Why Margins Shouldn’t Be A Mystery For CFOs

August 4, 2016 Don Mal

A research study says finance leaders may not be able to analyze an important area of the business, but that doesn’t mean they’re not eager to learn.

Nobody’s saying gross revenues aren’t important, but let’s be honest: When you’re working in finance, it’s all about margin. 

The responsibility for reporting on – and to help the organization drive – profitability – is core to what CFOs and their teams do. It’s just a shame that it’s so challenging for so many of them to do. In a recent study with the Cranfield School of Management of more than 200 CFOs and other executives in Europe, for example, there is a pretty major gap between the desire of senior leaders to positively affect margin growth and their basic ability to keep on top of where it’s at today.

“Based on conversations with C-level executives, and by analyzing the results of a survey of 200 CFOs and CMOs, a new in-depth report reveals that those who report growth ahead of market expectations are more likely to say that maintaining or increasing margin is vitally important (41%) to their organization, in comparison to those behind (4%),” a story on a site called The C-Suite summarizing the data said. “Despite striking evidence that a lack of insight into margin is damaging shareholder value and the financial health of organizations, more than a third (38%) would not know how to affect an increase in margin tomorrow.”

The report goes beyond the numbers to offer a model of eight different actions that are designed to help close this gap. This includes “opening the data vault,” offering data that matters and ensuring that awareness, analysis and action are linked. (If this sounds like a great way of summing up the value of corporate performance management, that’s because it is.”

It could be that CFOs’ abilities simply need to catch up with their desires. Another recent study from staffing firm AccountTemps showed that 30% of CFOs polled said motivation to learn new skills is necessary to get ahead. This was followed by interpersonal skills (27%) and ability to adapt easily to change (24%):

These results vary from a 2002 Accountemps study, when respondent CFOs deemed “embracing change” the most critical factor for professional advancement. Employees will be glad to know that only 7% of CFOs cited working long hours as a success strategy.

Perhaps the next step is for CFOs and their teams to think more specifically about what they need to learn. They probably already know Excel inside and out. They may have a working knowledge of cloud computing and how it changes the game for CPM. Developing a goal around better understanding how to affect an increase in margin may be a way to evaluate everything from technology and tactics to how they spend their time. That’s got to be a better way to get ahead in their careers. Or at least marginally better.

The post Why Margins Shouldn’t Be A Mystery For CFOs appeared first on Blog | Vena Voice | Vena Solutions.

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