The factors influencing the controller's role from financial management perspective

Abstract

The purpose of this thesis is to create understanding of how CFOs perceive the role of the controller. Previous research indicates that the evolution of the controller role is a multifaceted cultural and institutional phenomenon, influenced significantly by shifts in organizational structures and technological capabilities. The role of the controller has evolved from a traditional bean-counter towards the modern business partner, primarily responsible for providing analysed financial and non-financial operational data crucial for managerial decision-making.

The empirical research was carried out as a field study, involving thematic interviews with eight CFOs across seven distinct industries in Finland during the months of March and April 2023. The analysis strategy used an iterative methodology, combining thematic analysis with insights derived from the existing literature to construct a holistic view of the phenomenon.

The empirical evidence shows that the expected controller role requires a comprehensive skill set beyond numerical competence. Effective communication and storytelling skills are emphasized by CFOs for communicating financial insights to non-financially literate colleagues. The support of CFOs, and generally, the support of the management, plays a crucial role in the development of the controller function within companies. While standardized reports are common, controllers are often engaged in data crunching tasks, which hinder their capacity to interpret data for informed decision-making. Efforts towards enhancing information flow are evident through ongoing development projects in various companies, involving collaborative endeavours among individuals across different fields.

Today the evolving role of controllers in both small and large companies is influenced by ESG concerns. Opinions of the CFOs vary on the extent of management accounting's future responsibility in sustainability, with questions arising from the complexity of these matters. Some doubt controllers' suitability, while others see potential within the domain. Literature propositions aligns with some CFOs, supporting for management accountants' key role in sustainability management accounting systems. Perspectives differ on ESG reporting responsibility, highlighting the need for cooperation between finance and dedicated ESG teams for effective reporting.

The controller's role is influenced by a combination of skill sets, organizational dynamics, emerging trends, and technological advancements. Effective communication, adaptability, and strategic collaboration are key attributes for controllers to navigate their evolving responsibilities successfully. Organizational factors and support from top management play crucial roles in shaping their role within the organization. According to the findings of this research, CFOs are open to the idea of financial controllers transitioning into the role of business partners.