Several years ago I led a team tasked with organizing the roles and responsibilities in our financial partnering (FP&A) organization.  We needed to figure out:

• What are we trying to accomplish?
• What skills and talent do we need? And
• How should we organize ourselves?

So, like many of you, I have spent significant time thinking about 1) What does FP&A do and 2) What should FP&A do?  My team and I landed on this very “packed” vision statement for our finance business partnering group:

Decision support driving profitable growth

I don’t know that we addressed everything FP&A does and should do in this short statement, but I think we covered a lot.  Every word was chosen deliberately and carefully and I’d like to use each to showcase a key critical tool for FP&A professionals to master in their pursuit of this vision.  So, at the risk of acting like a pastor preaching a one-hour sermon on Genesis 1:1, let’s explore each word together:

Decision

The FP&A professional needs to view their work through the lens of decision-making.  Leave the critical and important tasks of balancing the books, making the regulators happy, and managing cash largely to our talented colleagues across the finance disciplines - we are here to influence decisions.

Tool #1 - Recommendation:  If you cannot look at a piece of work and drive out a recommended decision, try again.  The effective FP&A professional goes beyond “here is the data and here’s what it says” to “this is what I think we should do about it.”

Support

Especially in larger organizations, we have the luxury of working with talented leaders focused on both decision-making (general managers and the like) and decision support (largely staff functions). FP&A should play the latter role.  Here’s why:

1. Business decisions are best implemented when made and communicated by business leaders (so no one in the organization can complain “Finance made me do this”).
2. Business leaders should be fully accountable for their results.  The fewer decisions that are made outside of their authority, the fewer “excuses” are available for sub-par performance, meaning less motivation for fixing the root problems
3. These roles allow for synergistic interplay of the skills and experience of the FP&A professional and the skills and experience of the business leader.  Between the two of them, there is an unbeatable combination of business knowledge, intuition, fact-based analysis, and analytical horsepower!

Tool #2 – Collaboration: Only a strong, well-developed relationship of trust can drive this powerful combination of decision-making and decision support.  The effective FP&A professional builds relationships based on trust and competence that lead to true partnering and collaboration.

Driving

Now we come to the first verb in our vision. FP&A must not sit passively by and hope the right data, the right issues, and the right opportunities will present themselves.  The effective FP&A professional must seek out these problems and drive discussion, debate, and solutions.

Tool #3 – Provocative Unrequested Analysis: Too often we get tied up with a barrage of people dictating how we spend our time.  While these tasks (budgets, forecasts, analysis of monthly results, etc.) can be valuable, the effective FP&A professional prioritizes not only the urgent “fire drills”, but also the not-as-urgent investigations, analyses, and communications that the business may not know it needs.  In this work, don’t be afraid to provoke discussion and debate.

Profitable

Here is where we really earn our paycheck as FP&A professionals.  A healthy organization will seek to make decisions that meet its objectives and goals.  Some objectives and goals will be financial and some will be non-financial.  Our job is to ensure decision-makers are always aware of implications of their decisions on profitability.  The word “profitability” is not a narrow concept, and could include impacts to:

• Profit and Loss
• Economic Value Added
• Cash Flow
• Return on Capital
• Debt ratios
• And the list goes on. . .

In the end, the question FP&A must explore and opine on the impact of decisions on achieving the organization’s objectives and goals along with the impacts to overall shareholder value.

Tool #4 – Communication: Driving profitable behavior requires that your partners understand the how’s and why’s of the organization's profitability objectives, and we all know that this sometimes gets very technical.  The effective FP&A professional can deftly communicate, in terms the audience can grasp, the impact of decisions on profitability and value.

Growth

I’ll stick my neck out here and put forth that every healthy organization needs to grow to serve its owners well.  In the book Granularity of Growth the authors point out that the odds of survival hinge greatly on growth, not just profitability.  

Especially if you’ve heard this phrase from your partners;

 “the Finance Department should rename itself to the Sales Prevention Department,” 

you need to think hard about your perspective on growth!

Tool #5 - Strategic Thinking: Supporting your company’s growth requires a strategist’s perspective.  The effective FP&A professional understands the organization’s strategy, including how it competes with and differentiates itself from its competitors.  Only then can assess and estimate the growth potential of business decisions.

Does your team support the profitable growth of your organization by driving great decisions? Here’s hoping these 5 words and 5 tools can help you and your team achieve excellence in FP&A!