The mission of Finance in the corporate world is redefined by external factors, compelling it to re-invent its operating model to meet new business needs. So what can leaders do to successfully transform on the backdrop of complexity & uncertainty?
by Evelyne Legaux on 18-07-2023
Over the past few years, CFOs & senior Finance leaders have been confronted with the perfect storm of challenges ranging from the respective impacts of Brexit & the global pandemic to the emergence of new technology, exacerbated geopolitical risk or else new regulatory compliance requirements, on the backdrop of macroeconomic volatility.
Such a wider uncertain context has shaken the foundations on which the Finance function at large operates & triggered the need for it to deeply transform, so that it is able to effectively & efficiently respond to & even anticipate ever-changing business needs.
In actual facts, the very mission of Finance has been redefined as a function that drives a company’s future as opposed to just report on its past performance, and the role of the CFO has been evolving accordingly, to become that of a strategic advisor to the CEO. What this means is CFOs must now drive their teams to deliver on that much expected value to the business organization.
So, let’s explore what Finance teams can do to meet the new expectations from stakeholders, the hurdles that typically get in their way & some of the key factors that drive transformation success.
What can Finance teams do to deliver on their evolving role?
Creating a central & scalable structure such as an in-house Shared Services Centre or Global Business Services organization for instance, can go a long way in driving the simplification & harmonization of end-to-end processes across the board. But beyond scalability & cost reduction, such an operating model can be the springboard that enables Finance teams to unleash their expertise and provide holistic insights into key operating cycles & strategic guidance to the business.
What is new in our post-pandemic world where many people work remotely, is that a Finance Centre can now operate virtually, with employees actually sitting anywhere around the planet. Such a virtual model is also a very effective way for companies to overcome the challenge of sourcing talent with multiple language skills in one single geographical location.
Alternatively, where large volumes of Finance transactions are involved, business is growing at high speed &/or scalability is critical, outsourcing some of the processes to an external Finance services provider thus quickly expanding access to resources & capabilities, may be a better option to consider.
To be able to fulfil its enhanced mission, the Finance function must also develop new capabilities by embracing robotic process automation, digital technology & data analytics, and acquiring new skills. Having access to structured data & being able to make sense of it for analytical purposes, appear essential for Finance teams if they are to provide meaningful real-time insights to the rest of their organization.
Given the rapid pace of external change compared to internally available resources & capabilities however, Finance leaders may need to go for a hybrid organization model that would combine in-house processes with outsourced ones, the latter immediately benefiting from the partner’s technology & skills.
For the Finance function to unlock greater value in a fast-changing & increasingly complex world, CFOs must anticipate future business needs, create a vision for how Finance can best deliver on evolving expectations & develop a plan to get there.
This is where Finance transformation comes into the landscape…
Some hurdles may get in the way
While we are definitely living through exciting times for the Finance function, increasing complexity may cast a shadow on it all.
The difficulty is that they are likely to cut short-term spending in areas that are elsewhere considered long-term priorities such as ESG, talent development or leadership skills. To effectively balance short term performance vs long term value-creation, Finance leaders must be able to influence and gain trust & collaboration from the rest of the Executive leadership team, which can be a significant challenge.
With the constraint of finite time resources however, the profile of the ideal Finance leader going forward is likely to become less that of a technically savvy Finance expert, and more that of a generalist Executive that possesses the right leadership skills.
As their role becomes more complex & triggers broader expectations, CFOs are increasingly led to impulse & drive significant transformation initiatives throughout their entire Finance organization over the next few years.
So, let’s have a look at some of the lessons learned from successful transformations…
Key factors that drive Finance transformation success
With so many transformation projects failing to achieve their objectives, making the effort to understand & build on the common features displayed by those that succeeded, is a definite worthwhile exercise.
Successfully transforming an organization owes nothing to luck or chance, but comes with a combination of essential building blocks that Finance leaders must gather & assemble.
No matter how smart a new strategy, operating model or technology might be, it is the people who will deliver the sought-after transformation! It is also the people, both individually & in teams, who will first & foremost be impacted by it. Therefore, recognizing the human dimension of transformation is of utmost importance.
To do so, leaders must understand the basics of human psychology, acknowledge that transformation inevitably creates anxiety, fear & stress for people and adapt their communication strategy accordingly. More specifically, they must provide a framework for people to safely raise concerns & express emotions, along with adequate support to those who need it.
Bringing their team along on the journey with them is an absolute ‘must do’ for leaders, if they are to give that transformation the least chance of success.
At the outset of any project journey, it is critical for leaders to come up with a purpose-driven vision that people can make sense of, emotionally relate to and be inspired by. What will that transformation achieve for the organization? For its people? And for the wider community or society? Without a compelling & resounding ‘Why’ that triggers a deep sense of motivation, people will inevitably challenge & resist in various ways whatever transformation is being put in front of them.
Another success factor is to foster a work environment where people feel valued as individual contributors to the transformation at stake, listened to, understood & supported. People need to feel that the organization they work for believes in their ability to add value & empowers them to deliver.
To achieve that, leaders must enable two-way engagement with their teams and communicate in an open, honest, transparent & authentic manner about the transformation vision, its positive outcomes & any challenges expected along the way. Most importantly, they must demonstrate empathy, listen to people, effectively address their concerns & trust them. While this might mean disclosing some vulnerability or admitting that they don’t necessarily have all the answers, showing up as ‘human’ leaders will always go a long way in nurturing that initial commitment spark within people.
Likewise, people need to feel encouraged to safely leverage their own creativity, innovative ideas & potentially ‘hidden’ skills, to advance the transformation agenda without putting their own job at risk. People want to co-pilot the transformation, NOT just take a backseat!
Leaders must have a clear understanding of the wealth of knowledge, skills & talent that exists within their teams, and tap into this invaluable resource with discernment by assigning the right people to the right topics or problem-solving areas, through empowered focus groups or otherwise. Leaders must also consciously adopt a ‘fail fast & rebound’ mindset & create a work environment where people can unleash their creativity, learn & experiment without fearing failure, in order to open up the possibility of new ideas & perspectives.
Establishing a clear Roles & Responsibilities matrix and governance structure that transcend traditional silos & foster cross-functional collaboration, is also highly recommended to ensure that people understand how far they can push the boundaries of experimentation & decision-making.
Central to transformation success is for CFOs & other Finance leaders to take the time to step back & reflect about what this all means for people and what it takes from a leadership standpoint. While the above leading practices might appear challenging for Finance professionals in particular, reality is that ‘human’ leaders who genuinely put people at the heart of what they do, make an effort to understand the basics of human emotions & how Gen-Z think, are far more likely to succeed in today’s fast-changing world.
And as a positive side-effect, they might also be facilitating the emergence of the much-needed next generation of leaders…
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