Part 3 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.
Companies are constantly looking for ways to improve their performance, and there’s no doubt that it’s easier if different functions work together on finding improvement ideas. It’s clear that certain functions execute the ideas while others provide support on the sidelines and manage the outcomes of the ideas. FP&A is such a support function that typically works at the corporate or HQ level, with strategic concepts ideally supporting senior leaders or top management, even with driving their agendas.
How can FP&A teams most effectively help their stakeholders improve performance? The answer is business partnering. Let’s expand on that.
Business partners help drive company performance
As a business partner, the FP&A team is responsible for participating in strategy meetings where different options are discussed to drive the company forward. The FP&A team should help qualify each option to support the best choice. The team should even provide a recommendation based on analysis of the options.
Once a decision is made, it filters down to the operational units for execution, and the FP&A team will keep track of the overall performance. To drive performance, however, the FP&A team should stay in close dialogue with the operational units and help the line managers, as well as the local finance teams, better understand the strategic choices made and how to translate them into execution.
In this case, business partnering goes both up and down the company hierarchy. First, the FP&A team helps senior management make the right strategic choices and later assists the operational units to understand the choices and translate them into local initiatives. Without this link, there’s a very high likelihood that the translation of strategic choices will be misinterpreted, and company performance will suffer. To visualize how FP&A can use business partnering to improve company performance, look at the flow chart below.
This chain of actions can essentially repeat over and over as a continuous improvement cycle of company performance. It “only” requires that the FP&A team be treated as a trusted partner by both senior management and the operational units.
How is this different from what FP&A has always done?
Surely, there are pockets of excellence here and there where an FP&A team has always been involved in making strategic decisions and translating them to the front line. However, FP&A has traditionally been focused on strategic choices handed over to them in order to forecast their effect and prepare a budget that would show the total outcome. Then a message is sent to operational units to hit those budgets. Every time they fall short, line managers receive an e-mail (not even a phone call) to explain what actions to take to improve performance.
Not a lot of teamwork or collaboration is involved here. Often, the FP&A team failed to understand why the operational units didn’t just follow the plan! In simple terms, the line managers never understood the plan (and you must wonder if the FP&A team did, either). Hence, it’s no wonder performance didn’t follow.
For example, due to a bad year, management might decide all units must cut 10% from their spending. No direction is given about what actions should be taken. No patience is shown for non-performance. Perhaps an initiative to cut 10% might not be a strategic action. But still, the FP&A team needs to act as a partner to management and help it make smarter choices.
Deeper involvement in decision-making and execution
FP&A should know where there are improvement opportunities, both on revenue and costs, to reach the effect that a 10% cut across all units would yield. At the same time, FP&A can easily help translate the strategic action to operational units because they have been deeply involved in the decision. Instead of a one-sentence order to cut 10%, FP&A can pass on suggestions for initiatives the operational units can take to reach the desired results. This will make it easier for everyone to deliver – and FP&A is at the center of it.
Business partnering will not only make the FP&A team more successful but, more importantly, it will also improve overall company performance. What’s stopping you from getting started? The next blog in this series explores tools, approaches, and the mindset you need to make it happen.
Reach the other blogs in the “FP&A Business Partnering” series to learn how FP&A professionals can improve their effectiveness by establishing strong working relationships with business stakeholders.
This article originally appeared on LinkedIn and is republished by permission.