CFOs are in the perfect position to help their organizations improve overall performance by fostering communication and collaboration across the enterprise. To do that, they need to work together with business leaders to break down silos.
The dictionary defines organizational silos as insular management systems that prevent the natural flow of information and impede collaboration across varying units. As this definition indicates, silos get in the way of organizational effectiveness because data and information are blocked and essentially trapped in a closed unit. As a result, people cannot make fact-based and educated decisions because they are unable to consider all relevant information.
These organizational silos lead to a mindset that is damaging in another way. When employees do not get the information they need through a natural process, they waste time with data mining, which can ultimately undermine employee morale and employee engagement and lead to declining trust in leadership.
Regardless of organizational structure, silos can exist. However, the larger the organization, the higher the likelihood of silos. Their root causes are different departmental objectives and the lack of transparency and communication among them.
How silos impede efficiency
If we look at a sales department, for example, the main goals are straightforward: to increase revenue and win over new customers. An R&D department, on the other hand, is further removed from the customer and thus might not always see what the sales teams recognize as main objectives for product enhancements based on customer needs. Instead, an R&D department could be focused on new innovations that might not be most relevant to customers. Without communication and collaboration on common goals for the entire organization, the silo mindset can impede efficiency in reaching goals.
How CFOs can partner with the business as a neutral party
CFOs generally have a neutral position within the leadership team, since they typically do not own core businesses but rather orchestrate supporting activities. They can take advantage of this neutral perspective and help the businesses break free of the silo mindset.
The first important action is to acknowledge that silos exist and that they are impeding organizational effectiveness. It is then important to understand where silos are causing the most damage. The CFO should then partner with business leaders in charge of the problematic areas and engage them in collaborating with other leaders and building bridges. True business partnering involves understanding the strategic and operational needs and objectives those units are facing, as well as the challenges. There are a few essential ways this can be done:
- The neutral party can start by building a sustainable partnership and relationship with the unit leaders based on trust while learning about their perspective to proactively anticipate their needs.
- By understanding the different perspectives, the neutral party can then identify where value can be added and provide advice based on broad knowledge with the help of experts where required. This creates a win-win outcome in difficult situations: fewer silos and thus, transparent and educated decisions.
Breaking free of silos through experience management
A practical way to approach this initiative is by conducting a workshop with leaders of major units and subunits. Ideally, the unit leaders will come together in person, but the workshop can also be conducted virtually. In either setting, a simple experience-management tool with rich functionality and a friendly interface that captures and visualizes feedback can greatly help facilitate silo-breaking.
The leaders present their priorities, progress, and plans, focusing on a midterm view. This should include all stakeholder relationships and inter-dependencies from other units to get a full and transparent picture. All participants can then provide feedback in a form such as an open discussion, a Q&A session, or a voting session on major shared priorities and objectives.
Afterward, the workshop sponsor – the CFO – shares results among all participants as a binding plan of shared objectives across all units. This provides leaders a very constructive and positive experience because priorities can be shared in a safe environment and the participants are heard in a high-quality discussion or Q&A setting.
During the workshop, majority opinions can immediately be shown in a dashboard view, making them clear and visual. New insights are then extremely transparent and can be used towards the organization’s one common goal. The process should ideally be repeated regularly to interlock the objectives of the major units and manage the goals, objectives, and expectations of all leaders.
Informed and transparent decision-making can be done only when information from all units is readily available and communication and collaboration take place to establish consensus on common objectives.
For more information, check out the SAP Experience Management solution that can enable collection of experience data at every meaningful touchpoint, and combine operational data (such as costs, revenues, and sales) with experience data for better business insights.