5 minute read
Corporate leaders have expanded their roles and skill sets in the past two years, assuming additional responsibilities, implementing remote-work routines, and strategizing on ways to improve the financial and accounting processes. Now more than ever, corporate leaders can chart their own course to become a more effective business partner and add more value within their organizations. The 13th Annual KPMG Global Financial Reporting and Valuation Conference (GFRVC) spotlighted the following opportunities:
- Providing more valuable and faster insights and support for event-driven transactions;
- Digitizing the finance and accounting functions for complete transformation;
- Leading the way on top corporate priorities including environmental, social and governance (ESG), data collection and reporting; and
- Managing teams and developing talent in remote and hybrid working models for optimal collaboration and connectivity.
In some ways, the corporate leaders’ situation today is not unlike that recounted by the most decorated US Winter Olympian of all time, entrepreneur, influencer, broadcaster and New York Times bestselling author, Apolo Ohno. In 2006, fresh from his second Olympics win, he realized that to stay competitive for a third Winter Games, he needed a physical and mental transformation. Skating times good enough to win gold in Salt Lake 2002 wouldn’t be enough to make the finals in Vancouver in 2010.
Ohno told the remote audience how he set about preparing to excel once more. He looked at all the data, assessed his strengths and weaknesses. It involved “looking in the mirror and saying, ‘I know that perhaps you are not where you need to be, but what are the areas of your training, your recovery, your mindset can you improve over the shortest duration of time?’” Ohno recalled.
Corporate leaders faced a similarly defining moment in 2021, GFRVC speakers said. Having had to often step outside their comfort zones to proactively identify the opportunities, assess the ways in which to drive innovation and improvement, and build on their existing skillsets necessary to navigate their own career agendas, particularly as they relate to event-driven transactions, digitization, ESG initiatives, and workplace policies.
Providing cross-functional support for event-driven transactions
Event-driven transactions exploded across U.S. industries in 2021, up 60% from 2020, with a total of $5.1 trillion spent on transactions in 2021, up from $3.8 trillion from 2020 and being the biggest year in M&A since 2015. Given the accelerated deadlines and tightened regulatory environment, corporate leaders found themselves at the forefront of these events from the initial stages of strategic planning to execution and delivery.
Corporate leaders want to be confident that the decisions they make about their business will generate lasting value. Todd Dubner, KPMG principal outlined how corporate leaders can create a fairly valued, multi-business portfolio through two key levers – to sell more and sell fast and to reinvest aggressively in the core. “A consistent trend over the past years was this shift of the finance function from being less tactical to more strategic. What that means is that there are a range of different ways in which tomorrow looks different from today. This role of shaping strategy to exceed investor expectations really now falls (or should fall) within the finance function. Corporate leaders today are more enablers and drivers in strategy than necessarily the driver or the keeper of numbers,” said Ramahi Sarma-Rupavtarm, a managing director with KPMG.
Providing risk management for acquisitions, divestitures, IPOs, SPACs and other financing transactions is another way corporate leaders are positioning themselves as valued business partners within their organizations. According to the majority of respondents in the 3rd Annual Chief Accounting Officer (CAO) Survey (CAO Survey) from KPMG, the results of which were published in a new report CAO Spotlight: The value of the strategic chief accounting officer and highlighted during the conference, CEOs and cross-functional C-suite peers to the CAO believe that CAOs are critical to ensuring that transaction related controls and risk management are handled effectively throughout a transaction.
Digitizing the finance and accounting functions for complete transformation
Seizing new opportunities can be quite challenging given the traditional demands of the finance and accounting functions. KPMG’s Tim Lashua, KPMG partner, noted that CAOs often don’t have capacity to take on new duties. In fact, more than half of respondents in the KPMG survey said CAOs are currently held back by the volume of work they must still do manually.
CAO respondents from the CAO Survey and GFRV speakers are both in agreement that the solution to the increase of manual tasks is the continuation of the digitization process of the finance and accounting functions. Even planning for automation helps, noted Dara Bazzano, Senior Vice President and Chief Accounting Officer of T-Mobile. Designing process automation led her company to simplify its organizational flow, she said. Following T-Mobile’s merger with Sprint in 2018, Bazzano said that they were able to shorten their quarterly close by 10 days and the time spent on reporting by 50%.
Erin Polek, Senior Vice President and Chief Accounting Officer of Qualcomm, said her team began automation by looking for ways to simplify shorter processes. The more the Qualcomm team used robotic process analytics and other machine learning tools to assess processes, she noted, the more they saw opportunities that went beyond cost-cutting. “Then we focused on, how do we drive quality through the use of these tools rather than cost savings?” Polek recalled.
Unsure whether to pursue end-to-end processes or quick wins? It’s not a problem, according to Jim Murphy, KPMG partner, cloud-platforms make it easy to pursue different goals simultaneously. “You don’t have to wait for basic automation to be in place. Because of the cloud technologies that are out there, you could focus on capturing that data and analytical views, and the different views that are needed to actually help make decisions,” he explained.
Leading the way on environmental, social and governance analyses, data collection and reporting
Dean Bell, KPMG partner, kicked off the Charting the ESG Journey session by highlighting that “ESG is a place to unlock value for investors and drive profitable growth.” However, in order to unlock the value of ESG, there needs to be ownership and as of right now, some organizations are struggling with who should own this new corporate initiative.
Speakers agreed that ESG reporting needs to be translated into financial metrics and used as an input for strategy and investment decisions. Katherine Blue, KPMG Principal, highlighted what is central to the finance organization , “the concept around financial information and non-financial information needing to follow the same flows as the reporting on ESG-related performance to investors, shareholders and stakeholders.”
Joe Allanson, Executive Vice President, Finance ESG at Salesforce, sees the preparation of these new ESG statements as an enormous opportunity for companies. “I think the financial statements were really the way to communicate with investors in the last century. Now, ESG reports will offer companies a way to tell investors a much richer story about themselves,” he added.
But ready or not, here it comes: ESG burdens will probably grow, speakers agreed. “Increasingly, it will be a focus area from a regulatory perspective, for both reporting as well as disclosure,” predicted Dean Bell.
“ESG is not going away,” Joe Allanson warned. “There is no finish line. This is a core competency that every financial professional must have in order to be successful as a finance professional in the future.”
Managing teams in remote and hybrid working models for optimal collaboration and connectivity
The nature of how corporate leaders manage and engage a distributed workforce has shifted drastically over the last 20 months. Felicia Lyon, KPMG principal, and Melanie Wendt, KPMG director, highlight the three challenges most organizations and C-suite executives are facing:
- Rapid evolution of digitalization. The pace of technology and change is faster than it has ever been. We can no longer think about a three-year implementation plan for our technology. We’ve got to go fast and keep up with the market. Companies have to advance the way they use and leverage technology in the way they work.
- Double disruption. The pandemic and adopting new technologies in the remote environment, has caused double disruption. Companies were able to adapt quickly and have minimal declines in productivity, but it’s more than just simple teleworking software. Companies need to think about how to use technology to harness the power of their people while managing and mitigating risk and the challenges.
- Talent. Today it’s really an employee market and employees have great expectations. All companies are competing for the same highly skilled talent, and the number of transitions is at an all-time high.
Although the solutions to these challenges will not look the same for every company, the recommendation is for companies to, “use the data to drive the decisions.” According to Melanie Wendt, “It's being able to use the information that you can garner and make decisions and offer different things that you might not think of for those employees to engage them, and to help drive a purpose for them in a different way.”
The key takeaway
Whatever the choice, Apolo Ohno, the keynote speaker, advised pursuing it whole-heartedly. The most decorated American Olympian at the Winter Olympics in history, Ohno said he won in part because he focused on the possibilities, not the difficulties.
“We always have these voices on both of our shoulders,” Ohno said. “One is always telling you, ‘Yes, you can achieve these things. Yes, you can adapt. Yes, you can reinvent. Yes, you can persevere through this.’ The other is telling you, ‘No, you’re not good enough. You're not tall enough. You're not smart enough. You don’t know the right people. You’re not a good networker. You’re not social enough.’ Whatever it is that you are telling you, you’re listening to that.” Ohno persevered by focusing on the positives, he says. And for corporate leaders facing more opportunities in 2022, this was received as solid advice: think like a Chief Optimist Officer.