis

…But No More Money

And, on top of all of that, Finance has had to – and will have to –  deal with these growing demands with flat or declining budgets. CEB data show that finance executives expect their budgets to remain relatively flat as a percentage of revenue (see chart 3). The best CFOs will need to find a way to make their teams more efficient while also providing the right governance and guidance.

Finance budget-revenue is flat

Chart 3: Finance budget/revenue is flat  Source: CEB analysis

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