A READER ASKS:
We are truly a sales driven team of tangible big ticket items. We are constantly coming up with new or
improved methods to differentiate ourselves from the competition. But our marketing and sales plans seem to
continually get hijacked by the finance department, who focus on daily or monthly
data and not long term goals. How do we
get over the CFO’s wall of resistance?
There is
little doubt my answer to this multi-company corporate problem will probably
bring a touch of anger from our readers within the finance arena. Although we’ve all got an intricate place in
the company structure, I continually state that companies should be managed by
a management team that tends to lend itself to the sales side. However with that said, Performance
Management Systems can be developed and deployed to help win over the finance
men and women.
Performance measurement systems are affected by the very culture of the
group designing and using them. There is nothing wrong with a financial
reporting system, but this should not be confused with a performance management
system. The latter is intended to guide an organization to results. The finance
function, however, is embedded
in a culture of risk avoidance and control. The effect of that perspective is
to focus on process, accuracy of predictions and variance with expected data.
How much variation in month to month results is typical for your industry? Are long-term trends heading in the right direction? Does your executive team have evidence that past variance with plans is a good predictor of failure to meet goals? Is there a basis to believe this is the case now? Is the finance function being given undue influence over business operations? Remember, accounting is a trailing indicator and, while a provider of important data, it is a supporting function and should not be confused as a business driver.
Discuss with your finance group about a performance measurement system designed for your specific culture, perspective and the impact each department will have on providing data and interpreting that data. Talk about how decisions will be made if one set of data is well outside of expected predictions. How are accountabilities to be set, i.e., how much allowance is appropriate for variance and who is accountable for "fixing" that variance? Have these conversations during the design phase and it will help reduce conflicts with regard “a number” rather than measuring progress against long-term organizational objectives.
How much variation in month to month results is typical for your industry? Are long-term trends heading in the right direction? Does your executive team have evidence that past variance with plans is a good predictor of failure to meet goals? Is there a basis to believe this is the case now? Is the finance function being given undue influence over business operations? Remember, accounting is a trailing indicator and, while a provider of important data, it is a supporting function and should not be confused as a business driver.
Discuss with your finance group about a performance measurement system designed for your specific culture, perspective and the impact each department will have on providing data and interpreting that data. Talk about how decisions will be made if one set of data is well outside of expected predictions. How are accountabilities to be set, i.e., how much allowance is appropriate for variance and who is accountable for "fixing" that variance? Have these conversations during the design phase and it will help reduce conflicts with regard “a number” rather than measuring progress against long-term organizational objectives.
As always,
your comments are welcome. Please accept
my wishes for an outstanding week! If we
can assist in any way, call or write and we will respond immediately!
Regards,
George F. Mancuso
George F. Mancuso, CPC
One thing that would greatly help is if your CFO, project managers, or people responsible for the time and money would talk to the people doing the work on how much time is needed and what the entire scope of the work needs to be to get to a finished product. Time goes astray because not everything is accounted for in proposals including the time to produce proposals.
ReplyDeleteGood morning, George...
ReplyDeleteLittle bit confused by the question and the person asking the question. To answer the question properly we really need to know two items...first, is the person within the HCM function AND is the person asking about HCM programs, processes and initiatives? Since you broach the issue of (to use a Dilbert-esque allusion) an evil AND pointy-haired AND clueless CFO in the SHRM world, let's answer from that base.
In essence, the CFO is passive-aggressive because the copy machine has greater intrinsic worth than an employee. Since the book RE-ENGINEERING THE CORPORATION was published in 1993 (authored by Hammer and Champy) the employee as a human worthy of consideration has gone downhill, fast. While this is a broad stroke and there are many exceptions, much of what we see, relative to off-shoring, closing the Twinkie factory, etc. can be traced to that book and the fact that much of our manufacturing infrastructure was not modernized. We also have a situation where investors...most of whom are large block investors are literally living second to second on stock movement and most management of medium to large companies can not look to the long term. People are long term. At will employment is a two-way street and since the companies do not give a flying fig for their employees, the employees mostly don't give a pair of fetid dingos kidneys either.
CFOs want hard dollar ROI, Most HCM programs can not give real hard dollar ROI in the short term. And in the end, that is why your CFO is not your best friend.
What would help? Well..If training and development could be treated as a capital project, which, in most cases it can not. And do NOT get me started on benefit structure..
Oh, to come full circle...when was the last time you saw a copy machine getting a layoff notice?
Again, YMMV...and I am painting some broad strokes. Civil conversation is needed as is some very deep critical thinking. I think, though, you get my drift. The value of human talent is a nice concept. In rare instances, companies put substance to it.