Financial Leadership and the Management Accountant – Coping with An Uncertain Economic Environment by: Jeff Thomson IMA President & CEO November, 2008.

Financial Leadership and the Management Accountant – Coping with An Uncertain

Economic Environment

by:Jeff Thomson

IMA President & CEO

November, 2008

IMA – A Brief Background– Founded in 1919 – Entering our 90th Year!– Nearly 60,000 members spanning 125 countries

• China and Middle East are the highest concentration of members outside of US

– CMA Certification - internationally recognized • Over 30,000 CMAs worldwide• Exam and related materials translated into Chinese

– Opportunities for students to participate through scholarships, awards and competition programs; creation of student chapter; networking with local chapter; attendance at student leadership conference

– www.imanet.org/membership_helping_student.asp

– Over 1,000 members in China– Local contacts in China – Linda Li and Harry Liang

Where Is The Economy Now

• Oil - $56.45 vs. recent high of $147.96• Dow – 8,500 vs. recent high of 13,850• USD to EURO - $0.80 versus recent

low of $0.63• Baltic Dry Index - 841 vs recent high

of 12,000. (BDI is a measure of the cost of shipping goods)

• China GDP growth declining from 11% to 8% and then 6%??

The Past, The Present and the Future

US housing market bubble

US Sub Prime collapse

Investor lack of confidence

Northern Rock collapse

Bear Sternscollapse

Fannie Mae/Freddie Maccollapse

Lehman Bros collapse

Credit market squeeze

Global recession

New risk & analysisenvironment

On Going Issues

• Fair value accounting or mark to market concerns, issues and re thinking

• Difficult access to credit for all industries hurts investment and growth

• Fear of countries turning more inward to “protect themselves”

• How to properly manage risk and control

The Role of The Management Accountant Before, During and After

the Current Crisis• Before

• During

• After (the future)

Is now the time to be a management accountant?

Questions to think about…

What are some criteria for selecting a career? What does an accountant “do”? What does a management accountant “do”? Is certification important? Why do I need to care about ethics? What should I do to prepare for my first job?

The “Good Career” Checklist ….

Is the market environment/profession healthy? Is there career growth vs. “just a job”? Are salaries competitive and growing? Am I helping to create growth in my organization, looking forward - not behind? Can I have some fun along the way?

Financial Leadership: What Does “It” Mean???

•For the Young Professional: To grow as a professional with a cohesive set of hard and soft skills “tailored to my evolving needs”.

•For the “Seasoned” Practitioner: To be a more influential finance professional regardless of position in the hierarchy of an organization.

•For the Manager of Staff: To create a more influential CFO business partner team supporting implementation of the organization’s strategy.

Roles of a Successful New Employee

Team Player

Adapter

Time Manager

Diplomat

Investigator

Student

Resource Person

Representative

Dues Paying Member

Career Planner

Leader

Conviction The passion and commitment the person demonstrates toward his or her vision

Character Consistent demonstration of integrity, honestyrespect, and trust

Care Demonstration of concern for the personal and professional well-being of others (building “followership”)

Courage Willingness to stand up for one’s beliefs,Challenge others, admit mistakes, and change one’s own behavior when necessary.

Composure Consistent display of appropriate emotional reactions, particularly in tough or crisis situations

Competence Proficiency in hard skills (technical, functional, content expertise) and soft skills (interpersonal, communications, team and organizational skills)

What is Leadership - The Six “C’s” of Leadership Credibility

HA

RD

(H

) an

d S

OF

T (

S)

Ski

lls

FP= Finance Professional

FINANCIAL LEADERSHIP – A CONTINUUM (illustrative)

Effective Communications (S)

Time Management (S)

Cost Accounting, Budget Prep, Excel Analysis (H )

Audit, Tax, External Reporting (H)

Learn the Business (S)

Cross-Functional Collaboration, Influence (S)

Project Management (H)

Forecasting, ERP Evaluation (H)

Financial Risk Analysis (H)

Strategic Planning (H)

Cross-Functional Influencing Skills (S)

Leading and Managing Staff/Teams (S)

Process Management (H)

Enterprise Risk Management (H)

Investor and Customer Relations (S)

Change Manager/Agent (S)

M&A, New Market and Product Development (H)

Entry FP (1st job) Young FP Seasoned FP Senior FP

What CFOs are Saying …. Bottom Lines

•Aspire to move from counter of wealth and compliance cop to creator of wealth and influencers of strategy. But, ….

•This requires a whole new set of MA/finance function skill sets. But, …

•Sourcing these new skill sets is problematic and therefore they tend to be “home grown”.

NOW SOON

Strategic Planning Integrated Planning, Budgeting, Forecasting

Forecasting Predictive Analytics/BI

Risk Identification Embedded Enterprise Risk Management

Customer/Segment Profitability

Marketing ROI/Customer Lifetime Value Analysis

Financial analysis;Leading indicators

Sustainability/Non-Financial Reporting/Triple Bottom Line

What CFOs are Saying …. Top of Mind Skill Sets

NOW SOON

Moderate IT Integration

Heavy IT integration of data with standardization to enable “one version of the truth”

Analytics an enabler Data/predictive analytics a competitive differentiator

Soft skills – Communications + ?

Soft skills – collaboration on cross functional teams, KNOWING THE BUSINESS.

Project management helpful

Business PROCESS management critical …..

What CFOs are Saying … Top of Mind Skill Sets

5) Masters of World-Class Talent Management (Training, Skills, Certification)

1) Strategic Business Partner

2) Champions of Corporate Performance Management, Budgeting

and Planning

3) Custodians and Champions of GRC – Governance, Risk and Compliance

4) Masters of Flawless Delivery of Transactional Processing Activities

Foun

datio

n

Critical Finance “Areas of Mastery”

Financial statement preparation and analysis Business case preparation/analysis to support

new products. Support for Mergers and Acquisitions (M&A), Planning, budgeting and forecasting to support

operations and the strategy of the organization. Implementing internal controls, quality and risk

processes to report financials with integrity while growing the business.

Management Accountants: What do we do?

Management Accounting professionals

perform these and other functions around the globe

with a passion for technical competence,

ethics, and driving business performance

The Management Accountant: Advocacy for Management

Technical Accounting Depth AND Business Operations Breadth in Decision Support, Planning and Control + Highest

Standards of Ethical Conduct + Commitment to Lifelong

Learning = A Management Accountant

Design Implement Manage Report Audit

The ManagementAccountant

Public Accounting

Inside

Management Accountants: Who are we?

• CFO, Foundations Behavioral Health• CFO/Treasurer, First Savings Bank• Director of Finance & Accounting, Marriott

International• Director of Technical Accounting & Reporting,

Microsoft• Finance Manager, Habitat for Humanity• Financial Controller, Johnson & Johnson• Vice President of Finance, Southeast Corporate

Federal Credit Union

• Firms with the most IMA members in China: Caterpillar, PWC, E&Y, ABB, Motorola …

Business Leader Quotations

“I can tell you the Certified Management Accountant certification or other professional credentialing is key for our 1,800 accountants. And, we have a credential expertise requirement for our senior leadership team to help ensure long-term, transparent financial reporting and SOX compliance.”

David Burritt, CPA, CMAChief Financial OfficerCaterpillar, Inc.

On February 4, 2008, David Burritt, CMA, CFO of Caterpillar Inc. provided testimony to the U.S. Treasury Advisory Committee in a human capital panel discussion the committee led on the Auditing Profession.

The following quote is excerpted from his testimony:

“By passing the CMA exam, we ensure that our staff stays current with certain standards of management accounting. It also helps to ensure that we have a highly skilled workforce that can do their jobs better, faster and with greater expertise.”

William L. Brower, Jr. CMA, CFMVice President, Group Finance Business AnalysisJohnson & Johnson

“The CMA deals with all the relevant areas of financial management and is a perfect complement to the strategic way we expect our professionals to perform.”

Stephen Cosgrove, CMAVice President and Corporate ControllerJohnson & Johnson

Business Leader Quotations

How Does Certification Benefit You?

Capstone to your educational degree

Opportunity to assess and demonstrate capabilities and expand knowledge base

Distinguishes you from your peers and increases credibility and productivity

Recognition of achievement

Expanded career options and greater earning potential CMAs earn 25% more than professionals without

certification (IMA’s 19th Annual Salary Survey, June 2008)

A CMA Professional Has…

Demonstrated ability to work across the breadth and depth of the entire accounting process within organizations

Proficiency in decision-making, planning, and control functions

Agreed to maintain professional competence through annual continuing professional education

Committed to a code of ethics

CMA Statistics

Over 30,000 CMAs issued to datePass rates for the four parts of the

exam range between 50% to 60%

Preparing for the CMA Exam

Make a personal commitment to study

Don’t procrastinate Sharpen knowledge of exam topics Restore test-taking skills Take self-study or live review

courses Visit www.imanet.org/certification

Ethics

Every management accountant has a responsibility to behave ethically. (IMA Code of Conduct)

It is essential to be aware of how your personal conduct impacts your peers, your subordinates, and your organization’s ethical culture.

An environment where every employee does not adhere to the organization’s code of conduct has the potential for questionable actions to occur.

Even incidents of even seemingly minor “rule bending” can be the impetus for someone else to bend the rules “just a little more next time”

Words of WisdomWords of Wisdom

Relax and be yourself – Don’t go overboard trying to impress everyone around you

A handshake and a “thank you” are simple gestures that go a long way

Find a mentor (can be internal or external) Keep your résumé updated Participate in some activity outside the workplace

(community, professional) Network, network, network!

Questions?