The Tyco International scandal in early 2000 led to the conviction of CEO Dennis Kozlowski and CFO Mark Swartz for misappropriating more than $600 million from the company for personal use. The scandal, including a company-paid $2 million birthday party for Kozlowski’s wife in Sardinia, Italy, left the company on the brink of collapse. The disruption and the threat of bankruptcy placed the new executive team on the razor’s edge. A turnaround required rebuilding its businesses, restoring financial stability, and developing an ethically focused culture. To tackle these challenges, the executive team, led by CEO Ed Breen and Senior VP and Chief Governance Officer (and a former CFO) Eric Pillmore, used transformational leadership.
Transformational leadership focuses on changing an organization’s values and culture and the employees’ perceptions of the organization to improve it and to move it in a new direction. In the face of adversity, transformational leaders share their vision with their organization to motivate and lead it through change. Volatile business environments and risks, competitive pressures, globalization, technology, and scandals could plunge your company into crisis in a heartbeat, requiring a rapid shift in strategy and leadership skills. Management accountants are ideal candidates to participate in this change process.
CORPORATE DISRUPTIONRapid change and corporate disruptions are the new normal. For example, Amazon is shaking up its competitors as well as companies that didn’t know they were competitors—such as any organization in the market with Whole Foods, which Amazon recently acquired. Management accountants participate in planning and budgeting and should scan the horizon to identify risks and opportunities and question the assumptions made. Be ready to shift or completely change strategies to react to the marketplace. Approach it like your local community’s disaster response teams that hold drills to prepare and practice for emergencies. Companies must be agile and have contingency plans in place to adapt to changes and disruptions.
BECOME A STRATEGIC PARTNER
It’s imperative that management accountants expand beyond their traditional transactional accounting roles. While transactional accounting roles are necessary to ensure reliable and accurate performance reporting, research from IMA® (Institute of Management Accountants) and its partners shows that the finance function is transforming from its traditional role of reporting and distributing information—the transactional role—to taking a different seat within the organization. IMA Senior VP of Exams and Certification Dennis Whitney says, “Management accountants can add value to their organizations by becoming strategic partners.”
To expand your role and your career, take the opportunity to broaden your experience by getting operations experience. Rick Arpin, senior VP of entertainment at MGM Resorts International and a keynote speaker at IMA’s 2016 Annual Conference & Expo, moved from financial shared services to the entertainment operations team. He says of the experience, “I learned a ton with them: I had never really managed a large team, I had never led an ‘operation’ before, and I had never worked on such large complex projects. We built practices and processes that I still use today–strategic planning, leadership development, team building. These were critical areas of focus for a growing organization having to manage through some difficult change.” And they were essential skills for leading transformational change.
EARN THE CSCA CREDENTIAL
Every CMA® (Certified Management Accountant) can potentially participate in an organization’s leadership and strategic planning. Earning the CSCA® (Certified in Strategy and Competitive Analysis) credential helps them develop the skills needed to respond to corporate disruptions, become strategic partners, and build trust within the organization. The CSCA credential provides CMAs with knowledge to move into these roles. The exam focuses on strategic planning, competitive advantage, strategy implementation, and performance evaluation—skills that are critical for transformational leaders. Management accountants understand what makes their organizations tick because of their transactional, reporting, and monitoring roles. Studying for and earning the CSCA credential builds on and leverages this knowledge and prepares CMAs to participate in developing and deploying strategy. Patrick Stroh, president of Mercury Advisors, says, “CMAs who earn the CSCA credential are well-positioned to address organizational challenges and to add value to their organizations.”
Trust is priceless and must be cultivated by transformational leaders. In 2015, an International Organization for Standardization Audit Data Collection (ISO 295) project was launched to develop a global standard to define field definitions, file formats, and interfaces for audit data that can be used to streamline and automate the financial audit function. The initial project meetings were so contentious that the viability of the project was at risk. Two members of the U.S. delegation saw the potential of the new standard to revolutionize the audit process and patiently worked to develop relationships with the project members to facilitate cooperation. They fostered committee collaboration and, in so doing, turned around a situation that initially looked like it was doomed to fail.
STEP UP TO THE PLATE
Change is inevitable for companies. It isn’t a question of if it will affect your company; it’s a question of when. Management accountants can play a critical role in transformational change. Step up to the plate and start preparing today.
IMA LEADERSHIP ACADEMY
The IMA® Leadership Academy provides leadership opportunities for all members. From leadership assessment to leadership courses offered in person as well as through WebEx to participation opportunities in mentoring, be it reverse or traditional, the IMA Leadership Academy can help you meet your leadership goals and improve your leadership skills. For more information, please visit the Leadership Academy website at www.imanet.org/career-resources/leadership-academy.