Members of the CIMA Improving Decision Making in Organisations Forum* recognise that management accounting has a broad role to play in supporting decision-making across organisations. As global markets give companies around the world access to similar resources, and as increasing competition causes business processes to converge on similar standards, decision-making remains the crucial link in the value chain leading to superior returns.
The world's best performing firms have already seized the opportunities presented by finance transformation to make their accounting functions more efficient. They have also developed accounting professionals to operate as business partners, helping to improve decision-making across the organisation. The long-discussed finance transformation is already a reality for these organisations, giving them a significant competitive advantage.
The blueprint for improving the efficiency of the finance function is relatively clear, but developing effective business partners to provide decision support is a greater challenge. It requires a change management programme, starting with a shared vision of the future role of the function.
The CIMA Improving Decision Making in Organisations Forum* contends that any company not transforming its finance function to become more efficient and effective in supporting decision-making could be jeopardising its competitive position. This opinion is supported by a number of studies. For example, research by Accenture has shown a correlation of over 70% between businesses with high performance and the excellence of their finance functions. And a study by the Economist Intelligence Unit for KPMG had found that, relative to their peers, top-performing companies' finance departments place more emphasis on decision support.
As discussed by the Forum, it's clear that:
- Decision making is not the end of the process. It extends through to achieving results and is a continuous process.
- Accountants contribute to the strategic planning and enterprise governance framework, which articulates the business's competitive position and objectives.
- Individuals' personal contexts and attitudes can impair decision-making, but business partners can address this problem by championing evidence-based decision-making.
- Business partners can help to 'frame' a decision, provide management information, contribute insights and analyse alternatives to help the decision-maker. They can then support risk management and performance management to aid implementation.
Although the term 'business partner' is widely used to describe a role that brings accounting and business management together, expectations of the role can vary. Although shared service centres - whether in-house or outsourced, local or offshore - are becoming increasingly able to provide regular financial reports and analysis, most business partners are based within the business lines to provide operational support. As long as they can be a 'constructive irritant' when necessary, this form of relationship seems satisfactory for manufacturing companies with long term product life cycles - Ford and Rolls-Royce, for example.
Some business partners work more closely with the directorate and offer expert support and direction from the centre. Risk management services are provided in this way.
The emerging ideal type of business partner, especially in the fast-moving consumer goods industry, is someone who can collaborate emphatically with operational managers. He or she speaks their language, rather than financial jargon, but brings accounting discipline to decision-making and can challenge their assumptions - in effect, a sparring partner. Leading companies run training programmes to develop such professionals. Unilever, for example, has its own finance academy.
It seems to their operational colleagues that most accountants are working in their comfort zone, according to the forum. The transformation of finance gives them the chance to increase efficiency in this area and also effectiveness in supporting value creation. Many accountants will be challenged to move out of their comfort zone, becoming less of a scorekeeper and more of a player alongside their team mates in the business. A number of forum members have warned that some people from the operational side, often engineers or MBAs, will provide stiff competition for accountants applying for business partner roles.
The forum has described the development of accountants as business partners as the process of becoming 'T-shaped'. This means that they should acquire a broad range of business and interpersonal skills to top off the core strengths and technical skills acquired through their professional training. This requires a formal development programme that includes performing a range of finance roles and working closely with, or even within, business lines.
* The CIMA Improving Decision Making in Organisations Forum is an assembly of large organisations represented by senior finance and accounting professionals. Members include the BBC, Diageo, the Department for Work and Pensions, Ford, Fujitsu Siemens, Kimberley-Clark, the Linde Group, Pfizer, Roche, Rolls-Royce, Royal Mail, Tesco and Unilever. CIMA facilitates their discussions on developments in the finance function.
This article is contributed by CIMA (The Chartered Institute of Management Accountants) and it first appeared in Financial Management, CIMA's monthly magazine for its members.
