Quite some years ago when I was at the beginning of my accounting career I attended a local event organised by my institute [ CIMA ]. An opportunity to meet my peers and chew the fat so to speak.
There was a guest speaker who was an economics professor of some note that had been a high profile government economic advisor previously. As I chatted to a couple of people in a small group this chap came over and started to engage us in conversation. Then he asked a question....”so what do management accountants do?” stunned silence!
As I remember somebody squeaked out a limp reply...something about forecasting. I don’t remember anything about the rest of the evening but that question rattled around in my head for a long while afterwards.
Of course many people associate accountants with filing taxes or maybe tax saving and drawing up those glossy sets of accounts that big companies produce at the end of the year. This compliance type work is very necessary but it isn’t management accounting.
What's in a name?... It's all about adding value
For many job roles in a business it’s easy to understand what the role involves...the clue is in the title. A sales person for example sells products. A production supervisor makes sure production runs smoothly. The distribution manager ensures the company’s products reach the customer. The other thing about these kinds of roles is that it’s easy to understand how they add value. Let’s go back to that opening question about what management accountants do and rephrase it in the same terms. “How do management accountants add value? “
All businesses should have some sort of a plan lets think of this as a roadmap. It might express an ambition for a big exciting journey...an adventure...you know the sort of thing...brave new worlds...to boldly go etc. Or it might be less eventful. A steady as she goes and don’t rock the boat. The plan is an expression of this roadmap. Not just money...resources, units, people.
There is an old saying ‘failing to plan is planning to fail’ whilst this is true enough to me it implies that planning is a fixed exercise. I much prefer the term often used by the military ‘ Plans change upon contact with the enemy’ This implies that we need a plan that is dynamic and scenario based, that we can adapt as we meet changing circumstances. Life and business conditions don’t unfold like a spreadsheet in a series of rows and columns!
Perhaps this activity more than any other gets the accountant his or her reputation as a bean counter. In fact management accounts are a form of orienteering they are a way of checking our progress against the roadmap.
But they can be so much more than this. They can also be an opportunity to reassess our route. Do we need to take an alternate to avoid obstacles up ahead? Can we identify a faster smoother route? Are we able to harvest new opportunities and avoid potential difficulties that will slow or thwart our plans and in either event have we assessed our resource levels... identified, quantified the risks?
Have we stress tested using projected outcomes and scenarios? Management information needs to be comprehensive but succinct focusing on key areas of importance identified in the plan. It needs to be presented and reviewed in a timeframe that’s appropriate for the business situation.
Managing change. Many people mistakenly believe that technological change is a new thing... I don’t believe so, it has always been around but what is different is what we might call the technological ‘rate of inflation’ the pace of change is accelerating.
This can affect the way things are done internally...15 years ago not many companies were without a fax machine...now faxes are almost obsolete. But also externally, the Victorian penchant for letter writing was a form of social media but digitisation and connectivity via the internet have underpinned an expansion in social media that has provided business opportunities and disrupted conventional practices.
Such is the pace of change that the amount of data accessed and transactions conducted via smart phones as opposed to laptops and desktops is increasing exponentially. The increasing power, functionality and convenience of smart phones are being leveraged by the use of apps and the spread of wireless and 4g connectivity.
Is it too soon to anticipate the beginning of the end of the website that we were told was so essential to business only a few years ago?
This is also affecting the way we work together how knowledge is shared and accessed. Machine learning and the birth of AI will radically affect the way humans interact and the type of work we do.
Paradoxically change is a constant in our universe whether driven by technology or developing social norms whether we desire it or not it will impact the business environment. The management accountant plays a key role in understanding and increasing awareness of the potential consequences of this impact... both good and bad and in so doing plays a role not just as advisor but also as facilitator.
A simple answer to the question “what do management accountants do?” For me it comes down to three words...Discover...Inform...Influence hopefully the reader can identify with some of the activities I’ve described how management accountants discover...inform..and influence and can begin to understand firstly what an important integrated role that management accounting plays in realising business success... But also that all of these activities and the benefits they bring are completely scalable. No matter how small your business may be, employing this approach will bring more success.
What sort of personal attributes make a good management accountant?
Curious - A willingness to discover and learn
A good listener – one cannot understand without listening
Intelligence – to build knowledge
Courageous – To challenge and influence
Loyalty – success requires we believe in the cause
Patience and diligence – to explain and persuade
Empathy and vision – to motivate and inspire
Creativity – to develop solutions
To find out how I can work with you to improve your business call me on 07910736074 or email email@example.com