Get your financial organization close to the business.

• Author: Keating, Patrick J.
• Position: Includes related article

Last year, Financial Executives Research Foundation published Changing Roles of Financial Management by Patrick J. Keating and Stephen F. Jablonsky. In the FERF study, Keating and Jablonsky chronicled the emergence of the competitive-team orientation in the financial functions of six leading U.S. companies, an approach to financial management that integrates finance in the lines of business. These companies have developed the team orientation, say the authors, to meet - and beat - competition. In the following article, Keating and Jablonsky take Changing Roles one step further- they suggest strategies you can use to implement the team-oriented approach in your organization.

As Corporate America moves toward leaner, more flexible, and more knowledge-based forms of organization, the walls between finance and line management are coming down. Organizations are moving toward a competitive-team orientation. For financial management, the team orientation means integrating a financial perspective into business strategy and line operations, and sharing financial control with line management. The result is greater efficiency of the financial function and a better overall management control system.

Financial work in a team environment is characterized by a shift away from top-down monitoring to down-lip competitive analysis, and from top-down hierarchical control of production operations to midlevel involvement in local process-improvement programs.

The hallmark of the team-oriented financial organization is "getting close to the business." For many traditional financial organizations, this will mean moving members of the financial staff out of the front offices and back offices of corporate America and onto the competitive playing field.

The four cornerstones of a team-oriented financial organization are:

* Service to customers - The members of the financial staff serve their customers - often company employees from other department - as advisors who understand the business.

* Shared control - The financial function relinquishes the role of corporate policeman, responsible for overseeing work clone by others, and becomes instead tile systems controller, responsible for monitoring the financial health of ongoing operations.

* Seamless communications When financial control information is generated as it by-product of basic operating systems, communication becomes part of the process. Financial professionsls in a world of seamless communications have dual responsibilities: responsibility for providing analytical support to the business units and responsibility for maintaining the integrity of the corporate information system.

* Sophisticated capabilities people, financial tools., and technology are required to support management at all levels within the corporate hierarchy.

All team-oriented financial organizations are anchored to these four principles to one degree or another. Each organization's history, culture, and competitive and regulatory pressures play an important role in determining which of these principles it will emphasize. 3M, for example, relies strongly on sophisticated computer capabilities for producing market-oriented performance reports. But Citicorp emphasizes seamless lateral communications through electronic mail.

Making the change

To create a team-oriented financial organization, you should begin by figuring out where you are now. Your present position determines the distance your must travel. And then you have to decide if you really want to take the trip.

You may find helpful the three types of financial orientations described in Changing Roles - the conformance orientation, the command-and-control orientation, and the competitive-team orientation - in assessing your current position and your most recent history. (See the excerpt below.) Each orientation describes it distinctly different pattern of financial participation in the management of the firm, and each requires a strategy different from the others. The challenges of transforming the conformance-oriented financial organization to the competitive-team organization are quite different from those encountered in transforming the command-and-control orientation.

To be successful, you need to develop a vision of team-oriented financial work that is compatible with your organization's culture, and focus on those changes that best demonstrate how the financial organization can add value to the firm.

Plotting your strategy

As we have said already, service to customers, shared control, seamless communications, and sophisticated capabilities are the cornerstones for restructuring the financial organization.

The figure below identifies four strategies for building a team-oriented financial organization. Each strategy links two of the cornerstone elements of the team-oriented financial organization. Involvement links service to the customer with shared responsibility for financial control. Integration links shared financial control to seamless communications. Investment links communication with sophisticated capabilities, and innovation links sophisticated capabilities back to the customer.

We have found that financial executives develop strategies consistent with senior...