BusinessCorporate FinanceInsider Business Club: delivering corporate change

Insider Business Club: delivering corporate change

how can finance departments change from policemen to partners? our experts explain

Surely finance departments are already business partners, not

John Hayes, financial management consulting executive partner,

Our own CFO survey has shown that as many as 50% of finance departments have
been busy performing a good finance role, but they are not out there in the
business. That throws up an issue around perception.

Maybe finance had been doing a great job but the business units and the
people deep down in operating departments just didn’t know that. It highlighted
perhaps that there wasn’t the communication between them.

So we’re not saying that finance doesn’t partner. We’re saying that finance
is not seen as being a partner and perhaps where it is partnering, it’s in the
traditional roles of financial recording and reporting rather than the things
that worry the business like risk, compiling information and helping deliver

If the finance function is what’s known as silent running, that means there’s
a lot of automation and therefore there isn’t the hassle that’s routinely
associated with getting the numbers out. Those kind of organisations would find
it easier to make the switch because they have more time.

They are the ones that aren’t struggling 30 days after the month end to get
the numbers out, because they have already got the numbers out two to three days
after the month end. It is those organisations that are going to find it easier
to do this, provided of course they have the right skills.

Those organisations will still be able to fulfil that primary function, which
nobody pretends you can get away from, of producing accurate reliable
information that provides people with what they are looking for. But at the same
time, they can start migrating towards getting out more into the business.

Do finance professionals have the skills they need to partner more?

Nick Eaves, executive director, Badenoch & Clark

Many accountants feel that they lack certain relationship-building skills;
perhaps a lot of their expertise and their training and the focus of expectation
on their roles is to do with their technical competence. When asked to work on
building relationships and perhaps more importantly on influencing a wide range
of stakeholders, that is where they come across some barriers.

I think the predominant message is that CEOs want finance to play a role
that’s broader than the basic primary function. In the global market place it is
getting harder to make a decent margin and profit.

There is a lot of opportunity but there is such pressure on profitability
that the disciplines that finance professionals can bring to good business
practice is welcomed.

I think it is interesting to look at to what degree finance professionals are
confident predicting numbers going forward. Accountants are happy to check
historically, but looking at forward predictions involves an understanding of
the business of the commercial markets in which they operate, of external
factors and so forth.

I think the biggest constraint is finding out whether people are able to get
out of their comfort zone and learn these skills. The model that Princeton have
advocated and I know Microsoft embraced this, is that training, learning and
development is 10% about the central training function, 20% of it is to be
provided by your boss and 70% of it is about you. What I mean by that is that if
you go to a training course, what do you do afterwards? Do you prepare some
personal actions? Do you plan it like you plan your technical competence or is
it just a bit of a add on? Behaviour change is not easy.

If the department becomes strategic, what happens to operational

Peter Simons, technical specialist, CIMA

Within the finance team there are actually different kinds of roles and there
are people whose role it would be to get the figures done. They’ll be people wh
o will have the custodial role and there will be people who will be required to
get finance disciplines out there into the decision-making departments.

It seems that the usual distinction between accounts and finance is now about
people being operational or strategic. So the transactional part of accounts is
now centralised or even outsourced and that is operational. That is the bit
where we might have silent running.

We still require expert services – audits, tax, mergers & acquisitions
and so on. And that is a very head office accounting role. On the other side we
have at the operational level what might be called business partners in some
businesses, but they are actually only providing financial support. They are
almost apologists for finance.

What we are increasingly hearing is that businesses want those financial
partners to become much more strategic and provide finance leadership. Then they
are becoming advocates of financial disciplines, instead of apologists for
financial figures.

We have been talking about business partnering for a long time, but it hasn’t
actually happened in a lot of businesses and one of the reasons accounts hasn’t
come out of the closet, if that is the term to use, is that there hasn’t been a
demand from the business for accountants to provide this role.

Sometimes accountants can be assertive and they can lead the business, but it
is resisted unless there is a clear vision, and that has to come from the CEO
working with the CFO.

Chaired by Damian Wild

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