The Role of Financial Leadership in Sustainable Public Finances
In most private sector companies, from big corporations to smaller sized companies, the finance leader is involved in all key decisions. In the public sector, by contrast, there is often a mis-match in policy-making, where economists and policymakers take the lead in big decisions without involving finance leaders.
In ICAEW’s new publication, the role of financial leadership in sustainable public finances, part of its Better Government Series, we explore the role that finance leaders can and should play in managing sustainable public finances. We identify the drivers for strong financial leadership and the skills and competences that, in our view, a strong public finance leader should have.
Senior leaders from around the world provide their thoughts on the importance of strong finance leaders in the public sector. They explore the practicalities of financial leadership needed to tackle the problems that many governments are facing – whether it be driving public sector reforms or tackling increasing government debts and deficits.
The authors provide insights on:
- The importance of having finance professionals as leaders in the public sector;
- What a successful finance professional leader should look like and the specific skills/qualities that they need to have;
- The challenges that finance professional leaders within the public sector face and how they can tackle them;
- How a finance professional leader can make an impact in government and ensure that people listen when they speak; and
- How public sector entities can ensure that they have the right people in place for leadership positions.
The publication explores the multitude of roles that finance leaders should play in the public sector, including instilling financial discipline, providing strategic advice to policymakers on key financial policy decisions, strengthening standards, improving balance sheet management, and driving value for money across government.
Finance leaders need to have both a strategic and a detailed understanding of how government works and be effective communicators and influencers to help shape policy and debates. It is, therefore, important for such leaders to have a combination of soft skills and detailed technical skills.
We also note that it is important for these leaders to demonstrate a level of emotional intelligence. While the specific leadership attributes and skills will differ depending on circumstances, cultures, and individuals, it is important that finance leaders have integrity, courage, and the ability to build widespread support for changes that advance the public interest.
Governments are going through enormous change and public sector reforms are high on their agendas. If governments are serious about making change, politicians and civil servants should ensure that the roles within governments are fit for purpose. Radical changes are needed if governments are to manage public finances in a sustainable manner. It is therefore essential for the right finance leadership roles and the right structures to be in place.
If governments are to get this right, the finance leader roles mush be filled with people that have a track record of affecting change - with both the technical skills for the task and the strength of character to challenge public sector financial cultures.
To view more publications in ICAEW’s Better Government Series, please go to www.icaew.com/publicfinances