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Report: Value-centred culture key to business success

Li Xiaowei
page03  2006-3-21

For companies pursuing superior performance in corporate finance in China, enterprise- wide risk and performance management processes are crucial, says a study by the global consulting and technology outsourcing firm, Accenture.

To build the capabilities requires not only deploying and integrating technology to leverage scale and function, but also building a vigorous value-centred culture.

"Creating a value-centred culture is considered by the (high-performing finance) masters to be the most critical element for success," says the survey report, released in Shanghai yesterday.

"This culture facilitates the alignment of decisions, process and behaviours towards generating value and sustaining overall profitability," explained Matthew Podrebarac, executive partner of Finance & Performance Management at Accenture.

Essential to this culture is close involvement of the finance function in the rest of the company.

There is a considerable finance capability gap between Asian and Western companies, the survey finds.

Only 86 per cent of the Asian companies surveyed say their finance function is closely involved in and providing good support to the rest of the company, compared to 97 per cent of North American companies and 93 per cent of European companies.

The country-specific percentage figure for China will not be available until May but Accenture consultants say Chinese companies lag behind in this area.

"The status of finance staff in a Chinese company still needs to be raised to that of a business partner. Traditionally they are simply viewed as bookkeepers," said Andy Hui, partner of Finance & Performance Management at Accenture Greater China.

Chief finance officers (CFOs) worldwide are expected to oversee a greater system of controls than ever and to take a seat beside the CEO in determining a company's development strategy, finds the survey.

A strong correlation has been found between a high-performing business and the mastery of a set of finance and business competencies as high as 70 per cent of high-performing businesses report good command of those competencies.

They include enterprise performance management, which refers to measuring performance at all levels of detail and transforming insight into action; financial operations, which focuses on delivering reliable financial information and efficiency in operations and processes; capital stewardship, the ability to deploy, preserve and build capital resources by managing the income statement and balance sheet in an integrated way to maximize returns to shareholders; and enterprise risk management, the monitoring and managing of financial and non-financial risk across an enterprise's portfolio of assets in support of its strategic objectives.

Currently Chinese State-owned enterprises' primary focus is on financial operations; their enterprise performance management is at a nascent stage.

Chinese private enterprises excel at manufacturing and technology but tend to lag behind in corporate governance and financial management.
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