The UK’s Chartered Institute of Management Accountants and the American Institute of Certified Public Accountants jointly administer the Chartered Global Management Accountant (CGMA) qualification – a collaboration that affords them a unique perspective on how the finance profession contributes to business on a global scale. This makes itself apparent in some intriguing thought leadership, the latest instalment of which looks at the concept of Finance Business Partnering.
At its heart, this is no more than the idea that finance professionals should support a business’s strategic decision making. That sounds like it ought to go without saying, but a quick look at the CGMA paper suggests why it is not always as simple as it sounds. The difficulties of validating and consolidating financial information in large organisations mean that even highly skilled FP&A professionals can spend a large proportion of their time simply preparing and managing data.
Clearly, automating these tasks is of huge benefit, but a strategically effective finance team is built on the right attitude as much as on the right processes. The CGMA’s paper focusses on decision-making, and a good finance team has the potential to support improved decision-making at all levels of the business.
In fact, a strong partnership between the finance team and the rest of the organisation can do a great deal to make the hierarchy of the business more effective. Though some (mostly small) companies have taken steps to abolish them, most organisations are still built on several layers of middle management – and these can be either an obstacle or a driver of positive change.
Making sure that the latter applies is a time-honoured challenge, and one not made easier by the unhelpful associations of the ‘middle-management’ term. The Financial Times’ Emma Jacobs, in an article published last week, revisited some of the research on the topic, and the account of frustration and ineffectiveness was all too familiar. But her article also highlighted how middle managers can play a vital part in driving momentum in an organisation. With their capacity to motivate those below them and inform those above, they have a huge part to play in improving productivity. A finance team that takes finance business partnering seriously can play a big part in promoting that.
Once the data management side of finance has been automated, the team can turn their skills to the analysis that informs better decision-making, identifying the drivers of value in the organisation, and the actions needed to enhance them. However, it is a mistake to assume that only senior executives can benefit from this type of insight.
Giving middle managers the tools and access to ‘explore’ large datasets does not generally add a great deal of value. But giving them insight into the financial rationale underpinning the instructions they receive can be hugely motivating. Allowing them to feedback in the context of their own work can also be highly informative for senior managers. This requires a platform that can generate both strategic and tactical insight, and afford access to it selectively. It also requires a finance team that appreciate their impact at all levels of the business. Such an arrangement can form a strong foundation for a more productive organisation.