Many CFO’s complain about the lack of engagement with the other parts of the business.
Many Business leaders complain that Finance doesn’t understand their business.
This is despite having a Finance Business Partner
Some Business leaders rate their Finance Business Partner, but not the services from Finance.
So what’s going on?
If Finance recognise that they need to partner with other parts of the organisation, why isn’t it happening?
In my experience the reason why Finance Business Partners isn’t working is down to 6 key things:
1. Finance Business Partners are too involved in transactional detail
Finance business partners don’t just partner with other areas of the organisation. They are heavily involved in other finance team activities such as month end or preparing management reports. Which means that Finance Business Partners have limited time to understand what is going on in the areas that they are responsible for.
2. Lack of capability within the Finance Team
Due to a lack of advisory or analytical capability within the Finance team, they struggle to provide the insights or convey them effectively. Both are areas that don’t feature heavily in accounting exams or training.
Consequently, skills in this area are developed “on the job” and if team members haven’t been exposed to advisory or analytical skills, then Finance teams aren’t going to have them.
3. Lack of strategic leadership within the Finance Team
Many Finance leaders have technical backgrounds and have fallen into leadership positions. In addition, leaders are often too involved in the detail, they lack the exposure to the strategic issues and decisions facing the organisation. And the cycle continues!
Also, because many organisations are poor at developing people into leadership positions, unless leaders are naturally talented, they fail to develop their teams and thus the capability gap grows.
4. Reporting difficult to interpret
A lot of reporting Finance teams produce are observational in nature – for example people costs are over budget, operating costs are below budget. Without any real insights into what’s going on, reporting is seen as a compliance exercise, rather than being useful to business leaders.
5. Finance Business Partners are recruited as generalists
Finance Business Partners are often recruited as they have broad experience or they are personable in nature. Just as there’s no one size fits all for shoes, there’s no one size fits all for business issues either.
There’s generally very little thought given by Finance leaders to the specific work that the Finance Business Partner is going to do, or the type of area that they are going to support. Moreover, even if one of the business partners has some specialist skills, if there becomes a vacancy in the business partner team, then there’s either a reshuffle or, the next management accountant moves up into the business partner group.
Consequently, finance business partners often end up being stacked with more generalists.
6. Business Leaders don’t know how to use Finance Business Partners
What generally happens when a Finance Business Partner is recruited is that they are introduced to the team that they are going to support as the Finance Business Partner – and everyone nods and smiles.
Business leaders have been so used to meeting their management accountant, maybe once a month, to discuss the results or at budgeting or forecasting time that they assume the Finance Business Partner will do the same thing.
Because Business leaders are often not trained in Finance, they don’t know how to use the Finance Business Partner. This means that they end up asking the Finance Business Partner low-level questions, and then the Business partner ends up filling their time with low-level requests for information, which means they have little time to work on strategic matters.
As business leaders are unsure of how to leverage the Finance Team and their Finance Business Partner, there becomes a vicious circle of low-level activities.