The following Insights post is contributed by Keith Davidson, Finance leader at ICS, the specialty logistics division of Amerisource-Bergen.
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Building a team of any type in the corporate world is actually quite easy. Whether through the help of internal HR or external recruiters, plenty of resources exist to create and fill roles quickly. Similarly, for existing teams, it is quicker and easier to allow for status quo. Unfortunately, while some leaders are only focused on expediency of hiring or minimal disruption in changing an existing team, building a high-performing team takes time and focused thought. Fortunately, it is not an impossible science without logic or intuition. Hundreds of books have even been written exploring the topics of building teams, along with overhauling, refining, and maintaining those teams. I will not repeat those books, but instead will specifically address key areas when building a high-performing finance team. These steps are meant to be simple, intuitive, and can be applicable whether you are the CFO in a new role or a middle manager ready to take your team of financial analysts to the next level. Earlier, Part 1 focused on integral traits when evaluating the finance team. The steps addressed below, whether the team exists already or not, will ensure a solid foundation that provides the finance team with an opportunity to reflect those traits and be the type of dynamic finance team that drives profitable business growth.
Align with business leadership
Incoming finance leaders should clearly understand what they are being asked to do and why they are being asked to do it. Arguably the most important step in this process is understanding the context and background for why there is need to build the team to begin with, and that only comes through asking those questions and acknowledging the voice of the customer. In this case, that customer is likely the business leader (e.g. CEO, GM, etc.) or in some companies, a broader finance executive. Regardless, there are a multitude of reasons why you may be in position to build a high-performing finance team, and those reasons matter in the planning and execution. Are you being entrusted with building a team from one that does not exist? Refining a team that has slightly above average performance? Overhauling a team that suffers from poor performance or limited impact in the business? Answers to these questions are crucial when assessing both the needs for the team and the overall appetite for change. The CEO thinks the team performs fine, but you want to recommend massive changes without addressing potential gaps in that assessment? Prefer sticking with status quo when the division president is expecting a major overhaul? An expectation gap in this area will quickly lead to a significant uphill battle, or even a quick exit from the role itself. Another area to include in this assessment is understanding what the business needs. A plan for building a high-performing team may differ in an organization that is focused on growth through M&A versus one that is addressing long-term strategy, or one that needs better insights and analytics to check and adjust the current, everyday decision making. Once the what and why are understood, it is much easier in moving on to building the team using these basics.
Form a clear vision
Utilize the leadership and business alignment achieved above to create purpose and direction for the team. While some think creating a vision is cliché and arbitrary, I have experienced and heard from peers of too many rudderless teams with no true sense of direction or purpose in what their team is trying to accomplish for the business. The key ingredient in these scenarios is a lack of guidance on the vision and mission of the team. Leaders who fail in this area are often surprised that their team stops and starts various initiatives (without regard to whether they should), cannot articulate how they drive the business, and generally lack a sense of comradery or even job satisfaction. Instead, take the time to from a vision that clearly states why the team exists, what it does and does not do, and what it aspires to be in the future (you can even incorporate the traits from Part 1). From there, do not let it become just another slide, but incorporate it into every process: analysis, forecasting, hiring, and strategic projects. Use it at team meetings to gauge progress, as achieving that vision is a never-ending process. Do not stop at just the team, either; ensure the business leaders the team supports understand the direction (their feedback should have been a key foundation of the vision anyway). Having a clear vision for the team is a key first step in building a high-performing finance team and is not an area to be taken lightly or dismissed.
Once the vision is in place and aligned with the business, the next step is to secure the necessary resources to execute on that vision. Too many finance teams lack the three basic resources needed for an effective finance team: hard resources (software, hardware, communication, etc.), talent capital, and access to the business and leadership. Hard resources are traditionally the easiest, but many would be surprised at the amount of companies that neglect this, providing out of date laptops, small screens, and requiring 500 people to share a single printer. Use the bias to action from the newly created vision and reason for building the team in the first place to ensure the team has hard resources that limits idle time (addressing everything from computers that take 10 minutes to boot up to forecasting software that crashes at the blink of an eye). Time matters for a high-performing finance team and as much time as possible should be devoted to driving the business. Talent is a rather obvious need, so be aggressive in finding high-performing talent. This area could include convincing the company to use outside recruiting (nearly always better than internal recruiting as it pertains to finance) or evaluating the role levels and pay of the current team. Unfortunately, talent and the theory behind the right type of talent for a finance team is much too complex for this article. For now, understand that once you agree on the talent needed for the team, the market demands aggression and poaching. Finally, access to the business and leadership may seem like an odd resource to acquire, but it is always surprising to find the amount of finance teams that have restricted access to the business they support, including operations, the manufacturing floor, and sales and marketing. A finance team will never achieve its vision or be a high-performing team if it is forced to stay in the office without the ability to consistently maintain relationships and discuss the business with the people who operate it. Securing resources is typically overlooked, but it is key in the beginning stages of building a high-performing finance team.
Align the team to the business
Throughout my career in finance, two things have always perplexed me. One is the incessant waste of time that is corporate allocations, both in terms of the amount of time and money spent in calculating and allocating the arbitrary number, along with the GDP percentage points wasted by corporate America through intercompany arguments about them. Since I do not have the time to write the 25-part series needed on that topic, I will instead focus on the second one, and that is observing and inheriting finance teams where the team has no direct link to the business it supports. Consider if the following examples are familiar: analysts who do random tasks and input/output work with no knowledge or understanding of the internal customer, specific part of the business, or part of the P&L the work supports; managers who manage this collection of random tasks and are too in the weeds to think strategically or add value to the work; those in the business wandering aimlessly on who to ask for answers, so they always ask the first finance person they see, or the finance leader, without regard if that person is the best choice. This deli counter or DMV approach to finance is an instant killer to a high-performing finance team. Along with incorporating the vision, align each part of the team with specific areas that they are empowered to own as a finance leader, regardless of title or role level. A financial analyst charged with being the “CFO” of a cost center supporting the marketing team (including similar incentive goals and objectives) is much more effective than an analyst only looking at variances on a spreadsheet. A manager branded as the finance leader for COGS at a manufacturing facility, along with the same efficiency and production goals as the manufacturing leaders, will be empowered to drive results with the manufacturing team better than being only a manager required to send variance explanations and forecast data to corporate. This type of alignment not only helps the finance team achieve its vision, but it will also provide value to the business leaders. Without alignment, leaders in the business may not understand what is in their own budget or financial goals for their part of the business, and may not even know who to talk to first if they have a question or want to discuss a particular project or decision. As a result, that could end up causing a backlog of everyone coming directly to the overall finance leader instead of utilizing the various members of the team who are better versed in the day to day specifics. Therefore, aligning and empowering the finance team on specific business areas has a compounding effect on the overall business and is the best base for driving business growth with a high-performing finance team.
Foster an environment of innovation
A high-performing finance team will naturally want to improve and take on challenges in the business. Fostering an environment of innovation is crucial in harvesting this attitude. Creating this environment can come in many forms; removing barriers to ideas and opinions, no matter how unusual, along with encouraging a continuous improvement mindset are a great start. The finance leader must act in the same way as an example to the team. Of course, this does not mean that changes are made or suggested just for the sake of change. It also does not refer to finance trying to call the shots or becoming “Dr. No” throughout the business. Either of those extremes will cause a loss in credibility and pull from the business, and as a result, finance teams will find themselves on the outside looking in at key strategic and decision point meetings. Instead, teams should aspire for the balance of not reinventing the wheel on every project or exercise, but also not accepting status quo in areas where the business is stagnant or the process is not optimal (of course, deciphering this ambiguous area is one of the finance leader’s main tasks). Combined with aligning the team to the business, fostering an environment of innovation can be a huge asset to the business and creates the necessary space for a finance team to display high-performance.
Follow through and focus on the vision
As odd as it seems, following through on the steps in building a high-performing finance team, especially the focus on the vision, is forgotten enough that it is fitting for it to be an actual step in the process. Creating a vision and purpose for the team, and following the earlier steps, is not merely a PowerPoint exercise or a drill to show leadership dedication to the job or team. Reinforce the principles and focus on the team regularly, whether it is a monthly or quarterly staff meeting, or whenever the team is veering off course. Failure to do this will ultimately result in the team drifting backwards, and as a result, will give rise to the need for additional action in establishing a high-performance finance team.
As a finance leader, the primary assessment on performance is (or should be, at least) evaluating the effectiveness of the entire finance team (not just the leader) in driving profitable business growth. That effectiveness is not singularly focused on the amount of busy work or spreadsheets completed, it does not refer to how many details are mined, and it is also not just about sitting back and waiting to answer questions from the business team. The combination of art and science in building, maintaining, and operating a high-performance finance team is a constant evolution, and can be drastically different depending on the needs of the business. That variability and resulting challenge is one reason why I personally love the profession. Unfortunately, the gap in performance between high-performing finance teams and those that underachieve has never been greater. Making matters worse, some business teams have yet to see a high-performing finance team, and as a result, do not know enough to demand better. To reiterate an earlier point, being hired to take over a finance team is easy as it comes to the logistics of taking the job and keeping the status quo ball rolling. If the business team is not aware of shortcomings, it is even easier. However, do not fall into this faux complacency. Challenge the finance team to fulfill their mission and drive the business to new heights. A poor finance team does not just impact the people on the finance team, but even limits the effectiveness of the business leaders they support. Both Part 1 and Part 2 of Building a High-Performing Finance Team are not ground-breaking traits or steps, by design. They are a direct result of the simple problems I have either personally observed or have learned through various peer connections. Fortunately, and unfortunately, mastering the basics in building a high-performing finance team will only clear the path for much more difficult challenges. However, by then the finance team and the business team overall will be ready for these challenges and will have a solid foundation in which to act.
Keith Davidson is the Finance leader at ICS, the specialty logistics division of AmerisourceBergen, a Fortune 11 company focusing on pharmaceutical sourcing and distribution services. He oversees strategic planning, forecasting, financial analysis and client financial services and accounting. Keith has been instrumental in driving businesses to profitable growth in both the consumer products and medical device industries. He was formerly of EndoChoice, a small cap medical device company, where he rebuilt and modernized the Corporate Finance and FP&A teams, along with investor relations functions ahead of EndoChoice’s IPO in 2015. His teams were also responsible for driving commercial strategy and execution in the company’s three business divisions. Prior to EndoChoice, Keith spent the majority of his career at Kimberly-Clark corporation, where he held a series of progressive positions in international FP&A and corporate strategy, along with international experiences in restructuring and business development. Core experiences and passions for Keith include building high-performing teams, international M&A and integration, and corporate strategic planning. Keith holds a Master of Business Administration from Texas A&M University at Commerce and a B.Sc. in Business Administration-Accounting from the University of South Alabama. He is also a Certified Public Accountant.