The Pragmatic CFO: Culture in Finance

In our first blog post we split our response to the changing Finance landscape into three areas: Culture, Team and Technology. We also discussed how cloud technology can be a great enabler to expand the contribution of Finance within your company. Our second blog post, went into areas that improved your teams’ connection to and relevance to the business. For this post, we touch on the engine that drives our response to the changing landscape: The culture of the Finance team. It’s the culture which sets both the expectations of what can be delivered, where to invest time and rewards for desired performance.

At several finance executive networking groups we’ve discussed the different cultural approaches within finance to meet the expanded requirements from the business. We agree the traditional culture that emphasizes strong accounting and control is important since it represents one of our primary tasks, but it can also be a limiting view.

The Pragmatic CFO: Culture in Finance image 274519 l srgb s glThe Pragmatic CFO: Culture in FinanceFor colleagues who have lived in more of a traditional culture found it limited their Finance team’s opportunities and preparedness to grow the business. The opportunities were limited because colleagues did not see Finance beyond accounting. For preparedness, the team simply did not emphasize putting the data available to them to work toward business insight. Even if they were asked to assist, it was difficult to respond.

To embrace the ‘strategic and analytical’ side of finance requires the culture to foster and reward building upon the accounting work. While each firm will achieve differently, based upon discussions with my finance colleagues, here are common elements found in the broader culture:

Give Your Business Peers High Expectations

When it comes to analysis, you serve the business, more so than yourself – which is a bit of change from accounting. Therefore, the culture must have promotion of yourself – telling your peers and team what to expect from Finance.

Open Access to Data

The most critical step in enabling the business is opening access to information to your operators. You need to ensure accuracy, but then it’s all about speed and relevance. You control the speed by the tools used and the field will tell you what’s relevant (through the steps in our 2nd post help your team get more adept at determining relevant information). What the field wants the most is the ability to respond quicker, so let them at it!

Be Great at Trying

Exploring is at the heart of analysis and it must go hand-and-hand with the knowledge that it may take multiple attempts to bring together the different elements correctly to create relevant information. Unlike the monthly close where we work to shave time off the process, analysis is more like a start-up venture where dead ends are a critical part to finding success – you need to invest in exploration.

Act like Not all Information is at Our Desk

Finance is loaded with good transaction and operation data which is a good start to analysis. When combined with knowledge from field (customer buying behavior, competitor pricing, etc.) is what creates both an even-handed view and the appropriate benchmark to measure our results (e.g. 7% growth may be a strong achievement if our competitors are at 2%).

Analysis is not just for the Analysts

As noted before, good data exists within each function of Finance that can be used for improvements in pricing, operation, cash collection or processes. The culture should encourage and allow time for team members to explore the detailed data which they are most familiar to develop opportunities (and with the right tools to analyze detail). Often it takes the hands-on experience to understand the patterns in the data to screen in what’s relevant to create actionable information.

Less Data, More Information

This line summarizes a general message from a CEO that it’s Finance’s, not the business operators, to plow through the detailed data. More importantly, the best way to affect change in the business was to deliver only information that facilitated a decision and clear to reader what needed to be acted upon.

Our approach to the topic of responding to our changing landscape was intentional to make the culture the capstone, since it is the culture needs to embrace the means (technology), team (being relevant) and expectations of business partners.

Being pragmatic, we find rolling out the culture was a step at time. We’ll share an experience where Mark took on a team who had lived in a traditional culture.

First, Mark met with business operators and peers and then turned their needs into expectations for the Finance team – then made the expectations publicly known. The act of going public really lit the fire on both sides: The business felt free to start making requests and the Finance team was happy to both get an expanded role and the license to do so.

The next steps were to expand the culture to address the issues that limited the ability to embrace the full finance view. For example, the team’s strong accounting background was evident in all the communications – which were basically providing varying levels of accounting detail. It only took a short period of illustrating the “Less Data, More Information” concept before the team grabbed hold and made major changes to how they approached communications. From there, each cultural change had a different pace and adoption based upon how far outside it was from the team’s comfort zone.

The success in Mark’s experience reflects the importance of getting your business partners/peers initial and on-going insight and support. It’s a necessary to refine where to focus our attention, assist in funding new technology and its deployment, involving us in business decisions, etc.

One last thought for those pursuing a cultural change – its clarity and persistence that wins over time.

By Mark Richards (mark.richards01@sap.com) and Steve Shaffer (steve.shaffer@sap.com)

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