Finance teams are expected to deliver more strategic direction than ever before. But finance leaders also realise that the ability to see the big picture does not come about automatically. To achieve your strategic ambition, it usually means building on the skills of your existing personnel.
This is one of the trends highlighted in recent research from MHR Analytics in partnership with Accountancy Age. The report, The Road to 2022, An Evolving Finance Function highlights the areas where companies are focusing their upskilling efforts.
Updating the team’s technical capabilities is an obvious priority; especially when embarking on new initiatives in areas such as reporting, predictive analytics and scenario planning. But at the same time, the survey also underlines the importance of soft skill development, including communication and collaboration. After all, if finance is to deliver organisation-wide insight, it has to speak the same language as the rest of the business.
Expanding finance’s operational knowledge
In 2022, 84.5% of finance managers expect to be working more closely with other departments.
For the finance department to become more strategy-focused, there needs to be a two-way flow of information between finance and other functions. On the one hand, the CFO needs to be able to pull information together from all corners of the business to get the full picture. On the other, finance should be able to supply forward-pointing ideas and strategic direction back through to those departments.
As Gazprom’s Simon Reynolds commented, the transition “involves taking a more strategic approach and working closely with all departments to fully understand our customers and products, as well as costs”.
One thing that came through in the research is just how important it is to have a common business language. As one respondent put it: “It is amazing how often the business will use the same term but have different definitions or understanding based on where they sit”.
For more effective collaboration, organisations should consider focusing on the following:
To your team, knowing the difference between a gross profit margin and operating profit margin is finance 101 stuff. But can the same be said of the R&D department? And when you refer to matters such as profitability and cash flow, does everyone understand it in the same way?
In reports as well as in cross-departmental meetings, finance teams should avoid the assumption that accounting jargon is universally familiar. They need to develop the skill of talking about business strategy in language understood by those departments.
Developing familiarity with business processes
83% of finance managers expect to be seen as a trusted business partner to other departments within the organisation
‘Trusted partner’ status tends to be something that’s earned rather than conferred. You earn it by delivering the type of insights that other stakeholders within the business can actually put to work. Here are a few examples:
Critiquing whether a particular department is creating value for the company in the most cost-effective way.
Identifying opportunities for performance improvements and efficiency savings.
Acting as an early warning system for imminent risks.
Evaluating the profitability and risks associated with proposed deals, to aid deal negotiation.
Working with departments to define business-specific metrics to track: for instance, by establishing better ways of measuring the returns generated by individual areas of operational expenditure.
Helping departments to identify high-return projects.
One of the survey respondents, Tom van Rooyen of leadership services provider, Odgers Berndtson speaks of the need for “enhancing commercial acumen beyond the foundations of accounting literacy”. In other words, to be a trusted business partner, understanding the numbers will only get you so far; you also need a thorough familiarity of exactly what different departments do, and how they do it.
For finance team members, knowledge expansion may require a deep-dive into those departments and asking the following types of questions:
What are this department’s key processes? How do these processes link into each other and into the wider business model?
How do these processes create value?
What is the key technical language that operations departments use?
In terms of each product/service offering, what is its functionality, its perceived value to customers, and its points of differentiation against competitors’ offerings?
Updating your data skillset
Three quarters of companies are investing in updating the skills for finance employees.
As van Rooyen pointed out, “The majority of finance teams don’t necessarily ‘lack’ specific skills; most just need to upskill in existing areas.”
Let’s say, for instance, that your organisation is investing in new analytics and reporting capabilities, while also seeking to automate manual processes. In these situations, you may want to consider incorporating the following elements into your employee development strategy:
Choice of technologies. Look for solutions that not only cover your reporting requirements, but also feature a strong ‘self service’ element. This means they can be put to work by ordinary business users without the need for high-level technical input.
Roll out a ‘data literacy’ programme, providing information on all the data sources in play within the organisation, and explaining their value and uses.
Curate self service training and development resources for your team. This enables employees to pick up key information (e.g. how to create a specific report) right at the point of need, and in bite size chunks. (Tip: for building and managing such a programme with ease, take a look at MHR’s Learning Management System).
MHR Analytics specialises not just in equipping finance teams with the toolkit they need to become more strategy-focused, but also on providing all the support and training teams require to maximise return on investment. To start your transformation journey, speak to us today.
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