MY ORGANISATION is working on its global operating model, examining roles and responsibilities in many functions that will inevitably lead to yet another expensive reorganisation of some sort. My concern is that it threatens to disturb what I believe to be a high-performing but widespread community of finance professionals and support staff, as well as those in a shared services centre (which I intend to rename as Global Business Support).
This irritating organisational review – led by consultants, of course – has categorised the wider finance function as a mere ‘support service’, a term to which I object and which has connotations of a janitorial nature, rather than its more appropriate strategic importance.
Some FDs and CFOs lead organisations which include subsidiary companies and local operations, many with divisional, regional and other structures, and the reporting lines of the finance professionals tends to vary. I have always held the belief that a local and subsidiary FD’s reporting line should be to the local MD or equivalent, with a strong professional dotted line through the finance structure. This team approach places these FDs’ responsibility and accountability where it is most effective in order to deliver results, but provides the professional pride, allegiance, advantages and safeguards of belonging to the finance community.
Many people disagree with this, preferring line responsibility to follow the finance route, but I believe this demonstrates insecurity and arrogance. Therefore, I am also an enemy of centralisation other than for corporate functions and specialist technical experts – eg, in treasury, tax, consolidations, legal, shareholder liaison and the like.
Confusion caused by matrix organisation structures, and their systemic escape routes from accountability can only be resolved by the careful definition of various roles, and some of the largest and most respectable global organisations continue to make a success of them. Others failed dramatically – this notably happened in 2007, and then the global financial crisis soon took hold.
Modern thinking has evolved towards using finance as a ‘business partner’, a useful but hackneyed term which applies to finance professionals at all levels of organisations called upon to support, enable and influence colleagues in other disciplines and functions. This model involves embedding members of the finance staff in business areas, providing expertise and access to central finance resources in order to enable the business, while retaining the reporting line upwards through the finance route.
But what does the term ‘business partnering’ mean? Is it a priority for FDs? What are the key challenges and attributes of success? Who should lead it? These questions have been posed by ACCA in some of its recent work, and I am keen to see the published results next month. My own organisation draws on business partners from finance, HR and IT, and it has learned to utilise these professionals productively rather than to use them simply to take all the blame but none of the credit.
I question, though, whether reporting lines actually matter, and I believe it is outdated to view organisations in hierarchical terms. The ability to influence and drive organisations to achieve success is not determined by reporting lines, and I know many FDs who demonstrate and manage in this environment extremely well.
I have written previously that when I first became a CFO, my own reporting lines upward multiplied but were ill-defined. I now seem to report to non-executive bosses on the board, audit and other committees, shareholders, lenders and stakeholders. My direct reporting line to the CEO seems to be only occasional.
Last month the SFD postponed a visit to Noida in India, a centre of excellence for Shared Service Centres, but attended a Management Book of the Year event at the British Library.
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