Challenges faced by public sector CFOs

CFO working
By Andrew Harbison, CA Today

10 January 2017

As the role of the traditional CFO begins to evolve, CFOs in government share their priorities and concerns in a report by Big Four firm EY.

The role of the finance function in government is evolving, according to a study by global services provider EY. Not so long ago it was seen as a “professional backwater” within government. But as pressure mounts on government to do more with less, the accountant's time is now.

“If you go back a few years, the finance team had to just get on with what it was told,” says Alastair Bridges, former finance director at the Department for Environment and Rural Affairs. “That has changed - certainly in the rhetoric. Departments know they need a good finance function and permanent secretaries all value good financial directors.”

Today’s economic climate is causing budgets to be tightened. Solutions that worked ten years ago, are no longer applicable today. Innovation is essential.

New opportunities, old challenges

The advent of new technologies presents a golden opportunity for finance leaders. Powerful analytics software is empowering these professionals by producing data that is richer than any they have used before.

90% of CFOs who took part in the EY survey said that harnessing the power of new technology to improve business performance and manage risk will be one of the main factors driving growth in the coming years.

As the government realises that the implementation of new digital processes within their fiscal structure is necessary to address the new challenges of a turbulent economy, CFOs are increasingly being looked to for guidance throughout this digital transformation.

However, transformation on such a large scale, and with such sophisticated systems, can require a substantial amount of capital to action. Almost half of CFOs reported that difficulty securing funds is one of the main barriers they come up against when adopting technology.

As the skill set of the CFO adapts to this new environment, so must their team. One of the skills CFOs believe is essential is the ability to develop their teams so they can take on more of the finance chiefs’ responsibilities. This will allow the leaders to dedicate more of their time to strategic decision making at an organisational level.

Jon Thompson, Chief Executive, HM Revenue & Customs, said: “One of the essentials is that the team around the CFO has the ability to do the essential business of transactional management and stewardship, so the CFO can stand back.

“Pumping up the leadership capacity gives the CFO more headspace.”

But recruiting the right individuals to make up that team in the first place may not be easy.

Almost three-quarters of finance leaders (74%) agree, or strongly agree, that organisations are facing a growing talent challenge to find finance leaders who can thrive in this new environment.

Darra Singh, Head of UK Government and Public Sector at EY, said: “While there is an abundance of specialised finance professionals in the private sector, those with Treasury management, corporate finance and procurement expertise can be harder to find in the public sector. Competing for talent, particularly in a budget-constrained environment can also pose challenges.”

A focus on experience

The report shows that CFOs are invested in the future of the finance function, and as such, working to produce the next generation of finance leaders is a priority. 

58% of respondents said it is “critical” that individuals who have been identified as emerging leaders are given the lead of a major transformation project. It is the hands-on experience of pioneering a project that will give a finance professional the skills they need to take on a senior leadership position.  

Craig Watkins, former Director of Finance and Planning for the Ministry of Justice said: “You can’t take a member of the team and teach them the broader skills they need in the same way as you can train them for a tax or an accounting exam. That broader knowledge comes from experience - life experience - and particularly making mistakes. Those are the experiences that build you.”

Topics

  • Public sector
  • Business

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