Part 1 of the 6-part “FP&A Business Partnering” series on how FP&A professionals can improve their effectiveness by establishing strong working relationships with business stakeholders.
As finance functions around the world have been transformed to run very efficiently by utilizing global shared-service centers in low-cost locations, companies are starting to demand more effectiveness from the finance function. Essentially, finance is now doing things right, but not necessarily doing the right things—or rather, enough right things.
Finance is tasked with delivering better business intelligence and more importantly, better insights to influence decision-making in the right direction and creating an impact on company performance. At the center of this shifting demand is the FP&A function, which needs to deliver better analytics but also needs to partner with business stakeholders. Always an analysis function, FP&A can find it much more challenging to develop meaningful relationships with stakeholders as it requires completely different skills vs. the traditional role.
To help facilitate this change, we will take a closer look at the term “business partnering” and explore what it means for the FP&A function.
“Business” and “partnering”
Let’s distinguish the two key terms and discuss what they really mean.
Business: It seems obvious that this is about the company you work for and the industry it competes in. Too often, though, FP&A professionals have been occupied with purely looking at the numbers rather than connecting them to a business context. A trend is a trend, whether you sell flat screens or ice creams. However, these are two completely different markets, and production, supply chain, marketing, etc. all function in different ways. Hence, to build a relationship of trust with your stakeholder irrespective of what function they work in, you need to understand what they do. (We will explore tips and tricks to learn about the business in a later article.)
Partnering: To partner with someone, you need trust. Without trust, there’s no partnership. That holds true in business as it does in your private life. To establish trust with any given stakeholder, you can analyze what elements of the trust equation you need to work on. The elements are credibility, reliability, and intimacy, minus self-orientation.
Often, FP&A professionals find it hard to build intimacy with others. Yet it’s important to remember that being intimate with someone doesn’t mean being private with them. Rather, you can connect on a personal level talking about some experiences you’ve had together, or a common interest. Most important, you need to know the profile of your stakeholder. Some like small talk, whereas others just want you to deliver your recommendation in 30 seconds or less.
Once you have figured out how to build a relationship with your main stakeholders, all you need to do is to increase your interactions with them, be it in a formal meeting or at the coffee machine. (We will also explore the tools for how to build partnerships in a later blog.)
It’s difficult to be a good business partner if you fall short in either of these two categories. There really are no shortcuts to becoming good at it. It takes hours of work and practice, but you have to start somewhere.
Business partnering in the context of FP&A
FP&A is often a corporate function that delivers analyses to senior management, so it tends to work more at a strategic level than at the operational or tactical level. That means you need to understand the strategy of your company and challenge strategic decisions. You also need to partner with both senior leaders as well as frontline functions that deliver critical inputs to your planning and analysis.
Senior leaders are typically short on time and leave very little room for errors. Hence, FP&A business partnering differs from finance business partnering on the level of the stakeholders it deals with, as well as operating at the strategic level. In a later blog, we will look at how the FP&A function uses business partnering to improve company performance at the strategic level.
To understand the challenging part about being successful with business partnering in the FP&A function, try to remember the last time you showed up with wrong numbers in your management presentation or made a forecasting error that led to a wrong a decision. We’ve probably all done it but never really thought about how much it damaged your partnership with the management team. If only you had had the business understanding to know that your numbers clearly didn’t fit with what happened during the last month, or that your forecast clearly wasn’t realistic! Now that you know, you can get started on building trustful relationships and help your company improve business performance.
In conclusion, what’s important to know about business partnering is that you need to find ways of increasing your business understanding in addition to building relationships with your key stakeholders through establishing trust. By doing this, you will be able to leverage your FP&A skills and your FP&A team in a completely different way, which will boost value creation in your company.
This article originally appeared on LinkedIn and is republished by permission.