CGMA Designation Launch Brings Together International Business Leaders

On January 31, international business leaders participated in a panel discussion marking the launch of the new Chartered Global Management Accountant (CGMA) designation and focused on recent research presented in the report “Rebooting business: Valuing the human dimension.”

To compile the report, the AICPA and CIMA surveyed 280 CEOs from more than 21 countries and interviewed 17 CEOs, chairmen and other business leaders—a group collectively responsible for over 2.1 million jobs and a market capitalization of $1 trillion—to understand how they viewed current global challenges and ways to overcome them. The launch event, hosted by the AICPA and the Chartered Institute of Management Accountants (CIMA), was broadcast live via webcast and held simultaneously in New York City and London.

From both sides of the Atlantic, the message was clear: the economic crisis has brought about profound changes, as well as revealed the need for change within the finance role. The CGMA designation is a powerful response to this need: CPA, CGMAs can drive positive change and lead us through these challenging times by marrying financial reporting with non-financial factors such as long-term sustainability, transparency and other human dynamics.

The Human Dimension in Business

The report noted that 68 percent of survey respondents believe the human element—how customers, employees, partners and communities play a role in business success—is critical to defining value in an organization. Regarding this “human dimension,” the report emphasized that:

•    Overwhelmingly, more value is coming from people rather than financial and physical assets.

•    The most significant forces shaping the future business agenda for organizations are their customers and employees.

•    There is a clear need for companies to put more emphasis on demonstrating how the human dimension contributes value, given that the current reporting system doesn’t reflect such intangible assets fully.

However, this human element isn’t getting measured or reported. Launch event panelist Gary Kabureck, Vice President and Chief Accounting Officer, Xerox, acknowledged that the human element is difficult to measure, yet companies who understand these measures will be more successful than others. “People measure financial things because they can…but that’s not the information you need to run your business,” he said.

The survey also asked, “Who is going to be most influential in shaping your future business agenda?” The top response was “customers” with 16 percent offering this response. American Express, for instance, customizes offers to customers who like to spend at certain places, according to panelist, Chris Stanley, Americas Vice President and CFO of Global Network Services at American Express. When a business makes the customer feel like an individual, there is a greater spend and definitely a link between treating customers as individuals and financial results.

The number two response to the question was “employees” with 12 percent. Launch event panelists discussed how “old school” top-down model for employees—the “do what I say, and you’ll be rewarded” approach—is going by the wayside. Empowerment, recognition and interacting effectively with customers is not only better for the organization and the employee, it’ more cost-effective.

Short-Term Focus versus Long-Term Sustainable Success

The report discussed short-term focus versus long-term sustainable success, finding that:

•    Investor demands for short-term results are inconsistent with growing a sustainable business.

•    Investor focus on short-term rewards makes it difficult to plan for the future.

Seventy-six percent of survey respondents agreed that the current reporting system promotes excessive focus on financials, while 75 percent say there needs to be more emphasis placed on measuring and demonstrating the non-financial value of business.

Panelists discussed how quarterly reports are never going to go away and said the challenge for management accountants is to show investors how their company’s business decisions translate into good financial results. They also stressed the need to stay consistent with long term strategies, even if the short term results aren’t favorable, as well as to keep core businesses functioning well, even while making changes.

The Importance of Transparency

“Rebooting business” showed that 87 percent of CEOs see transparency as an opportunity, yet 70 percent also admit they struggle with it. The report emphasized that:

•    Transparency is a priority—and an opportunity—for most companies.

•    The biggest opportunities are improved reputation with customers and decision making. The biggest obstacles are data security and loss of competitive advantage.

•    It can be difficult to find the right balance between being open and protecting commercially sensitive information.

Launch panelists in London agreed that transparency is important, but said sensitive information also needs to be protected. Douglas Flint, Group Chairman of HSBC Holdings, commented on how not just the investor base, but the consumer—and society—generally wants to know far more today than in the past, particularly the organization’s values and the behaviors that reflect those values and drive results.

Roger Tomlinson, Finance Director for Business Partnering, Rolls Royce, said sharing information with employees has helped strengthen his company. At the same time, he urged businesses to take the time to carefully consider data before releasing it, stressing that it must be intelligible and trustworthy.

Helen Weir, former Group Finance Director for Lloyds and current Non-executive Director of SABMiller, discussed the increased flow and volume of information that exists today. She also discussed why it is important to consider what a business chooses not to disclose, since that information will likely become available to investors and the public at some point in time.

Just 12 Percent of CEOs Turn to Their Finance Team First

With all the information available to them and the ability to convey that information appropriately to stakeholders, CPAs working in business, industry and government have a prime opportunity to step forward now and take their seat at the table. “Rebooting business: Valuing the human dimension” reported that just 12 percent of CEOs turn first to their finance team to measure non-financial value in a company. Whether or not they are at the helm of publicly traded or private companies, CEOs are far more likely to go to the executive team, says the report, with 24 percent saying this was their preferred option.

The report also said CEOs need competent people to understand where value exists in a company, and that CPA, CGMAs can help work across the organization to connect the dots. Panelists reminded the audience that managing and reporting on factors such as the human dimension can broaden prospects and make a career in management accounting that much more rewarding. They also urged those in attendance to encourage their organizations to think differently and strategically. Showcasing their skills and business acumen with the CGMA is one way for CPA management accountants to tie together their financial and non-financial skillset.

Knowledge and Skills Valued and Needed

According to the survey, in the next 18-24 months, the focus for business will be on the human dimension. That is yet another reason why obtaining a CGMA designation now makes sense.

“CEOs have told us they need our leadership and counsel,” says Robert Mancini. “Obtaining a CGMA makes sense on every level—the work CPA, CGMAs will do will strengthen the global economy; the designation will give them the knowledge and skills they need to strengthen their organizations; and on a personal level, it will give them new leadership opportunities and satisfaction.”

For More Information

To view the Jan. 31 CGMA launch event, click here.