The culture of an organisation can have a significant impact on that organisations ability to implement and follow through on its strategic objectives. Without an organisation-wide belief in the strategy, and a clearly articulated communication strategy and focused, achievable actions process by which it will be achieved, a business risks parts of the organisation moving in different directions and deploying it's resources in non-aligned fashion.
Planning, budgeting and forecasting cannot be seen as 'finance' activities. Executive teams needs to work directly with the operational heads of the business directly, with finance providing the tools and robust challenge to assumptions made throughout the process.
Key behaviours identified in top performing companies:
- Clearly communicated company values and strategy across the businesses.
- Executive level ownership of specific actions, embedded within strategic plans and budgets.
- Inclusion of both financial and non-financial metrics.
- Risk-adjusted modelling and scenario planning.
- Clear feedback process to businesses explaining top-level changes to bottom-up plans.
- Incentive plans linked to forecasting accuracy and not 'achieving the budget'.
- Finance partnering, challenging and conveyancing of the budget, not the creators of the budget.
- Top-down agreement of core economic and operating assumptions and risk factors.
- Close partnership between IT and Finance
Issues identified in businesses with under performing businesses:
- No clear communication of strategy to underlying parts of the business.
- Sandbagging approach to budgets and forecasts.
- Lack of forecasting accuracy.
- Insufficient detail in plans and budgets.
- Data overload with insufficient understanding or identification of value drivers.
- Lack of organisational buy-in to the overall process.
- Significant time taken to complete each process.
- Poor underlying IT systems.
- A 'that's how we've always done it' approach.
Sonar can help you break through the barriers that slowly build up in all companies. Contact us now to arrange a meeting and put your finance function back on the path to success.