The world is now experiencing a severe economic recession as a result of the COVID-19 pandemic. The Organisation for Economic Co-operation and Development has warned that if a second wave of the virus hits, the global economy could contract by 7.6% this year before climbing back 2.8% in 2021.
So, what will be management accountants’ priorities during the economic recovery? CIMA Council, the Institute’s governing body, recently held a Strategy Insights session that brought together views and experiences from across its 56 members to help direct our response. I would like to share with you the outputs from this session and three significant themes that emerged:
Corporate resilience continues to be a major issue for organisations of all sizes. In this difficult climate, organisations face shrinking revenues, cash and liquidity challenges, and ongoing market volatility.
Additionally, organisations must address challenges in relation to workforce engagement, staff mental health, reopening workplaces and concerns around public transport, gaining access to reliable information on health, and potentially planning for a second wave of the virus. Some organisations lack adequate technological infrastructure, which hampers their agility.
Finance professionals can guide their organisations through the economic recovery by providing objectivity and clarity of thought, and by thinking ahead. They can help to ensure their organisations don’t retrench but instead move forward by making good strategic investments. Small and medium-size enterprises (SMEs), in particular, tend to be very entrepreneurial, so they will be in a good position to take advantage of opportunities that arise. Members in practice can work closely with their clients to help them manage falls in turnover, retain key staff, embed risk management systems, and boost the resilience of their organisations.
In the public, regulatory, and not-for-profit sectors, funding is a major concern. Organisations are also having to rethink how they effectively deliver products and services and engage with their customers in new ways, by replacing face-to-face contact with technological tools. In certain sectors, such as education and healthcare, the move to digital delivery has already proved to be successful.
Some large organisations had made significant investments in digital transformation before the crisis struck. They were therefore well prepared and may have even seen improvements in productivity during lockdown. COVID-19 has, however, accelerated business and digital finance transformation in organisations of all sizes across different sectors. In particular, it has increased usage of cloud and mobile-based applications.
Going forward, businesses are increasingly looking to invest in finance technology that gives them visibility of their productivity and supply chain challenges. They also want tools that enable them to replan their forecasts and test different scenarios virtually, as well as collaborate effectively with other business units.
The crisis has underlined the practicality of cloud accounting systems. Members in practice have found that even clients who were previously technology laggards are now interacting with them using digital channels.
Employability and skills
The COVID-19 crisis — together with the large-scale shift to remote working — has highlighted the importance of good communication skills. During the crisis, leaders have had to demonstrate emotional intelligence and engage with their teams remotely. Clarity, empathy, and succinctness have been key to enabling successful virtual communication, along with online collaboration tools. Other skills that proved valuable during lockdown were the ability to work independently and focus on outcomes, as well as an aptitude for project management. This year, leaders have been expected to demonstrate agility, creativity, and innovation while driving change in a remote context.
Additionally, the crisis has highlighted the importance of mindset. People with a change-oriented mindset and technological skills will be proficient in the new world, but some organisations will need to help their people adapt to the new environment, especially in cases where workers have been furloughed and may not have had the chance to develop new skills. Also, since different people have different needs, organisations should show flexibility when reopening their workplaces.
From a finance perspective, the crisis has highlighted the value of core finance skills and the use of data to generate insights. It has also shown that many finance professionals feel more comfortable with standard reporting than undertaking cash flow modelling and frequent scenario planning. Finance leaders will therefore need to consider how they can upskill their teams in these areas. Overall, however, the crisis is enabling finance professionals to prove their value as strategic business partners.
This economic climate presents huge challenges for organisations in every sector. Members can play a major role in helping their own organisations, as well as the local and global economies, recover from the crisis and become more resilient in the future. For additional insights and access to tools and resources, including our Business Resilience Tool Kit, visit CIMA’s Coronavirus (COVID-19) Resource Centre.
CIMA Council plays a key role in the advancement of management accountancy, and its primary focus is to engage on topics of strategic importance to the profession that can be supported by the activities of CIMA and the Association of International Certified Professional Accountants. This article is one example of the many outputs informed by discussions held at Council, which comprises 56 volunteers, and supported by its outreach work with the management accountancy community worldwide. If you would like to know more about how CIMA Council and Association governance works or are interested in being more involved, please contact firstname.lastname@example.org.
— Nick Jackson, FCMA, CGMA, is CIMA president. To comment on this article or to suggest an idea for another article, contact Oliver Rowe, an FM magazine senior editor, at Oliver.Rowe@aicpa-cima.com.