“The toughest thing of success is that you got to keep on being a success.”
Irving Berlin, composer
After completing this chapter you should be able to
Spot trends that impact our profession.
Use trend analysis to look for opportunities to serve clients.
Determine what your next step will be.
As you come into the end of this book, you may begin to feel overwhelmed about the task ahead in becoming a contract financial professional. Please realize that many others have gone before you and have successfully made the transition. The best place to start is with a personal commitment to learn and take more risks.
This chapter contains a tool for you to use in your commitment to grow. In addition, if you need more reasons why you need to add value to your employer or clients, study the trends that are impacting every Controller and CFO throughout the United States. Just as the quotation at the top of this page reminds us that there is work required to stay on top, keep in mind that you must commit to becoming more effective. Despite any trepidation or fear that you may feel, remind yourself often that once you have made the transition to become a part-time or contract Controller/CFO, the rewards you receive will be tremendous and far outweigh the challenges you face.
The many significant trends will help you see that there is a world of areas that you could specialize in to make money, have multiple clients, and satisfy your need to contribute.
In addition to the pitfalls to avoid, these are five realities that you must face in order to make yourself and your team more effective. Most are self-explanatory, but I have added a few comments at the end. The “we” is you, your team, and our profession.
Unless we change our thinking, tomorrow looks just like today.
Without a clear vision of tomorrow, what we expect tomorrow will not change from today.
If we raise our expectations, we alter our future vision.
Our skills and knowledge grow obsolete at an ever-faster rate.
A finance/accounting team only advances in two ways: 1) the solutions we provide, and 2) the connections we sustain.
OUR SKILLS AND KNOWLEDGE GROW OBSOLETE AT AN EVER-FASTER RATE
You must devote the time and resources to training and educating your staff. The skills you and your team acquired as recently as three years ago are now outdated. Even if your employer does not provide you with the funds for training, you must find ways to get your people trained.
A FINANCE/ACCOUNTING TEAM ONLY ADVANCES IN TWO WAYS: THE SOLUTIONS WE PROVIDE, AND THE CONNECTIONS WE SUSTAIN
As accountants we are very good at finding solutions and very poor at maintaining connections. This is an area that you will need to focus a lot of your attention to. The connections I refer to are
Getting outside of your office and meeting with people, face-to-face, on a regular basis.
Making allies with your peers on the executive or management team.
Becoming part of a networking group.
Rule of thumb: As the Controller you need to spend 25 percent to 35 percent of your time meeting with those you serve, including major customers, investors, creditors, and of course your peer managers.
Rule of thumb: Your employees must spend 10 percent to 15 percent of their time outside of the accounting department, meeting with those they serve (for example, vendors, customers, bankers, service providers, coworkers, and peers).
Be sure to refer back to the trends regarding being your own employer and boss, highlighted in chapter 1.
What trends do you see occurring in business?
What does the future hold for accountants?
TREND #1
The Cost of Processing Transactions is Approaching Zero
This is characterized by the information illustrated in table 9-1.
Table 9-1: Comparison of Labor Cost Per Transaction
Finance Process | Cost in the Average Company | Cost in the Worst Company | Cost in the World Class Company |
A/R remittance processing | $0.67 | $13.68 | $0.01 |
P/R check processing | $1.91 | $10.93 | $0.36 |
A/P invoice processing | $2.93 | $6.80 | $0.35 |
Tracking fixed assets | $4.05 | $19.10 | $0.16 |
Expense report processing | $6.05 | $25.75 | $0.27 |
Labor cost per transaction |
Source: AICPA and the Hackett Group www.thehackettgroup.com
Notice how close the costs in the last column are to zero.
TREND #2
Everyone Demands Instant Gratification
This is characterized by the following
The Internet and World Wide Web.
WiFi availability.
Cable TV, CNN, satellite radio.
Quicken and QuickBooks.
Executives who can get information on demand anywhere anytime yet have to wait 10 days for accounting to issue reports.
TREND #3
The Finance Group Will Spend Less Time Processing and More Time Consulting
This is characterized by the following
Decentralization of controls and management reporting.
Demand for real-time financial results.
World-Class companies are able to close within one day.
Finance must track, measure, and report on nonfinancial data.
Time spent processing transactions must be reduced below 35 percent from its current 77 percent.
Widespread adaptation of the scorecard and dashboard for internal reporting.
TREND #4
The Finance Group Will Be Ever Smaller and Less Permanent
This is characterized by the following
The average finance group is between 33 percent to 70 percent smaller than it was 25 years ago for the same size of company.
The typical manager’s span of control is approaching 25 employees (it was five employees in 1970s).
For every U.S. worker who loses their job, there are 25 employees who would leave their job if they could afford to.
The average salary and benefits of an American worker in industries (where jobs are being added) is $22,000 and where jobs are being eliminated is $32,000.
CEOs will continue to use downsizing and outsourcing as a permanent management tool.
TREND #5
A Finance Professional’s Employment Will Not Be Full-time or “Permanent”
This is characterized by the following
Today’s college graduate will have 5 to 8 different careers and spend 20 percent of their time unemployed before they retire.
U.S. companies are relying on just-in-time employees to meet any growth in employment.
Contingent workers make up between 25 percent to 33 percent of this country’s workforce and will grow to 50 percent by in the next decade (contingent worker = parttimers, contractors, and leased employees).
91 percent of businesses use temporary employees, which resulted in the temporary industry to grow tenfold over the last ten years.
30 percent of all new jobs created are part-time and lower pay scale positions.
American businesses are outsourcing finance and administrative work in record numbers.
TREND #6
Movement Toward a Pay for Performance Compensation System
This is characterized by the following
Wage increases to professionals that are barely keeping up with inflation.
Employers demanding that employees must provide positive proof that they are earning their compensation.
Profit sharing plans and stock options are replacing annual raises.
“What have you done for me lately” mentality widespread among executives and managers.
For many professionals, 20 percent to 30 percent of compensation is based on performance milestones.
TREND #7
Accountant Required to Have a Broader Base of Knowledge beyond Accounting/Finance
This is characterized by the following
Almost all of accounting is done using technology.
The profession requires a five year degree in order to become a CPA.
During a merger the employees who are retained are those who have skills beyond accounting.
Continued outsourcing of non-value work like A/P invoicing, collections, receipts processing, and tax preparation.
By the year 2020, 75 percent of all American workers will need retraining because their skills have become obsolete.
Technology’s life cycle hovers around 18 months.
TREND #8
Reliance on Tasks Forces and Project Teams
This is characterized by the following.
Work is being characterized as a series of projects staffed by employees whose expertise is required to bring the project to fruition.
Due to poor communications, there is more reliance placed on cross-functional task force and project teams to get the work done.
CEOs screen for accountants who can work well with others and are team players.
Just-in-time employee syndrome.
A majority of employee teams have members in remote sites or locations.
TREND #9
Increase in Need for Compliance and Governance That Does Not Waste Resources
This is characterized by the following.
Sarbanes Oxley.
U.S. workers who admit doing slow, sloppy work on purpose—currently 22 percent and rising.
Current and past scandals for financial reporting, stock options, and the pro forma earnings. The next scandal will be hedge funds.
More and more reliance on technology instead of people to make decisions and process transactions, leading to lack of awareness on the quality of the work.
Executives who put profits ahead of governance.
Greed.
Achieve sales targets at all costs.
Ends that justify the means.
“What have you done for me lately” mentality widespread among executives and managers.
The Plus/Delta Analysis is an excellent learning tool for every meeting, project, or performance evaluation.
The Plus/Delta Analysis is a summary of what is worth repeating and what needs improving. It spawns rapid improvements, shortens the learning curve, and increases accountability.
Announce to everyone the purpose of the Plus/Delta.
Spend time gathering a list of things that worked well and list them on the Plus side. Stay with it until this list is complete or there are no more suggestions.
Spend time gathering a list of things that people would like to see changed and list them on the Delta side. Again, stay with it until this list is complete or there are no more suggestions.
Before the next session or meeting, address the changes that were previously recommended and accommodate those that cannot be changed.
Start the next meeting by reviewing the most recent Plus/Delta.
Remind everyone that you will continue doing what is working from the Plus list.
Inform the team of the changes that will come from the Delta list.
Explain which changes cannot be implemented, then brainstorm alternatives.
Continue to use the Plus/Delta tool at each meeting, event, or gathering.
Notice and celebrate how quickly improvements are taking place.
Note: This is good documentation to retain for demonstrating to others that you are being proactive in addressing people’s suggestions for improvement and are listening to your best resources. Even better, it models for clients what it takes to be an agent of change.
There is a real need for your services!
The need is expected to continue to grow dramatically because of ongoing reengineering, pressures to lower costs, and the new paradigm of the flexible organization. Consultants flourish when companies are confused, anxious, or optimistic about the future. Hired Guns like you love to take on problems that have multiple layers of complexity.
Produce quick results.
Limited time and income.
Super-high visibility.
Few external rewards for achieving success.
Unreasonable expectations on you.
Personal autonomy.
Flexibility.
Doing work that is fun, fulfilling, and challenging.
Higher income.
Hone your skills as a negotiator, time manager, and delegator.
Identify opportunities for yourself before launching into the role.
Define your role through a Position Description.
Stay focused, know what is important, and establish priorities.
Keep your eyes on the big picture.
Be accountable for your results and success.
Think in terms of systems to support what the company needs.
Think in terms of systems to support what you need.
Market from your strengths.
Build your own support system or network.
Leverage your time and knowledge.