The Covid-19 pandemic has upended nearly every industry and profession, creating new challenges while accelerating pre-existing ones. This is as true for the finance function as it is for any other area of business, writes Raef Lawson, VP – research and policy at IMA
The Institute of Management Accountants (IMA) recently conducted a survey of the impact of the pandemic on finance functions of companies around the world.
Entitled The Impact of Covid-19 on the Finance Function, the resulting report looked at how the pandemic has affected company revenue, as well as staffing, compensation, priorities and personnel for the finance function. But perhaps the most enlightening – and actionable – part of the report details the demand and need for finance departments to invest fully in upskilling and ongoing education for staff.
The study, which included a survey of 1,481 accounting and finance professionals located in five countries – China, India, Saudi Arabia, the UAE and the US – unsurprisingly found across-the-board declines in revenue over the course of the pandemic. Also expected were declines in staffing levels: approximately 50% of the companies surveyed have let some of their staff go – albeit this differed by region, with US companies having laid off the fewest employees and Middle Eastern firms having laid off the most staff.
Financial headwinds also had an impact on compensation in the finance function. According to the survey, respondents have had a reduction in their compensation this year, whether in salary, bonus or both. This combination of layoffs and cutbacks has certainly made things more difficult for finance professionals, but organisations that have had to make these adjustments may also face difficulties going forward when it comes to employee retention and other human capital issues. And such challenges will be important when addressing the next part of the survey’s findings: the shift in priorities for the finance function.
Covid-19 has changed the actual work that finance professionals are doing. As might be expected, the largest increase in emphasis is seen in risk management, with nearly half (44%) of companies spending more (or much more) time in this area. This is followed by cash forecasting and management. On the other hand, less time is being spent on business partnering and decision support, with 34% of companies spending less time in this area, as opposed to 22% spending more time. The shift toward risk management and forecasting will likely continue once the worst of the pandemic is long past, due to the need to prepare organisations for any such ‘black swan’ events in the future.
Capitalising on growth
So, what do these Covid-era changes, challenges and evolutions mean for the way professionals and organisations think about skills and education? First, upskilling should be imperative at a time when the job market is difficult. As the economy begins to recover post-pandemic, professionals who have spent time acquiring new skills and/or credentials will be in a prime place to capitalise on a return to growth.
The survey results bear witness to this fact: More than 80% of respondents have improved, or plan to improve, in the core finance skills listed above. Though this may not be an ideal time to pursue traditional academic credentials, programmes like IMA’s Certified Management Accountant certification offer mastery of the core skills needed by today’s finance professionals, including risk management, at a time when demand for that competency is rising.
Another important resource when it comes to risk management is the Committee of Sponsoring Organizations of the Treadway Commission (COSO)’s Enterprise Risk Management Framework. The COSO framework equips finance professionals with the tools they need to predict and pre-empt organisational risk rather than just react to it. The framework covers governance and culture, strategy and objective setting, performance, review and revision, and information, communications and reporting. Both individual professionals and organisations should embrace the framework if they have an interest in enhancing risk management capabilities, as our survey indicates.
Finally, organisations must understand their own role in encouraging upskilling and ongoing education. It’s one thing to rhetorically support a new attitude toward learning, but many professionals, especially in a difficult economic time, will inevitably find it difficult to bear the costs in money and time. Furthermore, professionals increasingly expect their organisations to provide resources toward upskilling.
An authoritative 72% of respondents in our survey believed companies should financially support upskilling of their employees. This means that organisations, as they seek to return to growth this year and attract back some of the human capital they had to lay off, will need to demonstrate their commitment to helping finance staff adapt to the new realities of the profession.