As Paul Meyer once said, \u201cProductivity is never an accident, it is always the result of a commitment to excellence, intelligent planning, and focused effort.\u201d<\/p>\n\n\n\n
As business leaders in this post-pandemic world, we need to look for new ways to leverage our resources constantly. Time is the most precious resource. For many years the belief has been that if we are not very busy, we are not very productive. Nothing can be farther from reality. While it is imperative to invest the time and effort to accomplish results, too much busy-ness deviates us away from goals and impacts our ability to think strategically. While this is true in many organization departments, this is especially true when it comes to a team\u2019s abilities to dissect financial information. With so much data to digest and understand, it\u2019s time-consuming and challenging to process the appropriate information productively. This is where the value of Financial Planning & Analysis (FP&A) organizations comes into play.<\/p>\n\n\n\n
As an integral strategic partner to decision-makers in organizations, FP&A bridges the gap between financials and leadership. They\u2019re the people who can take an organization\u2019s financial performance and tell the story behind them, making it easy for decision-makers to determine actions needed, reducing \u201cbusy-ness.\u201d Ensuring your organization has the right partnership with FP&A will provide the required information and tools to make the decision-making process smooth and timely.<\/p>\n\n\n\n
But how does the FP&A function provide better support to leadership? Today we\u2019ll cover four areas FP&A can better align with leadership teams.<\/p>\n\n\n\n
How we measure the results and success of the decision-making process is a fundamental part of business. Analyzing the track record of results and using those results as learning opportunities to keep improving the company\u2019s performance is paramount. However, the resulting data FP&A provides can be irrelevant when not adequately aligned with leadership and overwhelming when too much information is presented. With so much data readily available, it\u2019s vital to identify a limited number of KPIs that are aligned with the overall goal of the organization. FP&A is highly numbers and metrics-driven, and while it\u2019s exciting to dive into the weeds to pull as much information as possible, this is overkill. In a sense, it results in \u201canalysis paralysis\u201d for those looking at the numbers.<\/p>\n\n\n\n
Before jumping into your organization\u2019s (or client\u2019s) data, be sure to align with leadership. We recommend setting recurring conversations with leadership to define, implement, report KPIs, evaluate progress and change as necessary. A regular communication cadence with aligned expectations will enable you to provide more relevant data and hone in on organizational priorities.<\/p>\n\n\n\n
\u201cWhat-if\u201d scenarios are the hidden gem of FP&A\u2019s success. They\u2019re a financial tool that\u2019s a decision-maker’s best friend. If you\u2019re unfamiliar with a \u201cwhat-if\u201d scenario, it\u2019s pretty straightforward to understand: create a potential outcome based on specific parameters. For example, what is the expected number of customers that will purchase based on our latest promotion? It\u2019s essentially an estimate that can help provide beneficial insights to leadership, both good and bad. Creating these estimates provides an edge in understanding potential results based on real-time and historical data, enabling the key stakeholder(s) to make decisions in a timely manner. They\u2019re also instrumental in identifying potential risks like over expenditures, forecast issues, and inaccurate prior estimates.<\/p>\n\n\n\n
While this sounds clich\u00e9, the fact of the matter is in order to develop a meaningful partnership with your stakeholders, the FP&A organization has to bring strategic and value-added analysis to help stakeholders in their decision-making process. Thinking ahead of what metrics or information may be needed is a must-have for any FP&A organization. Leaders and key stakeholders want to have access to information, often even before they formally ask for it. Timing is of the essence. If an FP&A function can be proactive, it can help create insights, thereby improving the organization\u2019s utilization and providing additional value to the partnership with leadership.<\/p>\n\n\n\n
The real value of an FP&A organization comes from being strategic in taking data and translating that data into current and future action plans. When FP&A teams shy away from truly involving themselves in an organization they become a team that simply \u201creports\u201d information. While this is helpful to an extent, the FP&A team needs to take the extra step to provide real value.<\/p>\n\n\n\n
It\u2019s critical for the FP&A team to be involved in the operations of an organization. They need to step out of the financials and understand what\u2019s going on in the operations of the business. Numbers only tell so much of the story, and by getting your feet on the ground, you\u2019re able to see more of the business. Once you\u2019re able to have a more holistic understanding of the business operations, you can identify new areas of improvement and analyze how those improvements may be accomplished.<\/p>\n\n\n\n
Not only is it important to involve yourself in the operations of the business, it\u2019s even more valuable to spend time building relationships across the organization. When you step outside of the financials, you can forge strong relationships, build trust and create bonds by connecting with people and adding value in-person. Relationship building is a necessary skill that will benefit you throughout your entire career. Investing time early on in each new position will allow you to accelerate your involvement within the organization, enabling you to build successful partnerships between peers, departments, and stakeholders.<\/p>\n\n\n\n