Enhancing Performance Management

Enhancing Performance Management

Performance management technology is the new go-to for companies that are looking to enhance their efficiency across the board. Areas of focus include concepts such as financial reporting, operational monitoring, compliance, and forecasting. Outdated reporting functions are often delayed and can greatly impact the ability of a company to strategically plan.

What is Performance Management?

While it’s true that different companies will have a different definition of what “performance management” actually means for them, a common thread is that it is intended to enhance performance be evaluating insights from financial and operational results.

 Additionally, it includes evaluating centralized information faster and more effectively. Essentially, performance management is gathering all of the most critical information and then processing it faster so that more can be accomplished with the results.

Common Characteristics of Effective Performance Management

There may be some small discrepancies from one company to the next, but the core characters of effective performance management include things such as financial reporting, disclosure management, financial consolidation, and close management.

Effective technology is helping companies create strategies that they couldn’t otherwise and manage issues on a larger scale so that problems are solved quickly and with less ramification on other parts of the company.

Benefits of Performance Management

Ultimately, effective performance management allows leaders to play a more meaningful role in their company. Risk management, strategic planning, and problem-solving are all made even more possible by utilizing some of this technology. It also allows more team members from finance and business units to collaborate and reach common goals.

Challenges

Technology is certainly an exciting advantage, but it doesn’t come without challenges. For instance, it’s important to still perform assessments on the information that is being evaluated to ensure that accurate data is being evaluated. Essentially, technology is an advantage, but there is still a real need for human oversight.  

accounting and finance

Benchmarking Accounting and Finance Functions

The financial sector is experiencing an influx of change and transition as technology becomes incorporated into more and more of its practices. Of course, the intention is to streamline processes and automate some of the more mundane tasks associated with everyday work in the field. It’s an exciting time marked by a heightened need for new practices and the appropriate talent to operate it. The 2018 edition of Benchmarking Accounting and Finance Functions focuses on such trends and what it means for the sector as a whole.

How Does Technology Influence Accounting and Finance?

The financial sector is geared toward producing results. Now, more than ever before, there is a requirement to drive efficiency, reduce costs, and simultaneously create value. At the core of the changes are the finance leaders who are not only required to understand the technological changes but the regulations that seem to be created right alongside them.

Is it More of the Same?

It may not seem like such things are novel concepts in the accounting and finance world. The truth is, they aren’t. However, the speed and intensity in which changes are being made are certainly something that working professionals have likely not experienced in their careers. Professionals, new and seasoned, can benefit from understanding the landscape of the industry and what those changes could mean for their future and the future of the sector.

Intended Audience

Who would benefit from taking a look at the report? Seasoned professionals may have the business concepts down, but one of the hardest things for them will be learning the constantly changing technology that is impacting their work more than ever before. Novice professionals will also need to understand the bigger picture of how the technology works with the traditional approach to finance.

Overview

Staying abreast of the latest news in accounting and finance will help professionals have a stronger grasp of the climate of the industry. It could help people prepare for training and even understand the bigger picture of how changes could impact every day as well as the future of the work.

For more financial industry news, check out: New Changes to PCAOB and What They Mean.

tips for financial professionals

5 Tips for Finance Professionals

Success for finance professionals doesn’t come easy.  It requires a unique blend of both technical and soft skills rarely found in one individual.  While technical skills are easy to identify and can then be obtained, the required soft skills are often nebulous and hard to grasp even once explained.  Below are 5 tips that have guided me throughout my successful career in finance.

Think Like an Investor

This is what separates successful finance professionals from the rest.  When you think like an investor, you care.  You care why products are not performing to forecast and you care when a new product launch gets delayed. You find out what caused the delay and if there’s anything that can be done about it.  After all, you want to get the greatest return on your investment that you can!

Let Me Tell You a Story…

One of the earliest and most common ways information was passed between individuals was through the use of stories.  As a finance professional, you are a vendor of information and must utilize the power of stories to summarize and explain results in a memorable way.  Second tier finance professionals just recite facts and figures which, in their raw form, can be disinteresting and difficult to extract meaning from.  When management starts looking to you early and often to tell the story, you know you’re on the path to success.

“Trust but Verify”

A finance professional without credibility will quickly find themselves unemployed.  As previously stated, finance professionals are vendors of information and sometimes our source of information is incorrect or incomplete.  “Trust but verify” is the attitude often quoted by finance professionals to reflect the fine line we walk between trusting the people and processes which provide us information and validating the accuracy of the information as we vet the data.

Use Caution when Changing the Narrative

Sometimes the narrative changes because you reported on bad or incomplete information.  Other times, the narrative changes because additional factors are discovered.  Whatever the reason for the change in narrative, it’s going to happen during your finance career and it needs to be handled very strategically.  Make sure to “close the loop” on the narrative change, meaning you should have answers to as many of the below question as possible before discussing it with management:

  • Materiality – How large is the change?
  • Cause – Why is the narrative changing?
  • Timing – Why now/why wasn’t this discovered sooner?
  • Solution – What will prevent this from happening again?
  • Scope – How do we know this isn’t happening anywhere else?

Being able to minimize fallout and concerns from narrative changes helps to preserve your credibility, displays your business acumen, and allows management to focus on value-add activities instead of “babysitting.”

Pay Attention to the “Flavor of the Week”

Some items warrant our attention regardless of how material they are…these are often the “flavor of the week.”  It can be anything that catches upper management’s eye and will receive extra scrutiny for the foreseeable future until usurped by the next flavor of the week.  Being able to read between the lines of corporate initiatives, acquisitions, and questions from management, will help you identify the new flavor.  Being able to tell the latest story shows that you are in tune with leadership and, if you can improve the metric, management and other finance professionals will note that you have the influence to drive positive change in your organization.

Author – Nathan Vannoy, Big 4 CPA, MBA
DLC Finance and Accounting Consultant

Click Here to learn what it takes to become a
DLC Finance and Accounting Consultant.

out of touch executives

Out of Touch Executives

Are executives really out of touch? Internal communication failures is the main reason leadership executives lose touch with their employees, according to a survey conducted by AMA Enterprise, a division of American Management Association.

A recent Bloomberg Opinion article  poses the concern that U.S. corporations might be required to institute co-determination governance. This would require large companies to allow employees to elect 40 percent of their directors.

The rationale for this proposal is:

  • U.S. income inequality
  • A belief that workers are well positioned to make corporate decisions that place worker, customer, and community interests equal to those of shareholders.

How Does Co-Determination Affect Corporate Function?

The shift in decision-making that occurs with co-determination potentially results in:

  • More power and fiscal interests for workers, with less for managers.
  • Improved income distribution, though the author notes that there is mixed evidence of this.
  • Improved worker engagement and performance related to pride and shared ownership.
  • Concerns that co-determination will:
    • Reduce productivity
    • Make businesses less nimble during economic challenges
    • Affect corporate ability for rapid growth or new product development

Does this Imply That Executives are ‘Out of Touch’?

The Bloomberg article does not state that executives are out of touch. Rather, it makes subtle suggestions of the need for corporate leaders to learn from other countries’ governance experiences.

Here are two:

Germany’s Example

Germany uses a co-determination system that:

  • Is supplemented by a worker council system that represents labor interests; and
  • Has been shifting toward a shareholder value system because of laws implemented within the last two to three decades.

Japan’s Example

Japan has never had a system of co-determination. Instead it:

  • Has had boards with high management presence and low profit margins because of a passive approach to shareholding; and
  • Is now implementing a new corporate code to focus on shareholder returns by improving external control of management.

Steps to Stay ‘In Touch’

The opinion author suggests that as the U.S. and other nations have gone too much in one direction or the other related to governance, there are prudent steps to take now, regardless of legislation. He suggests creation of a government framework that includes the following points:

  • Representation of workers on boards, funded by tax incentives; and
  • Gradual experimentation and implementation by U.S. companies to evaluate and compare performance.

What do you think? Are you ‘in touch’ and ready to move ahead in the direction of increased worker input on corporate decisions, regardless of governmental influence?

Executives, to learn how you can be more in touch check out: Qualities that Make Great Leaders.