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
