As more companies tackle transformation, finance organizations, as scorekeepers, need to make sure they stay ahead of the change curve. The use of data and technology is often the first way finance looks to add strategic value to the company, but the key to success may actually lie in how effective finance leaders are at selling the change to the people doing that work.
To be clear, we’re not talking about incremental change, such as the automation of manual processes. Rather, we’re talking about transformative changes requiring a fundamental shift in the way people work, who they work with, and how they think about their work and the contributed value. In finance, such changes might include the replacement of high-volume, repetitive tasks with more strategic, data-driven decision-making, risk management and predictive analysis.
Take balance sheet reconciliations, for example. True transformation might include the use of automation to prioritize risks in specific material accounts and improve data quality, flow, benchmarking and visualization. In such an environment, a key enabler of change is the learning and development required to ensure that people are not only developing the skills they need to perform the new processes but are also empowered with the mindset to embrace the new working philosophy.
In this sense, change management is people management, and as such, it is likely to be met with a certain amount of resistance – it’s just human nature. This resistance can be overcome, but it requires careful planning.
There are 5 major enabler of transformative change in finance function including Mindset, People, Processes, Data and Systems / technology.
Let’s explore how agile change management approach can help in orchestrating successful finance transformation.
Create Cause & Purpose
In order to create lasting change in the future, employees need to understand why it is essential to change now. Begin your approach by defining what is causing this change and what the purpose is behind it. This underlying purpose will be a pillar of your agile change management strategy, so it must be something that you sincerely believe in, to then motivate others to work towards this goal at an individual level.
In Finance Transformation, the primary objective is to create value for the business by making the overall organization more efficient, better informed and more strategic.
Therefore, finance teams working in different dimensions of the finance function should be provided with clear purpose of transformation in order to improve operational efficiencies (in P2P, O2C, General Ledger Accounting), improving record to report cycle by making it more agile and real time, leveraging analytics and generating insights for the business functions to enable them make better business decisions, as well as influencing the strategic decisions and improving the overall performance (top line and bottom line) of the organization.
It’s also crucial to reach a common understanding between all parties involved in the change process including team members from Accounting, Treasury, FP&A, Reporting, Tax etc.
Agile change should be posed as a necessity, or else your finance organization may never fully achieve other critical changes in the future. Bridging this gap will help every team member understand that each one of their efforts will help the finance organization move from the as-is state to the to-be state- that is to add value to business by transforming overall finance function from the cost center to value center.
Maintain Meaningful Dialogue
Agile Change Management is all about people, and it’s been proven that 70% of communications happen verbally in an average organization. These two facts should have already given you a good idea on why Meaningful Dialogue is so important for a change to be effective.
Collecting Insights is the first step of the journey when driving change with an Agile mindset, and what better way to do it than talking. Simple as that; these conversations, brainstorming sessions and interviews with finance team members from each sections of the finance (Accounting, GL, Treasury, FP&A, Reporting, Strategic Finance etc.) will allow you to gather the most valuable information to begin your change process, so identifying the right people to go to is a crucial activity at this early stage. The information you get is just as good as the resources you involve.
It is also very important here to initiate dialogues with stakeholders outside the finance functions including sales, marketing, business development, HR, IT, Operations etc. As the ultimate aim is to create value for the entire business, therefore it is very important to take on board non-finance business teams as well in order to understand their key business priorities and areas of strategic focus as the aim is to enable them make better business decisions and improve the performance of the organization.
This will also be helpful in gaining initial buy-in from all stakeholders.
Experimentation is nothing without a good environment to carry it out. The Agile Mindset provokes change; change that comes from experiments. To realize all the benefits of empiricism, the mindset change needs to be encouraged from the high levels of the hierarchy in the organization. A free thinking, highly creative, hyper collaborative, open way of work needs to enable collaborators to feel safe to try, fail and learn fast, so the continuous improvement promoted by Agile is achieved. So, in a nutshell, think about what your to-be state is, what you think should be the outcome, how long it should take you to get there and how much planning is really necessary. With this in mind, experiment, measure and repeat as many times as you need it.
Mindset is one of the major enabler of transformative change in the finance function. Therefore, team members in different sections of the finance function should be encouraged to bring innovative and new ideas within open work environment and start with small experiments keeping in view the objective of transformative change in their respective section. For instance, analytics can be tested in both AP & AR in order to generate hidden insights which can be used to improve cash conversion cycle as proof of concept and let AP/AR team to involve in such POC in order to share their insights and feedback by looking at the simple AP/AR process from different value adding view point.
Same experiments can be done in different areas of finance including reporting factory where finance team members can experiment on transforming data into insights rather than just information and test it with non-finance business function ensuring it enables them to take better business decision keeping in view their key business priorities and leading to improvement in top line growth.
Lastly, experimentation will also help to raise early warning signals and reduce significantly the risk of failure of entire transformation projects causing organizations loss of millions of dollars.
Creating a sense of ownership on your workforce will facilitate your daily tasks as a change manager. When people relate to what they do and feel the purpose as their own, is much simpler to keep a motivated, efficient, and happy work environment. For this reason, involving key players in the creation of the change challenge is vital toward potential success. This practice also reduces resistance within the organization and allows your leadership teams to speak the same language as their collaborators.
Therefore, it is important to involve all finance team members from different sections of the finance in orchestrating finance transformation, for example team members from the Accounting team should also be involved in improvement initiatives within FP&A or reporting section because transforming systems / processes within FP&A are done in integration and synchronization with accounting systems and processes and lack of ownership on one side or the other can cause friction.
Respond To Change
As your agile change management process moves forward, you should measure its performance along the way. Nothing is written in stone. If there is an aspect of your strategy that isn’t working, experiments will make it visible.
This way, if there are proactive adjustments or refinements to be made, you can easily see where they should be implemented. Plus, if you are continuously tracking the progress of your strategy, you can gather your data for monthly or quarterly reporting to share with your finance team. That will give everyone an opportunity to look at the insights you’ve uncovered and use that as motivation to keep the momentum going. And remember, responding to change rather than managing resistance (when possible), is the way to go.
Agile change management is a healthy, necessary process for your finance organization to undergo. Remember that co-creation promotes employee engagement and commitment, feedback is golden, experiments are your best friends, and change is what drives improvement and success. Your collaborators should always come first, and remaining adaptable is the motto. Once you and your finance team are ready to take the leap, you’ll be able to accept change and adapt with ease for years to come.
Author : Muhammad Zeeshan Taqi
Reference Used: Software One
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