Is mounting pressure leading to a mountain of mistakes?
"Willingness to change is a strength, even if it means plunging part of a company into total confusion for a while." Jack Welch, ex-CEO of General Electric
The role of the financial leader is evolving. No matter your industry, job title or seniority, over the last few years, there will likely have been a noticeable shift in your responsibilities and your overall role within your business.
Not too long ago, the function of 'financial leader' was as a gatekeeper - protecting the business financially and, within risk management and compliance, reputationally. Now, the role increasingly sits alongside the CEO as a source of business growth: a revenue generator able to identify sales opportunity within existing customers and new prospects around the world.
For businesses, this is surely a positive. Without growth, there is no success. In the current economic and political climate, every business needs as many revenue avenues as possible - if the financial leader can also lead revenue growth, then the change in their role is understandable.
But what is the impact on the person behind that role? Financial leaders are not being asked to let go of the task of protecting the business; they are being asked to play a dual-role - financial gatekeeper and revenue reaper.
We have looked into this more closely with our study, Facing Forward: The Evolution of the Modern Financial Leader. Having spoken to 200 of the UK's senior financial executives, the report explores everything from the roles they perform to the issues that cause them concern.
The results of the study provided invaluable insights into the mind-set of the modern finance leader, whilst also looking at the potential impact that the evolution of their roles could have on the wider business. A key point that became apparent was that the pressure of playing two roles is leading to concerns that due diligence, accuracy, and clear focus may fall away.
Almost three-quarters (71%) of the financial leaders surveyed feel there is too much pressure placed on financial teams to be business protector and business growth driver. Assessing the viability of playing the two roles, the majority (56%) believe that their board has unrealistic expectations of the finance team.
As a result of this increased pressure, over half of respondents (53%) admit that "it's only a matter of time before their business makes a serious mistake due to lack of staff and resource." If you combine this reality with the fact that more than 1-in-2 (55%) admit their business sometimes takes gambles in risk management which make them uncomfortable, then you can see that trouble may lie ahead.
Looking specifically at risk management and culture within businesses as they try to maximise revenue in challenging economic climates, 59% of the UK's financial leaders admit their businesses take credit risks in order to rush through revenue-generating activity.
Similarly, in regards to regulation, over half (52%) also stated that their business sometimes rushes compliance processes to push through deals with new customers, partners, and suppliers.
Fuelling Growth through Data
None of this is pleasant reading - not for the finance team and their leaders, and not for the boards and CEOs who need them to adapt and comfortably play both of the roles needed of them.
But it is the reality we now live in - and so financial leaders must be armed with the right tools and talent in order to succeed. By equipping finance teams with skilled professionals and the right analytical tools - you are empowering them to manage increasing risk with smarter, data-driven decision-making.
Dun & Bradstreet's study provides clear evidence that current excess pressure on the finance function will only cause significant issues at a later stage if left unchecked. We must act now-investing in the insight and expert analysis needed to provide them with the certainty that they are making the best choices for the business.
Only then will the modern financial leader be able to sit truly comfortably, confidently, and successfully alongside the CEO as the business's core revenue creator.