Wednesday, March 30, 2011

Supercharge Your Finance Team

There are two general schools of thought in developing a high performance team: develop people organically or hire high performers and ‘retire’ the low performers.  According to some sources, hiring can cost from 40% to 150% of an employee’s annual salary.  By far the cheaper of the two options then is to retain your current talent and work to increase their leadership skills.  Below are some high impact and low cost ways to develop the next generation of finance leaders.


Charlie “Tremendous” Jones said “You are the same today that you are going to be in five years from now except for two things: the people with whom you associate and the books you read.”
Grant Cardone, International Sales Training Expert, claims that the average person reads one book per year while the top performing CEOs read 60 books per year.  Books provide the highest ROI when it comes to knowledge.  Therefore, if you want to develop a high performing team, the best thing you can do as a leader is to offer them knowledge by way of books.  My own personal list of “must reads” include:
  • 48 Days to the work you love – Dan Miller
  • QBQ! The Question Behind the Question: Practicing Personal Accountability in Work and in Life by John G. Miller
  • How to Win Friends & Influence People by Dale Carnegie
  • The 7 Habits of Highly Effective People by Stephen R. Covey
  • The Go-Getter: A Story That Tells You How To Be One by Peter Bernard Kyne

If you have a large team, develop a library.  A great place to start is the book list at by Josh Kaufman.  Josh has developed an outstanding list of the best business books available.  Put the library on display where it is easily accessible.  Don’t implement an onerous checkout process as some organizations do.  If books “disappear”, consider that a small price to pay for upgrading your talent level. 

Ask your staff to develop short book summaries and include answers to at least the following questions:
  1. What are the top 10 key concepts from the book?
  2. Are there additional ideas/points the author missed?
  3. How are the author’s ideas applicable to our team?

Finally, find a way to motivate your staff to really push themselves.  Why not announce a competition for who can read 52 books in a single year?  Give away an iPad as a reward.  Nothing motivates like healthy competition. 


Aside from an increase in general management knowledge, leaders generally excel at soft skills.  An easy and inexpensive way to develop soft skills within your staff is to introduce them to Toastmasters.  Toastmasters is a non-profit educational organization open to all people ages 18 and above who wish to improve their communication skills.  Members meet once a week for 60 minutes and give planned and impromptu speeches.  Membership is typically in the USD 20 to USD 50 per year range.  As members work their way up through the various levels, there is a sense of accomplishment.  The results are outstanding: increased confidence, communication ability and leadership skills.  Starting a local chapter is easy; all that is needed is a group of dedicated people who are willing to start.  Finding a club is even easier: visit and search by city. 

Additional Ideas

Vendor demonstration week/brown bag lunch
Set a day or week aside as a one-time event or every month and have a new vendor come in to demo their product.  Put a different employee in charge of this and have them think through questions that need to be ask: how would this product work in our environment?  What are the barriers to implementing this type of product?  What type of efficiency gains would we see if we used this product?  

Write a weekly informal management letter
If you are in a large organization, your team may not get a chance to interact with the leaders directly very often.  If the team is going to be transformed into a high-performing organization, high touch points will be needed.  An informal management letter (weekly or monthly) may provide them insight into how the strategic direction is being implemented.

Plan an informal offsite breakfast
Having formal monthly, quarterly or annual events is great but don’t let those events stand in the way of spending time outside of work with your team members to mentor them.  Breakfast is generally the cheapest meal and breakfast meetings are a great, time-boxed way to begin the day.  

Ask the CEO or a board member to host an informal lunch session
Likewise, having leaders from other parts of the organization spend time with your team is a great way to develop leaders.  Ask the CEO or board member to host an agenda-less lunch session with a few of your staff members. 


Developing a high performing finance team doesn’t have to be an expensive proposition.  By using high-impact and low-cost ways, you can grow your group and develop the next generation of finance leaders. 

Wednesday, March 2, 2011

Finance Function Performance Management

A good performance management framework should align corporate vision and strategy with business and departmental objectives.  As the global economy rebounds and companies begin to migrate from sustaining strategies to growth strategies, now is a good time for finance leaders to re-evaluate their group strategies and set their future plan.  A key component in this process is linking the group strategy to the performance management function.

Finance Function Strategic Plan

A well thought-out and executed performance management function begins with understanding the strategic plan for the organization as a whole and its impact on the finance function.  While different companies use different frameworks to define their strategy, every strategy addresses the following elements:

Strategic Plan Element
What question does it answer
Where is the organization going?
How do we get there?
Critical Success Factors
What do we need to “do well”
Key Performance Indicators
How do we measure how well we are doing?

For the finance function to have an impact and support the overall company strategy, the finance function needs to have its own vision, strategy, set of critical success factors and key performance indicators.  In developing your key performance indicators, make sure you are balanced between leading and lagging indicators.

Goal Setting

Once the finance function strategy is set, finance function team members need to set their goals against this strategy.  Goal setting at the business area, department or individual level should encompass objectives or measures for results (what actions or outputs need to be produced) and skills/behaviors (how actions are to be performed).

Measures and targets from an effective performance management system should be SMART:
          Specific: easily understood and agreed upon by managers and staff
          Measurable: able to be quantified and updated regularly
          Actionable: within the control of the business area/individual
          Realistic: be achievable
          Time-bound: i.e., within a certain time period

In addition, goals should balance financial and non-financial measures and link the strategic to the operational.

Why do measurement efforts fail?

Peter Drucker said “If you can't measure it, you can't manage it”.  The corollary to that is “You get what you measure”.  In order to develop into a leading finance function, the importance of measurable goals at the group and individual level cannot be over-emphasized.  Of course, there are several reasons why organizations fail to deliver.  These include:
          Lack of alignment with strategic business objectives
          Dependence on lagging, not leading, indicators
          Poor integration with other information (internal and external)
          Heavy reliance on financial measures

Finance Specifics

There are a few areas in the strategic development and goal setting process that are specific to Finance.


The primary goal for most finance functions at public companies is to align the finance function under the CFO with primary responsibilities being financial statement production and audit support, with secondary responsibilities being financial management support.  The organization should be measured on the drive toward common accounting policies, common accounting processes used across the business, and providing better insight into corporate performance through management reporting.  If not already for global companies, a goal to consolidate the number of support functions to a cost-effective location would be appropriate.  This will help to save costs, improve efficiency, standardize processes, and enforce internal control.


Production of accurate and auditable financial statements is key.  The finance function should have goals around driving common data standards through the use of a common chart of accounts and common financial management measures.


Goals here should be to improve operational KPIs in the key functional areas: payroll, accounts payable, billing, accounts receivable, collections, credit, consolidation and reporting, inventory, fixed assets, and treasury.  They key is to develop a list of KPIs specific to each area, review 3-5 year operational data to develop insight into trends and develop initiatives to improve the measures.


Key measures should exist around the control environment through the annual SOX certification process for public companies.  If warranted, measures around the updating of internal control documentation should be development.  Controls related measures should also include the number of controls automated and the number of controls moved from detective to preventive.


For most companies, much improvement can be made without the implementation of new technology.  For technology-related projects, formal portfolio and project management measures should be used: # of projects supporting the corporate vision, # of projects on-time and on-budget, etc.  Other measures, in conjunction with the other areas above, can measure the amount of technology-enablement that will occur in the next year: number of A/P invoices accepted electronically and so forth.