Contact Raef Lawson: https://www.linkedin.com/in/raef-lawson-2a27914/

Download the Full Report, "The Impact of COVID-19 on the Finance Function": https://www.imanet.org/insights-and-trends/the-future-of-management-accounting/the-impact-of-covid19-on-the-finance-function?ssopc=1&utm_source=MagnetMail&utm_medium=Email&utm_term=EMAIL&utm_content=03%2D09%2D21%20Value%20Creation&utm_campaign=How%20is%20COVID%2D19%20affecting%20the%20finance%20function%3F

FULL EPISODE TRANSCRIPT:
Mitch: (00:00)
Welcome back to Count Me In. IMA's podcast about all things affecting the accounting and finance world. I'm your host Mitch Roshong and this is episode 114 of our series. In this episode, IMA's Vice President of Research and Policy, Raef Lawson, joins our co-host Rouba Zeidan to talk about IMA’s recently released report, The Impact of COVID-19 on the Finance Function. Raef led the research and discusses his findings in regards to how this pandemic has disrupted the profession and what the perception is towards upscaling and rescaling. So, to hear more about the survey conducted and the key points from this report, we will listen in to their conversation now.

Rouba: (00:44)
So good morning Raef, and thank you so much for joining me.

Raef: (00:55)
Well, it's a pleasure to be here to talk about our study we recently completed.

Rouba: (01:00)
Absolutely and it's quite insightful so I'm happy to be sharing this with our listeners. So let's start from the beginning, IMA published a recent report. You were the lead researcher on this body of work, which evaluated the impact of COVID-19 on the finance function. So can you tell us a little bit about the scale of this research that you conducted, basically the countries, the sample size, demographics, and then the purpose behind it?

Raef: (01:31)
Sure. So it was quite a study from our perspective, it surveyed almost 1,500 people in countries from around the world and those included China, India, Saudi Arabia, the UAE and the United States, and the survey study participants were about evenly divided among those five countries by design. Slightly more than a third of the respondents were women although that percentage varied by country, ranging from say 51% in China, to 18% in Saudi Arabia. And, you know, I think though that those percentages fairly well mirror the participation of women in the workforce in those countries in the accounting and finance field. So, the purpose of the study was to really understand the impact, not just on organizations as a whole, and you know, in the news we can hear plenty about that, but you know, in keeping with IMA's mission to help advance the accounting and finance function within organizations to look a little more specifically at the finance and accounting function within organization and see what the impact of COVID-19 pandemic had been on those.

Rouba: (03:05)
Amazing. And, so this is technically a global piece of research, as what are some of the most notable highlights that this report uncovered?

Raef: (03:15)
Sure. Yeah and that was true, we selected the countries in the study to really get this global overview of the impact of COVID-19 on organizations, and our study yielded quite a huge thing of results. One not surprisingly was that there was, an across the board decline in revenues among organizations of all sizes. With very large companies, and by that I mean those with revenues over $10 billion, most likely to report having experienced a considerable decline in revenue, you know, of course, subsequent to that, we hear how larger organizations bounce back also more rapidly from the effects of the pandemic and how smaller companies are now, suffering. The pandemic has impacted employment as we've heard as well. And surprisingly about half of the companies have led some of their staff go.

Rouba: (04:31)
That's substantial. 50%.

Raef: (04:33)
It is, it is, you would think it would be much less, but that is, you know, a tremendous percentage and a lot of, obviously suffering on the employee's part. It did vary by region. So companies in the US were the least likely to have let go of staff, followed by China and India, while those in the Middle East, which again include Saudi Arabia and the UAE were most likely to have let some of their staff go. And the impact on accounting financial professionals wasn't confined to be let go or not. There was also a considerable impact on the compensation of finance and accounting professionals. And most of the respondents to our survey, reported that they had a reduction in their compensation this year, this past year, whether it was salary, bonus, or both. And again, that varied by region with companies in the US least likely to have changed the compensation of their employees, companies in China were most likely to have left salaries unchanged, but to have reduced bonuses and that reflects the larger amount of incentive compensation that Chinese companies typically pay. And finally, companies in India and the Middle East were most likely to have actually cut salaries of their employees. And then finally, another key finding was that there was a change in the findings of the priorities of finance functions, which is understandable. There was an increase in the emphasis on risk management with nearly half the company spending more time in that area, followed by cashflow forecasting new management, you know, most when the pandemic hit, a lot of companies went into crisis mode just trying to survive and these two, competencies areas became, critical for their survival. And, you know, fortunately less time was spent on business partnering and decision-making, with about a third of the company spending less time in that area, though I will say we've completed another study recently that has found that the pandemic has changed most CFO's views of their role within the organization. And most CFO’s now are becoming a business partner with their organization. Their insights are considered being key to decision making at the senior level within their organization. And I think we'll see a much greater emphasis on the CFO as a strategic business partner going forward.

Rouba: (07:48)
So it does bear some good news to the profession, despite all of these, negative results. But there's also one notable point that I looked at, which was basically the tourism industry was one of the most severely impacted industries. But what other sectors also fair in terms of that kind of impact? And what do the findings tell us about them?

Raef: (08:11)
You're right. The tourism travel and hospitality industries were the hardest hit industries. There, 13% of the respondents were furloughed or let go. 58% had their pay cut and, you know, that's clearly a result of companies quarantining, locking down and so forth. But also relatively hard hit were professionals in the government, nonprofit and education areas where another 5% of those folks were furloughed and, 52% had a decrease in their salary. So that was a significant impact for those industries. On a positive note, relatively least effected were those working for companies in the accounting and finance industries. Sorry, so good times or bad, we need our accountants.

Rouba: (09:12)
Absolutely, you know, I liked that there's been quite a bit of that conv...

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