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Secondly, the team is being dragged away from strategic, value-adding tasks into the nitty-gritty.

The finance team tends to become the ‘bag lady’ of the corporate centre, which results in a number of undesirable outcomes:

• Too much focus on irrelevant detail – checking and double checking which sends a message to the business divisions that “we do not trust you”. The most common complaint operating divisions had of central finance is their ad hoc requests for information and insistence of providing data in formats that are inconsistent with their own.
• An abundance of finance reports and forecasts which do not provide the answers to key management questions, not to mention the endless tinkering with and consolidation of reports.
• Scope creep – finance staff often start taking over activities/roles that should be done within the business divisions because they are unclear about where to draw the boundaries.

What we are seeing is far too much focus on the day-to-day activities rather than on the value-added / strategic finance tasks.

One of the key aspects we look at when we benchmark is the split between strategic activities and non-strategic activities.

We call these the “3 C’s”. As I have said, finance functions tend to spend a lot of time on the first two “C’s” – complying and consolidating.

Creating value 

They spend less time on the third, crucial aspect – ‘creating value’, which is the strategic element of the finance role.

Our analysis of one major company showed that the financial director and controller were spending on average 60 per cent of their time on day-to-day activities – in the ideal world, their combined target should be closer to 20 per cent.

This lack of rationalisation within the finance team means that it tends to focus on analysing data rather than performance.

This then drives the behaviours of the business’s leadership team, meaning that they too get caught up in the detail and the past, rather than trying to plan for and meet the challenges ahead of them. This is generally not good for business.

If readers of this article could take just one key message from it, it would be that finance teams need to appreciate that their behaviour has a much greater impact on business outcomes than they think.

Finally, there is also a lifecycle issue that governs both the role of the centre and that of the finance function within the centre.

The most commonly noticed staging points are at adolescence “the teenage tantrum” and at maturity “the mid-life crisis”

Unless the corporate centre takes stock and has at least a ’spring clean’ at these staging points, you end up with blurred boundaries and duplication between roles, not only between the centre and the operating units but at the executive level within the centre.

For finance executives in the centre this often means clarification over who has responsibility for strategic planning and forecasting, setting and analysing financial targets, and deciding on how the money in the bank (capital) should be spent.

The finance function has everything to gain from a correctly adjusted corporate centre.

Too often we see finance teams who appear as beleaguered housewives, too ground down by the day-to-day to focus on whether their kids are happy and healthy or whether they are really involved in the family unit in the right way.

Not only will its overall workload be reduced, but a finance function which refocuses on the tasks which genuinely add real value to the corporate centre and the company.

Sozen Leimon is a Partner in Maxxim Consulting, a management consultancy specialising in organisational design and change management.

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Related links

• Maxxim Consulting