Finance Doesn't Have to Compromise Company Culture Says GreySuits CPA
Chartered Professional Accountant, Rodney Davis of GreySuits Inc., a strategic accounting firm was interviewed about how companies and organizations can make key financial decisions without compromising company culture; how non-financial leaders can work with finance; and when CFOs should stay out of company discussions.
Q: Financially-based planning and decision making often seem at odds with the purpose and culture of many organizations. How do you ensure the two are aligned?
Rodney Davis: This concern may come from a technical lead, marketing lead, sales lead, or even operations. We often hear: "We know what's necessary to achieve the goals of the organization. The finance person just doesn't understand what we do." It's an interesting dilemma I've seen play out many times. Good finance people understand what drives the organization. Rather than having to prove yourself, let the data speak for itself. The conversation should only happen once you've distilled the key performance indicators (KPIs), or in layman's terms, the cause and effect. When you take a particular action, you should always look at the outcome of that action.
Q: How do you set out goals that non-finance leaders can get behind?
Rodney Davis: The most important thing that a senior financial leader can do for his organization is to truly understand the cause and effect of the various areas of your business: technical, marketing, sales, and even finance. Find the metrics for success that each department uses and amalgamate them with your financial data, and then have a conversation. For example, the sales team may look at how many leads were gnerated. And of those leads generated, how many confirmed bookings? Of those bookings, how many converted into sales, and what's our average sales size? Five or six simple metrics that salespeople can get behind, that are not subject to emotional interpretations or manipulation or changes. They are verifiable and they're objective.
On the technical side, it might be how many hours of labour go into producing something. What are the costs of the raw materials based on the amount billed by suppliers, and what is the allocation of overhead? Again, they're objectively determined. You marry the metrics they already use with the financial results, and you're able to have conversations with these different leaders, speaking objectively about the financial implication of their actions. You then take away any doubt, like "those aren't my figures" or "I'm not sure those figures are correct." There's always going to be some sort of tension with sales, marketing, technical or creative departments because the finance person says they can't do it or they have to do it differently, which they think compromises their integrity. But it doesn't have to, if you speak in these terms.
Q: Are there times when the finance guy should just butt out?
Rodney Davis: I used to be in the telco sector and my VP marketing, my chief marketing officer would send me their ads for approval. I'd say, "I don't have useful input on colours, font size, or picture selections. Let's talk about how many impressions it's going to take to generate a dollar of sales or how long it's going to be before the marketing dollars translate into revenue." I would try and make sure that I wasn't weighing in on items that were outside of my expertise. It's a mistake that I think a lot of finance executives make, where you have a discussion about technical integrity of something, or get into creative conversations. You have to resist that temptation because it dilutes the effectiveness or the importance of your actual financial message. Which is what a CFO brings to the conversation.
Video clip of interview available (full rights granted for any news media platform):
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