Jeff Thompson, President & CEO of the Institute of Management Accountants, recently stated, “To succeed in today’s automation-driven world, today’s young accountants need to become ‘future proof.’” Becoming “future proof” requires that something be continuously updated, redesigned or changed so that it will continue to be effective as the future unfolds. Accountants have been around for a long time. Organizations will always need accountants, won’t they? Why do accountants need to change to become future proof? What is it they need to change?
The World Economic Forum’s “Future of Jobs Report 2020” ranked “Accountants and Auditors” fourth on its list of jobs whose demand is most likely to decrease over the next five years. Other surveys have confirmed WEF’s general assessment. Automation and artificial intelligence are steadily eliminating the need for work traditionally performed by accountants. Traditional accounting jobs are slowly but surely disappearing.
The following observation made over my fifty plus years as an auditor, controller and management consultant may surprise many, if not most, financial executives: Most financial executives are not considered by their non-financial counterparts to be part of their organization’s decision-making team. They are not seen as value-adding members of management. Instead, they are viewed as key figures in the organization’s “administration” who help measure and preserve an organization’s value, but have no significant role in creating that value.
A 2013 survey by EPM Channel adds credibility to this observation. Among the questions answered in its “Finance 360° Insight™” Survey were three that were quite revealing:
· How often is Finance called upon to provide support when executives are facing important business decisions? Only 35% of financial executives indicated that they were asked to provide support for their company’s important business decisions. Non-financial executives believed that finance’s input was sought just 31% of the time. This is certainly not a result you would expect if financial executives were considered value-adding contributors to the decision making process.
· With the right type of training, experience, and tools what is the level of support you think Finance can deliver to your organization? 46% of financial executives believed that with the right background and support they could become “game changers” and significantly improve the quality of their company’s decisions. Only 24% of non-financial executives saw that kind of potential. Over three-quarters of non-financial executives didn’t believe a financial executive, no matter how well seasoned and supported, could be a “game changer” when it comes to the quality of decisions.
· What is the actual level of decision support that Finance provides to your organization today? Only 7% of financial executives said they currently provide “game changing” decision support for their organization. As low as that percentage is, it’s seven percentage points higher than non-financial executives view. None of the survey’s non-financial respondents believed their company’s financial executives currently provide “game changing” decision support.
In short, accountants’ perception of their value to an organizations is much greater than the value attributed to them by their peers. Although they are considered valuable administrators that measure and preserve the value created by others, they are not considered value contributors themselves. Unfortunately, it is in measuring and preserving value that automation and artificial intelligence are eating away at the demand for accountants.
To remain relevant accountants must do more than simply measure and preserve value; they must become indispensable, value-adding members of an organization’s management team. This is true whether the accountant is an employee of the organization or an independent accountant who provides accounting services to clients. Add value or go the way of the dinosaur.
The Institute of Management Accountants’ recent Statement on Management Accounting titled “The Profitability Analytics Framework” provides a comprehensive framework accountants can use as a guide in expanding their role, adding value, and securing their future. It does not promote specific methodologies and it is not a “paint by the numbers” solution. Neither is it a quick fix that will change the perception of an accountant overnight. Instead, it is a framework that details the areas in which accountants should focus their attention – revenues, costs and investment – and how accurate models of each should be used to support the three phases of strategy – formulation, validation and execution.
The WEF report suggested that by 2025 analytical thinking, creativity, and flexibility will be among the most sought-after skills. These skills will be essential for accountants as they concentrate their focus on addressing the areas highlighted by the profitability analytics framework. Every organization is unique and will need to address its issues differently. Accountants will need to use analytical thinking, creativity and flexibility, together with an ability to influence individuals over whom they have no authority, to customize solutions that best fit their organizations.
By increasing the scope and focus of their activities, insuring the accuracy of their analyses, gaining the confidence of their peers, reducing the need for management intuition and mitigating management’s biases, accountants can become vital, value-adding parts of an organization’s decision making team. They can become the starting point for top management’s data-driven decision-making and make themselves “future proof.”
The novel I recently published for the Profitability Analytics Center of Excellence (PACE), “Profitable Expectations: An Accountant Rising to the Challenge,” is the story of a traditional, financial accounting-focused controller who was able to “future proof” herself and transition from being an able administrator to an indispensable, value-adding member of her company’s management team. It highlights how she used analytical thinking, creativity, flexibility and her ability to influence her peers to enhance the quality of her company’s revenues, develop ways to reduce costs, and optimize the use of its investment dollars. Hopefully, it can provide a template for accountants who hope to “future proof” their careers in the years to come.
You can learn more about “Profitable Expectations” on the PACE Website at https://www.profitability-analytics.org/greatexpectations