Business Partner and Corporate Cop: Do the Roles Conflict?
Yet they still are responsible for protecting the assets of the organization. We asked management accountants in leading-edge companies whether their role as "corporate cop" conflicts with their role as trusted business advisor and business partner. Management accountants are aware of the dichotomy but don't see a conflict.
"You ask the stickiest question we face," said a Boeing accountant, "and it's one we try and deal with every day. It comes down to intellectual honesty. It's reflected in the way we deal with our people, the way we train them, and the conversations we have with them. We tell them that first and foremost we have to protect the assets of the company. We have a fiduciary responsibility to the corporation, and...we do not do anything illegal or unjust. So first and foremost, they have to understand that.
"Second, they are here to work with the program or the team and come up with the best or the most creative solutions they can. They can't just rely on what we've done before; they have to stretch and see what can be done within the confines of laws and regulations. So we push program service and creativity, but at the end of the day we come back to controller enterprise solutions. At the end of the day, our people have to use critical control thinking, look at the program, and review where they've been and what the concerns are. How do you train people to do that? A lot of counseling sessions and trial and error as you go forward."
"One of our roles is to properly report transactions and financial results," said an accountant at Abbott Labs. "There are a lot of people who would like to have the results portray what they want to happen, not necessarily what is happening. So we've got to be in a position to say 'no's Which means that the policeman aspect of our work is still there and still has to be done. But it's not necessarily a conflict with our role as team member. I call it wearing two hats. We have to wear the hat of the management team to help them achieve their goals. And we also have to wear the corporate finance hat to recognize that we have a duty to the corporate finance function to do things right, to stand up for what has to be done, and to say no when no is the appropriate thing to say.
A Hewlett-Packard accountant said, "When I became a controller about five years ago, the first thing the general manager said to me was, 'If you're just going to be a policeman and not be a proactive business partner, you and I are not going to get along at all."'
As an example of how seriously accountants take their fiduciary responsibility, another HP controller said, "Business controls happen, period. They are important and are the starting point for everything we do. It means that you cannot violate a business control. I talk about this all the time so that there is no doubt in anybody's mind where the business team stands. Six months ago we got into a situation where we were desperate to ship. The product was ready, but the software wasn't. We told our customers, 'We can't ship it to you.' It was December--year-end for them. They said, 'We don't care, just ship us an empty box. Just ship it or I lose my budget and you lose the order.' I said, 'Obviously we can't do that.' I drew this picture for the team. I said, 'Let's say that our CEO is at a dinner with other CEOs, and some CEO comes up to our CEO and says, "What are you doing to my company? You sent a bunch of garbage that you knew wouldn't work so that my R&D engineers could get around my accounting folks." Our CEO is going to be real embarrassed if that happens.' I painted that story and everybody was going, 'Oh man, could that happen?' Yes, it's a small world, it could absolutely happen. So people saw the danger of going around the business controls. It's one of those things that as soon as you stop talking about it, people start to creep back. They have to keep hearing it on a regular basis."
So it appears that both roles are expected in management accountants, yet they don't necessarily conflict. The decision support role actually helps management accountants safeguard assets, and the fiduciary role enhances their role as a team player.
How do management accountants perform these dual roles? Commonly used techniques include assigning more responsibilities to the business organizations, being less obtrusive, educating the organization, and taking on a participant role as opposed to an overseer role.
"One of the things we've done at Hewlett-Packard is to allow business organizations to manage their authorization approval process....I don't have to sign every check or review every P.O. to make sure it's valid. I allow the business managers within that organization to be responsible for that. Periodically, however, I will get a copy of purchase orders that appear to fall outside the normal approval process."
"One of the things my CFO liked most about me is...that I would say to my team, 'This is a totally stupid idea. You can't do it because (1) it's outside of business controls, or (2) you'll lose money on this, or (3) it'll impact your people's happiness or whatever.' My boss used to say to me, 'Christine, the reason you are ranked a 5 on a 1-to-5 scale is because you're not afraid to speak up? So I guess I gained their respect. They didn't mind me being the policeman because I always put things in terms of trying to keep them out of trouble and trying to keep the business competitive."
"It's education. I sat my staff down and I said that business controls are paramount.... There are no excuses for lack of business controls. So without being a cop, I made it very clear that there are no exceptions to this.... I gave examples of when controls weren't in place. Once, when we didn't have business controls, two engineers signed a contract with another company that accidentally gave our technology away. That was a problem."
The dual role means that accountants are the team members who have to ask the tough questions that nobody else wants to ask about what's really best for a company. As an example, an accountant said, "I work with a marketing group that doesn't think about profit. All they think about is how many units they can sell. I'm the one who has to say, 'I don't care how many units you sell; the more you sell, the worse the picture looks. Why are you selling this product?' I make them justify it in a way they may not want to. Marketing thinks quotas. They think volume. And I have to say, 'What money are you bringing back in? How are you going to recover your investment?' These are not always welcome questions?'
The finance function has to be independent so that it can turn on a warning light when something looks like it's going wrong or a set of assumptions doesn't make sense. Independence is enhanced with communication from the top that the finance function is a valued business consultant, coach, team member, and decision support group, but it also has to be looking out for the best interests of the company.
Do you play both roles in your organization? How do you balance them? Should IMA develop training courses in this area? Educators: Are your students being prepared for the dual role?
Gary Siegel, Ph.D., CPA, is associate professor at the School of Accountancy, DePaul University, in Chicago and president of the Gary Siegel Organization, an opinion research and behavioral accounting firm. He is coauthor, with James Sorensen, of Counting More, Counting Less, the 1999 IMA Practice Analysis.
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|Title Annotation:||management accountants|
|Date:||Sep 1, 2000|
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