Does your finance manager have a seat at the leadership table?

By Ron Yates, former Senior Financial Consultant

What role does your finance manager (or person responsible for your finances) serve on your leadership team? Are they ‘just a bean-counter’, watching the budget, worrying about revenue and keeping expenses down, or do they play a more strategic role?

The role of your most senior finance employee is clearly to manage your funds. They need to be on top of the numbers and reporting these to the board and leadership team. They need to be ringing alarm bells when they spot financial risk, and they need to manage the work of any other resources with finance functions. They need to ensure that systems and processes are in place that protects your organisation from financial risks – particularly fraud and insolvency – and that your organisation meets financial compliance and reporting requirements.

But a finance manager’s role goes beyond balancing the books and ticking boxes. In this article, we look at the importance of ensuring your finance manager has a seat at the leadership table.

Risk-ready finance managers

Smart organisations will be looking for much more from their finance manager. For example, we often think of our finance people as risk averse. They are probably the member of your leadership team most likely to hold up the ‘stop’ (or at least the ‘slow down’) sign when your creative team member has their latest bright idea. While this may have been appropriate in the well-established organisations of the past, we’ve seen the evidence (including in big corporates) that in our fast-paced world, organisations that don’t innovate will wither and die.

Risk-ready finance managers are essential for all organisations, not just start-ups or those chasing growth. This doesn’t mean that we’re expecting our finance managers to be careless with the money – but they need to help the organisation understand the financial issues arising from opportunities presented. For example, an organisation looking at loan financing to invest in a new venture needs a finance manager who can take a robust look at the opportunities – what are the costs of the loan, are the revenue projections realistic, what level of risk is the organisation exposed to, and what are the potential benefits? A finance manager who can map this out with an open and enquiring mind will provide valuable information to support leadership and board decision making.

Finances for the future

Similarly, you need your finance manager to take a long-term view. How are you gearing for the changes on the horizon? For example, the NDIS, consumer-directed care, further digital revolution or some other external or internal driver. Your finance manager needs to fully participate in leadership discussions about future direction, and this needs to be reflected in your finance strategy. If you have to change your business model, your finance manager needs to be working through the downstream impacts, such as managing any assets or investments differently to lever funds for investment or cashflow. If change means that you have to restructure or reduce costs, the decisions about how that plays out across the business sits with the leadership team as a whole, but your finance manager plays a key role in scoping out the financial implications of different options – again, informing decision making.

Leaders need to know their numbers

This doesn’t mean that the rest of your leadership team should sit back and let the one with the calculator worry about the money. Each member of your leadership team needs to understand the organisation’s finances, how external market factors impact your organisation and how their team contributes to (or takes from) the bottom line. It’s also important that they understand the financial consequences of the decisions they make on the organisation as a whole, and the knock on effect this has on delivering social value. They need to role model good stewardship of your funds to their teams, just as much as the finance manager does. Most of all, they need to be prepared to make the difficult financial decisions collectively, as a team, rather than protecting their little kingdom at the expense of the rest of the organisation. A good finance manager, who can present information clearly and support evidence-based decision making, is a vital contributor to this kind of leadership performance.

For more information on CBB’s consulting services, please contact us via email consulting@cbb.com.au or phone 1300 284 364.

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