5

Insights for executives

The answers in this issue are supplied by:

Breaking the glass ceiling

New ways Finance can leverage core strengths and add strategic value
It was the vision of the CFO to say we need to become more valued partners and focus on our people and our practices.
Finance Executive, Director of Financial Planning
The role of Finance has evolved considerably beyond its traditional roots of regulatory reporting, cost savings and process efficiencies. A recent Ernst & Young LLP study shows that 79% of senior business decision makers acknowledge that the Finance function has become much more strategically involved in the last five years.

Anne C. Ilsemann Partner Americas Advisory Ernst & Young LLP +1 212 773 7129 anne.ilsemann@ey.com

Thomas G. Cucuzza Americas Advisory Finance Competency Leader Ernst & Young LLP +1 248 797 5078 thomas.cucuzza@ey.com

However, when asked whether they wanted Finance to play a bigger role, only 47% of senior business decision makers said yes. A full 40% of those senior business decision makers do not want to see a change, while 13% want Finance to be somewhat or much less involved. While the term glass ceiling has typically referred to unseen yet unbreachable barriers for women in the workplace, our recent survey results exposed a similar perception of the Finance organization as a whole when senior executives describe the role of Finance in the strategic decision-making processes of corporations. Is there a glass ceiling for the Finance organization? As Finance charts its course for the future, has it hit the glass ceiling, or is there still room to grow?

Whats the issue?

Finance has finally earned a seat at the decision-making table. But within many organizations, the business still sees Finance more as a barrier than a facilitator of success as being an internal regulatory body whose involvement in corporate strategy slows processes down. Often, the disconnect stems from a misalignment of priorities. The business recognizes that Finance is working hard, but if their priorities do not match, the business does not see the value that Finance can provide. As a consequence, many senior business decision makers see a limit on the level Finance can reach in becoming a strategic advisor to the business. Some within the business believe that if Finance can not keep up, it should no longer have a seat at the table. Finance needs to quickly close the gap in terms of knowing what the business priorities are, what skills and competencies Finance resources need to support the business, and how to align those skills to be most effective. If Finance fails to catch up or keep up, it will not only be limited in the strategic value it can deliver, but also may actually see its level of influence diminish.

They [the Finance function] can get more involved than what they are, but I do not think they should get heavily involved and become a surrogate for the responsibility for the business unit. The major decisions are being made elsewhere and Finance supports, analyzes and provides their view. Were organized by business units. The decisions are with the business unit leaders. Finance is involved, but they do not make the decisions.
COO, Financial Services

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Why now?
Globalization, advances in technology, increased regulatory reporting, squeezed margins and changing consumer demands have placed immense pressure on the business. The business has had to evolve, shifting its priorities to remain competitive. It expects Finance to do the same. In many cases, however, Finance has not kept pace. To break through the perceived glass ceiling and become a true partner to the business, Finance must refocus its efforts to engage where the business needs it most. The function needs to be able to provide the right resources with the right skills to address the right business priorities. And it needs to be able to do it immediately. By leveraging its core strengths institutional knowledge and memory, long-term thinking and foresight, and cohesion related to organization and structure Finance has an opportunity to add true value to the organization.

How does it affect you?

To mirror evolving business priorities, Finance will need to act quickly to determine its strengths and skills, identify the weaknesses and develop a plan that focuses on providing appropriate levels of support to the business priorities where Finance can be most effective. Finance can achieve these goals by addressing the following areas: Emphasize advanced training. Everyone in Finance should get the training needed to support the increased strategic involvement of those in key advisory roles and to ensure a clear organizational structure. Identify and eliminate blurry lines. There are often blurry lines between the role of Finance strategists and operations at the lower levels of an organization, leading to tension and confusion. Nurture ties with business decision makers. Fostering ties for Finance with senior business decision makers requires emphasizing Finances potential as a strategic advisor, rather than a time-intensive obligation or a final check. Implement efficient tools and technologies. Finance should be proactive about initiating the development or better use of tools and technologies to help advance structure and organization. Tools and technologies that streamline communication and information management and increase efficiency are highly valued across industries.

Whats the fix?

Becoming a true partner to the business will require Finance to take the following actions:

Emphasize strengths, and list them Finance should know the true value it can provide to the business. It should maximize the full potential of those strengths to increase Finances visibility and indispensability within the organization. Assess current competencies To provide the right level of strategic support, Finance needs to have the necessary capabilities. Finance needs to objectively assess its current competencies and the gaps, and what it needs to do to fill those gaps. Exploit capabilities Once Finance knows where it is most capable and has the strongest competencies, it should exploit them to show the functions relevance in the areas where it excels as it builds the skills to support other priorities. Use key enablers Training, tools and technology can help enable Finance resources to maximize their relevance and value to the business.

Business

Finance needs to understand the business and what it takes to grow the business. So I think the individual, whatever level they may be from the Finance side, needs to understand not only the corporate umbrella strategy, but also each business unit strategy to ensure that they have the right input when they do come to the table.
SBDM, VP Marketing

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Whats the bottom line?

Finance has key skills that the business values foresight, organizational cohesion, collaboration, and information and technology knowledge. According to our study, the business already recognizes the value these skills can provide. Finance needs to exploit these skills to continue to gain more strategic influence and to strengthen its seat at the table. Finance executives will need to clearly demonstrate their understanding of business priorities, and have the right teams in place to respond proactively and effectively with relevant and timely information. Any delay in aligning priorities to the business, in hiring and training appropriately skilled resources or in using key enablers to exploit Finances capabilities could permanently limit or diminish the role Finance could play in helping the business to achieve performance and growth objectives.

The benefit to Finances involvement is that Finance brings a unique perspective on risk and is able to quantify the risk exposure the company faces.
Finance Executive, Chief Accounting Officer, Consumer Products

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For related thought leadership

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Finance executives: can you keep pace with changing priorities?
Misalignment can reduce an organizations cost-competitive profile
The roles of the CFO, Finance executives and the Finance organization as a whole have changed significantly in the last five years, and the CFO has finally earned a seat at the decision-making table. To maintain this seat, Finance needs to grow ahead of its roots and keep pace with rapidly changing business priorities.

The new CFO agenda: revenue planning, establishing KPIs, risk management
Three important business priorities where Finance can prove its value
In the wake of expanding globalization and advances in technology and to meet the changing needs of the business, Finance has to align its priorities with those of the business. Revenue planning, establishing KPIs and risk management are three areas where Finance can offer significant strategic value. go

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