Emerging markets are the world's business growth engines. Consider that in 2010, leading U.S. automobile companies manufactured and sold more cars in China than they did in the U.S. While emerging markets may once have been the last place business focused, as engines of corporate growth they're now the first.
Growth and talent are the pair of issues at the top of the corporate agenda. According to top executives responding to The Conference Board's CEO Challenge 2011 Research Report, companies are focusing their attention on growth. CEOs from around the world cited "business growth" as the "most important" among the critical issues they face. Not surprisingly, "talent" came in second on the list of the top 10.
Given the finance function's pervasive role across the enterprise, finance leaders have a particular requirement to step to the front of the line and take the lead in understanding the ramifications inherent in this sea change; i.e., what is needed to be effective in global and growth markets.
But how have global markets changed and where should finance executives, and others, be focusing their attention? A critical perspective is offered by Michael Spence's concept of a multispeed world. Spence, an American economist and recipient of the 2001 Nobel Memorial Prize in Economic Sciences, is the author of The Next Convergence: The Future of Economic Growth in a Multispeed World.
Professor Spence asserts that it's not just that global businesses are now operating in different markets, but that the speeds at which various geographies and markets are growing and developing is different, hence the term "multispeed world." The challenge is to lead businesses, and the finance function, in a global economy which is growing and developing at different rates in different regions and countries. We have been witnessing this shift since the 2008 global financial crisis and recession. As such, it may not be useful to focus on the "global" economy, but rather to recognize that different parts of the world are growing at different rates and currently the center of action is in the Asian growth -- formerly referred to as emerging -- markets.
The Conference Board's CEO Challenge 2011 survey of 604 CEOs from Asia, Europe, and the U.S. offers another interesting insight on growth and talent. Respondents from Europe (28 percent) and the United States (43%) identified business growth as the number one challenge. While CEO respondents from Asia (29 percent) -- the world's fastest growing region -- ranked talent as their number one concern; respondents from Europe identified talent as their number seven concern and those from the U.S. ranked it fourth.
One of the many challenges for finance executives is to lead and support corporate growth via the finance function; this likely requires talent in the finance function, and across the business, who can lead in a global, multi-market, multispeed world. If you're leading – or plan to lead – the finance function in this environment, it's important to broaden your focus; to take an increasingly panoramic view.
What are some of the specific actions finance leaders and specialists should be considering?
Stay at the front of the global curve. Finance executives should anticipate and proactively plan corporate global growth initiatives and tackle the attendant talent challenges. Lead the way by knowing the talent requirements for different markets and how they can support business growth.
Develop leaders and finance specialists with global experience and perspectives. Take a fresh look at global assignments, global careers, and global mobility. A global finance function requires executives from different parts of the world who have world experience. This involves more than sending U.S. and European executives on assignments to the "emerging markets" in Asia and Latin America. Increasingly, it involves providing executives from all regions – U.S. and Europe, Asia and Latin America, and China and India – with the opportunity to gain on-the-ground experience in all regions. In brief, if you have a global growth plan, it means endeavoring to build a finance function with leaders and specialists who are knowledgeable and ready to lead, live, and work in a global environment.
Continue to rethink finance talent sourcing and operations. As business and growth shift to new markets, so too are finance leaders looking to emerging and growth markets for a wider range of finance talent (i.e., thinking beyond the back office and transactions involved to all of finance's core activities). This may involve stepping up finance recruiting and continuing to redesign finance activities to leverage talent in these markets. Interestingly, some leading companies are moving finance activities and leaders, previously based in headquarters in the U.S. and Europe, into their fast growing centers in China and India, and finding that this facilitates new and more agile thinking in the function.
Stay abreast of global/national financial reporting, and compliance rules and regulations. The world is not only moving at different speeds, but business and the finance function are increasingly subject to new regulations. This is one wave that appears to be moving around the entire world.
The cycles of regulatory trends have long been considered a critical variable in business planning. In the aftermath of the 2008 global financial crisis, they've only become more so. Government actions of all types -- including reporting, fraud, anti-money laundering, and taxation -- are now playing a greater role in shaping business and finance plans than ever before.
Finance executives are on the hook for financial controls and regulatory issues. These are ultimately people issues and, as such, tie back to the talent and training in the finance function (and throughout the company). An essential challenge is developing leaders and managers in finance who can excel in this increasingly regulated global environment.
In summary, preparing for ongoing success in global and growth markets continues to present new challenges to finance leaders and executives. The global environment today is continuing to change, and new realities, including operating in a multispeed and increasingly regulated world, are at the forefront. The challenge for finance executives is to prepare leaders and talent across the function to be effective in this new environment.
Jeff Schwartz is a principal with Deloitte Consulting LLP's Human Capital practice. He is a regular contributor to Business Finance, sharing his perspective on executive talent development, where the next generation of finance leaders will come from and some of the best practices organizations are applying in addressing these issues.