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Is it time for a finance revolution?

Posted: Friday 20 May 2011 by Ana Barco
Replies : 3
Category: Financial reporting
Keywords: 2011, finance, management, Organisation, performance, report, research
Ana Barco's picture

Why is focus on the activities that better help meet corporate objectives, increase performance and provide better motivation, reward and progression prospects for staff restricted in the finance mix?

A recent CIMA report, Finance and organisational performance; shaping the future  provides some insights on the shape of the changing finance function in high performing organisations, as rated by respondents to a global survey. The insights make interesting reading;

•  The majority of finance professionals (75.4%) believe that when finance staff work in management support roles they are more effective in helping the organisation achieve its objectives.

•  There is evidence that better performing organisations dedicate a higher proportion of effort into management support, also perceived as business partnering activities, and less on the transactional and operational ones.

•  The majority of finance professionals agree that undertaking such management support roles is better remunerated.

•  Nearly 70% believe that those that are in these management support roles are promoted faster and over 50% that they are more difficult to retain.

•  Strong rationale for a shift in focus - yet this potential link to higher performance and the incentive and motivation to finance staff are not being necessarily translated to action at the coal face.

Organisations and finance functions, on the whole, are transforming the function at an evolutionary pace, according to CIMA research.

Yes, organisations find focus on management support and performance management valuable, and justify higher reward and progression for those that undertake these roles.

Yes, we see that organisations plan to grow finance with over 80% not expecting any cuts in employee numbers.

Yes, many organisations plan to shift effort and resource from transactional areas to management support and management accounting ones over the coming 5-10 years as they strive to build value creating functions.

But... is it time to shift gear? Do we need to move from this evolutionary pace to a finance transformation revolution?  Thoughts on a postcard…

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CIMA’s recent report ‘Finance and organisational performance: shaping the future’ is available from www.cimaglobal.com/performance

The CIMA research programme is supported by Hays. 

Which do you need most: your heart or your brain?

Posted by Adrian Rutter on Sunday 22 May 2011 19:18

Seems to me there are two things that finance people do: pump blood to run transactional systems, and think deep thoughts to improve overall performance (or at least provide data and advice for general managers to improve performance). You can wrap either of those up in zippy-sounding buzzwords like "strategic focus" "operational enhancements" or "business partnering activities", but you have to get both of them right.

Try becoming a high-performing organisation when your key supplier has just stopped delivering because once again your Accounts Payable people have screwed-up payment. Or when, although your 'finance business partner' tells you you're achieving target margins and your 'transformation lead' has just given the slickest-ever Powerpoint presentation to staff, no-one was listening because payroll was late yet again.

I know it's a minority view (depending on how the survey was phrased, maybe I'd have been one of the 24.6%) but true management support/business partnering that makes entities sustainable high-performers comes from well-rounded finance people who pay just as much attention to the accuracy and efficiency of core transactional competences as they do to providing wisdom and guidance through data and performance analysis. (The 'effort' and weighting of attention may vary, of course, depending on need or priority.) So I'd read data the other way; entities who don't provide rewards and career paths to develop both skill-sets are going to slide inexorably and invisibly downhill, with their highly-paid 'business partners' having not the slightest idea why.

Oh, and I might as well show my colours as an utter Luddite: can anyone name me one transformational revolution that's actually achieved all of its aims without doing at least some lasting damage at the same time?

Is damage control needed in transformation?

Posted by Ana Barco on Thursday 26 May 2011 11:11

I am there with you, especially where late payroll is concerned, I'd be the first to have a word with my finance business partner in this instance!

Certainly the research does not down play the importance of any of the services that finance needs to provide - be it the transactional or specialist services. The finance function is still very much delivering all the finance services and all are key.

When speaking to some senior finance managers I see some acknowledgment that these areas are perhaps easier, controllable or more in the comfort zone. I get the impression that with the advances in IT and also efficiencies and process improvements that external delivery (shared services or outsourcing) can bring, senior management now see a need to transfer some focus on the support or partnering elements. There is also an understanding that the skills required to deliver these operational activities and roles are somehow more plentiful

In turn, the collaborative roles, working in and alongside the business, are considered by many to be undertaking higher end work which can be more complex to deliver well. It places an increased demand for the analytical and commercial skill sets and qualities which are still, it seems, harder to find and to develop. But, it is here where organisations, especially large ones, are placing a greater focus going forward.

Interestingly our research highlights that for these roles technical expertise is still essential, with the majority requiring a finance professional qualification - so the need to maintain that accuracy and technical input you mention is very much maintained - but perhaps moving it closer to the business and the products and services the organisation undertakes....

I'm interested to find out whether you think this apparent focus onto the management support areas is leading (or will lead) to some damage. Is the worry that finance will take its eye off the operational facets.... Have you any specific concerns or experienced some conflict already in this?

Conflict, constructive deconstruction ...

Posted by Adrian Rutter on Thursday 02 June 2011 20:12

Well, I've recent experience of two major transformational projects that were handled extremely well strategically, with clear goals and visions, buy-in at senior governance levels, and a very clear set of aspirational requirements set by who in my world we usually call the first-tier management team and the governing bodies ... but, below decks, you wouldn't believe the amount of string and sticking-plaster that's proved necessary just to keep things even half-decent at the transactional level.

I'm convinced that at least part of the problem is that few accountants can truly span the whole range of what we should be doing. That wouldn't be so much of a problem providing there was a proper appreciation and conversation around all the elements in the finance mix, but when the profession at a sweepingly general level dismisses operational competences in favour of analytical and commercial skill-sets, then, vital as those are, to me it's like trying to run a three-legged race with three legs tied together.