Ep. 114: Raef Lawson - The Impact of COVID-19 on the Finance Industry

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...