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Datalogic
Molding the Next-Gen CFOs
What are some of the trends you've been witnessing as a CFO that have been uplifting the financial streams of your organization itself?
I am quite passionate about the topic of CFOs needing skills rather than academic qualification. Many companies in the industry continue to focus on hiring finance personnel with accounting qualification. While there is nothing wrong with accounting qualification, I feel that companies need to relook at the skills of next-gen CFOs.
There is a long-standing industry parlance that says the key to having a capable CFO is to have someone with strong accounting skills. This view was valid; besides accounting qualified CFOs are usually able to produce better financial reporting quality for the company, it is also supported by the signaling effect, which was a concept first developed by Michael Spence.
In our case, firstly the aspiring CFO “signals” to the board and investors that he or she is more detailed oriented, more likely to enable stronger corporate internal control and financial accuracy, secondly the company with an accounting-qualified CFO “signals” to the industry and stakeholders that the company’s has strong financial status and accurate reporting.
My view is that when we take a deeper look at the industry which has evolved over the past 10 years, this argument may not as valid as it used to be a decade ago. As many organizations had started transforming most of the manual, time-sapping financial transactions, sometimes using machine learning capabilities sometimes through outsourcing or insourcing to centers of excellence, the need for accounting had reduced significantly.
The main work of a CFO is therefore shifted more toward the business. Having an accounting qualification may not be that important.
I am an accounting qualified person, spent many years to earn my FCCA UK and CA Singapore, therefore I am not biased against the qualification. However in my experience, people who are less focused on controls and process, more tech-savvy and more focused on the insights of the business are the ones that will stand out in the CFO’s space in the days to come.
In line with those thoughts, please shed light on a few practices you have imbibed in your career.
When I was the regional controller in Motorola back in 2006, I was already accounting-qualified in both UK and Singapore. However I felt that it is not enough, I needed to know more about the whole organization, I started pursuing an MBA. Some of my friends told me,
“Vincent, your job doesn’t require an MBA at all, may be you want to look at the latest tax regulations etc.” When I completed it, I gained considerable understanding of the other functions within the company, I felt that I contributed more to the company.
When I became the regional CFO in Datalogic back in 2018, I was already fellow of both certified chartered accountant UK and chartered accountant Singapore, plus 25 years of experience in handling finance and accounting. However I felt that it is not enough, I needed to know more about the management and strategies, I started pursuing a PhD in general management specializing in strategic management. Some of my friends told me, “Vincent, your job doesn’t require a PhD at all, in fact no job in the finance function requires it!” Now that I am close to completing it, I gained considerable understand of the company strategies and corporate management, I felt that I contributed more to the company.
I truly believe that next-gen CFO will need to focus more on the business, someone who is a business leader but knows finance and accounting; instead of someone who is an accountant who tries to know business.
What would you say are some of the top qualities that budding executives looking to become part of a financial team should have while working under a CFO. Is there any advice that you would like to share with these individuals?
While working on my PhD thesis, I conducted an extensive range of interviews with leaders of professional firms, associations, and business owners. From my observations, I discovered that there are some essential criteria for getting into the shoes of a CFO.
When I say that anyone can be a CFO, it doesn't mean that it's an easy job. Instead, I am trying to explain how you do not need to be an accountant but must have specialized expertise, experience and knowledge in specific domains.
In today’s industry, people who are more prudent, tech-savvy, invulnerable to risks, or putting meticulous attention to detail are the ones that will stand out in the CFO space in the days to come
For example, a CFO of an insurance company is likely to be strong in mathematics and actuary but may not be an accountant. I recall the CFO of a large insurance company in Singapore has a PhD in mathematics and is an actuary but was not accounting qualified. For example, a CFO if a manufacturing company is likely to have high analytic skills or MES expertise (Manufacturing Execution Systems) but may not be an accountant. I recall the CFO of a large contract manufacturing company was great in analytics and management but was not accounting qualified. Another example, a CFO of a bank in Singapore is likely to be strong in banking and financial instruments and may not be an accountant. I recall the CFO of a large bank in Singapore was a bond trader, fantastic in managing funds but was not accounting qualified.
Likewise, if you are helming as a CFO in a distribution company in Asia Pacific, you need to be strong in handling regional conflicts, like people and financial resources in China/Taiwan, India/Pakistan etc. Accounting skills may help somewhat but more may be needed.
The second most important criterion for being an efficient CFO is to be technologically sound. In a world where Artificial Intelligence (AI) and Machine Learning (ML) are making their way into nearly every business sectors, mastering digital capabilities is crucial for taking financial operations to the next level.
Next in line is perhaps one of the most crucial yet overlooked criteria for playing the role of a CFO in an organization. It is the ability to develop the team and have a worthy successor. Earlier, CFOs could either develop team internally or interact with their industry partners to choose strong players. However, with the world now much more inter-connected and employees able to work anywhere, it may not be the case anymore, we have to change our way to develop our team.
Overall, this is a very interesting topic. We are living in a time of rapid change and I like to leave the readers a quote, if we do what we have been doing we will get what we have been getting!
