How to Develop Finance and Business Partners

In the experience of CIMA Forum members, the HR (Human Resources) and ICT disciplines use the term business partner to identify a contact point within that department who can contribute expert support when required. Their ambition is for the finance and accounting function’s business partners to be influential. 

 

When CIMA Forum members talk about what finance and business partnering means in their business, it becomes apparent that it varies. There are as yet no established best practice models or processes.

 

A recent discussion of the CIMA Forum about partnering with marketing or research and development (R&D) functions provided some insights into the role of finance and business partners. From a small sample, it seems that in a mature market (or a market with long product-development cycles) it is required that business partners should provide tactical support but in a more dynamic sector, and finance must be prepared to challenge strategically. 

 

The global alcoholic beverages company Diageo sums up its finance role broadly as a constructive irritant. In contrast, Rolls-Royce’s finance team performs a more supportive and monitoring role — but a constructive irritant when necessary.

 

The job title varies too. Business partner or finance and business partner are recognised as descriptions of the role. Financial or business analyst, business or finance manager, or simply management accountant, are all used as job titles.

 

Matrix-reporting relationships are the norm, usually with a dotted-line connection to the business and a solid line to the finance and accounting function. Geoff Lewins, Director of Finance Strategy at Rolls-Royce, spoke of the ‘duck theory’: if he/she looks like a finance and business partner and behaves like a finance and business partner, they are a finance and business partner no matter whom they report to.

 

The main types of finance and business partners: 

  1. Shared service centres, including outsourced centres, can have the capabilities to provide reporting and analysis services that would otherwise have been provided by a finance and business partner. At Ford Motor Company, an accounting and business partner supports the business lines to ensure that standard systems and processes are used. But ordinarily, this is not considered to be finance and business partnering.
     
  2. Most finance and business partners are embedded in the business and provide tactical financial support (for example with budgets, planning and analysis) to line managers. They do not produce accounts but they resolve problems, reconcile differences and tailor reports to the line managers’ requirements. Generally, they have a matrix reporting relationship, which has a solid-line connection to the finance and accounting function, and a dotted line to the business unit manager. Some of this financial support can now be provided by shared service centres.
     
  3. Some finance and business partners are more definitely expert members of the finance function, reporting directly to the finance directorate. These may provide finance and business partnering in specialist areas, such as risk management or merger and acquisition activity, or they may be strategic finance and business partners who support the group’s finance director. They may not have the close understanding of the business usually expected of business partners but their distance can make it easier for them to challenge the business.
     
  4. Only a select sub-set of finance people embedded in the business can combine the business understanding and close working relationships gained through proximity, with the financial expertise and strategic thinking needed to provide finance leadership.
     
  5. These are regarded as ‘true’ finance and business partners by the CIMA Forum. They can challenge line managers as sparring partners. They do not produce financial or management information but they promote the application of finance disciplines to decision making, challenging the business to generate more value and having a significant influence on the business’s direction. They provide as much leadership as support. They can be embedded in the business or have a matrix-reporting relationship.  
CASE STUDIES 

Kimberly-Clark  

A lot of thought has gone into finance and business partnering at Kimberly-Clark. ‘Services’ refers to backward looking roles, reporting historic information. It is very easy for finance personnel to get comfortable in a finance silo. Finance and business partners need to be enterprise driven. They need to be looking at what might happen in the future.

 

CIMA hosted a similar forum in Australia, the CIMA Business Partnering Forum, and for one global company member, finance and business partners are required to understand the drivers of value in the business. Their focus is on planning, strategy, control, commercial, supply chain and corporate. Finance and business partners should be proactive in engaging (internal) customers.

 

Ford Motor Company 

For Ford, the role of finance in the manufacturing environment is clearer because of the process certainty in terms of the inputs, controls and outputs. Over time, finance has been able to shift its focus from merely measuring outputs to deciding on inputs and the control environment.

 

Rolls-Royce 

For Rolls-Royce, business managers help line managers to achieve their milestones/targets. It is all about resource management. Developing new jet engines are complex, long term projects. Business managers help to apply financial disciplines. Estimating is a key discipline (Rolls-Royce has developed an estimating tool encompassing all the best practices of the discipline).

 

It is a challenge for finance people to fill these roles. Accountants have a tendency to overly focus on spreadsheets. They need to be able to speak about finance in the engineers’ jargon. An engineering background provides a keener understanding of the business. Nevertheless, management accountants have a good grounding and can be developed into business managers.

 

The Finance and Business Partners’ Skills 

Douglas Flint, Group Finance Director of HSBC Holdings, said, ‘I think there is going to be a divergence between skills required for technical outside reporting to stock exchanges (SEC and the like) and that which is necessary to inform both management and outside investors.’

  

I personally believe the technical requirements of financial reporting now are beginning, in some respects, to distort the value of information from a management perspective, and I suspect we will unfortunately end up with a greater divergence than we have today between management reporting and financial reporting.

 

Of the two, I think management reporting is going to be more relevant because it will actually describe the processes through which value is created, as opposed to putting financial-data elements into a technical framework for compliance with international finance and U.S. GAAP rules.’

  

No finance and business partnering model, processes or metrics may yet be established as the best practices to be applied. However, it is clear that a finance and business partner needs to possess a broad range of wider business skills in addition to the core skills and financial disciplines of the traditional accountant’s skill set.

 

One member of the CIMA Forum noted that, having introduced shared service centres, they still have about 800 finance managers but only 100 of these could be considered to be strategic finance and business partners. Many of the remainder may not have the potential to become this type of finance and business partner. They may not have the aptitude to develop the broader ‘soft’ and business skills to complement their core financial skills. Even those that do have these skills may find that their core financial skills will not suffice for the form of quantitative analytical analysis often required to support decision making.

 

The CIMA Forum agrees that the selection criteria used by high-end strategy-consulting organisations are instructive as to the qualities required of finance and business partners.

 

Primary responsibilities of a finance and business partner:

 

  • To partner with the Chief Commercial Officer to plan/implement commercial strategies
  • To proactively challenge the business with alternative strategies that maximise value
  • To partner with the Chief Technology Officer and Business Transformation Director to plan and control budgets.

  

Another case study at Ford showed that the company has had to invest a lot of effort into ensuring compliance with Sarbanes-Oxley (SOX). The expertise of its management accountants has been very important for this purpose.

 

Ford has found this to be a valuable exercise, as it has improved the understanding of business processes and identified opportunities for improvement. But Ford also recognises that the skill set required of the accountants for finance and business partnering are different from those required for SOX compliance.

 

Different capabilities, including softer skills, such as communication, relationship management, change management, project management and team-working, are required. Also, they need to be business savvy and be able to use more sophisticated analytical and creative problem-solving techniques.

 

Alberto Bonacini shared some of his insights into business partnering gained through his current experiences at Roche and his previous finance roles with General Electric.

 

  • What a finance person brings to the table is clearly his or her financial expertise. This is the initial non-negotiable foundation that gives a business partner the necessary peace of mind to run the business. The role of finance is both to ensure this ‘financial peace’ and to act as a translator of financial terms and financial measurements into terms and events the business can easily relate to. 
  • Finance people need to become ‘sparring partners’, able to challenge in a positive way as people with a financial skill set.
  • Co-decision making and solution optimisation are the ultimate goal, rather than imposing financial control and discipline. Ideally, others should want to include the finance person in the decision-making processes. He should be invited to contribute because his view is respected, rather than simply asked if we have a budget for something. 
  • At GE, finance was is linked to the business that the term business partner did not arise. There is a clear role for finance and it is unthinkable to imagine a CEO not working closely together with a CFO. You can’t move without the endorsement from finance, but you can move faster because finance is already involved and committed. 

 

Leading companies are very clear on behavioural expectations for finance and business partnering. These behaviours include:

  

  • Challenging
  • Adaptability
  • Living Our Values
  • Accountability
  • Motivation
  • Collaboration
  • Forward Thinking
  • Growing People 

 

A guest speaker from a leading-edge technology company made a thought-provoking presentation on analytics, a seemingly technical topic. Interestingly, although he shared with the CIMA Forum how his company had used analytics to achieve a step change in their business model, he emphasised the need to develop finance and business partners’ soft skills over the need to develop technical analytical skills. Without these soft skills, impact will not be achieved.

 

Key learning points:

 

  • In talent development, it is important to acquire expertise in business-process improvement and experience by rotation through the range of finance roles (back, head and front office)
  • The communication and influencing skills required to get from analytics and insights through to achieving impact are higher-priority areas for focus and development than sophisticated analysis and modelling skills
  • Intuitive logic can be more valuable for finance and business partners than scientific analysis in achieving impact.  

 

For more information about CIMA, please visit www.cimaglobal.com
 
About the Author

 

Aubrey Joachim is a management coach, mentor and management-training provider. He leads conference and seminar companies, and provides training programs across Australasia to professional bodies. He has served as branch secretary and, later, president of CIMA’s New South Wales Branch (June 2009 to 2010).

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