Achieving a World-Class Finance Function by Reaching Outside the Box

Jay Thompson, Managing Director Business Performance Improvement
Melissa Shipman, Vice President Managed Business Services, Robert Half

Suppose you were asked to predict what skills and talent you’d need to possess on your finance team to remain world-class over the next three years. What would you say? If you are uncertain in your answer, you are not alone. The accelerating rate of change and today’s dynamic business climate make it nearly impossible to predict which skills an organization may need. How could anyone know what mergers, acquisitions, regulatory reform, new technology or business-model disruptions may materialize in the near term?

To be a world-class organization, firms need a world-class finance function, regardless of the industry or type of business they are in. But can any organization pursue excellence in its core competency while also competing to be world-class with its in-house finance function? Excellence at the core business requires agility, innovation and scale. Some would contend that expecting the same of an in-house finance department is unrealistic. In a business environment in which the status quo is disruption, it is challenging for any finance leader to predict the precise mix of skills and talent he or she will require to address the next challenge or opportunity facing the business, let alone acquire these resources on short notice.

Consider, for example, a conventional publisher moving into a digital model of business. Because the strategy involves bundling books along with digital products and support over the life of the contract, the publisher now needs to defer significant revenue across the term of the digital services contract.

This business change calls for specialized skills to analyze the financial impacts of the new business model and to facilitate communication with auditors about the change while also working with the sales team to identify strategies to minimize deferrals of revenue. The publisher’s move to digital is savvy, but it throws a monkey wrench into the finance function; moreover, the finance leader would not have wanted these additional resources or specialized skills resident on her permanent staff until the move actually happened.

Another example is a divestiture. A newly spun-off company would require a finance function of its own that’s ready to hit the ground running, and an independent finance or ERP system. And while the spun-off company may be inheriting staff from its parent, it is impossible to know in the early days whether the inherited staff represents the right skill mix for the new enterprise.

To complicate matters further, there may be regulatory challenges – either due to the industry, or the nature of the spin-off. The finance staff at both companies would be too busy to provide support or expertise on questions such as whether to arrange for a public offer or simply sell the new firm, whether to set up a full accounting department or to outsource services, etc. Seasoned leaders know that the best decisions are not made when you are running short-staffed dealing with a full daily workload.

These are just two examples of situations in which leveraging robust finance resources on demand can help organizations weather rough periods of growth or change. The companies can then scale back later to create greater efficiencies once a steady state is achieved.

Finance and accounting leaders have historically relied on third parties for transaction-heavy accounting functions such as payroll, billing or accounts payable. Now, these same leaders have the ability to tap into specific, high-end finance capabilities for strategic events by aligning themselves with a trusted partner who possesses the expertise to recruit and manage specialized resources in whatever area of finance they need, and only for the period that they need them. How they do that was the subject of a recent webinar, The Finance Labor Model in the Digital Age. For those who missed it, we’ve made it available on our website, free.

One key strategy is to identify a partner who can rapidly on-board resources to address whatever technology upgrade, regulatory change, business realignment or merger may be coming. Such a partner relationship is especially useful when business changes cannot be foreseen – and finance leaders know from experience how quickly changes like this can disrupt finance operations. The ideal partner, whether currently engaged or on standby, can quickly supply expert resources that blend with the firm’s own professional core to strategize on business challenges as they arise. The model allows any firm to have immediate access to specialized capabilities that are not, and do not need to be, part of its permanent team.

The benefit such a trusted third party offers is its ongoing familiarity with a client’s operations and strategy, its access to specialized expertise, and its deep knowledge born of experience addressing a broad variety of business challenges. To maintain world-class performance, CFOs do not need to maintain a round-the-clock world-class function at great expense – but they do need quick and reliable access to one when needed. The ever-changing combination of technical knowledge, motivation to quickly get things done and effective communication skills required by the demands of the business almost mandates such access.

As stated in our recent white paper, The Labor Model for Finance in the Digital Age: “Responding to the modern business requires a finance labor model that relies on a broader portfolio of employment arrangements and technology solutions.” We go on to say that “CFOs will stand out by committing to being disruptors themselves.” Certainly, anticipating a need and being proactive in addressing it through creativity and innovation is what sets disruptors apart. Fostering a trusted third-party relationship for finance, in anticipation of future demands stemming from a shifting business environment, is a prudent move for any finance leader.

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