Finance leaders’ talent, tariffs, and transformation plans

Katie Nightingale: 

Mark, when we've worked on transformations together, our key stakeholders tend to be the HRD, the CPO, or the CFO…. I face [typically] into the HRD, and I know the importance when we're doing transformations of bringing people on a journey. But often, and certainly with my experience in industry, there’s tension between those different roles. With our understanding of transformations and the value that each stakeholder bring, it's still surprising to see that low stats around those two roles not getting on. What's your view?

Mark O'Sullivan: 

I agree. The silos still exist, and we see it in some of the projects that we've been involved in. But when you look at why tech-led transformation programmes go wrong, two key things stand out to me. One is a failure to land the ops model. Now, when you've got the HR Director and the Finance Director seeing things in a different way and not working together, the chances of landing a consistent operating model around people, process and technology is vastly reduced.

I also think that disconnect between the CFO and the Chief People Officer is important in explaining a lack of adoption. We see so many systems that get implemented, but the user adoption post go-live isn't what it ought to be. And I think that lack of coordination and lack of alignment between the CFO and Chief People Officer could really be a key enabler of improving those adoption stats.

Katie Nightingale:

But we often see that they're not sat at the same table together. So, what can we do to really support that relationship? 

Mark O’Sullivan:

When you look at programmes that we've been asked to come in and review post go live, where they've failed to deliver the business case, you can trace it right back to the start. 

That's where the small divisions start to occur in terms of how people are interpreting a project. It's easy to talk at a high level at the outset of a business case around what we're trying to achieve, and everybody says, 'yes, absolutely, we're all aligned'. But then when they go back to their respective teams, they take away a different version of that story around the benefits it's going to bring, and the changes the organisation might need to deliver to successfully deliver that. 

As you get into implementation, those divisions grow wider and wider and wider, such that by the point you're seeking to go live with a new piece of technology, the divisions are unrecoverable. That's a key driver of project failure. There's a big role for us in terms of working with businesses at the outset of those programmes to set them up for success.

If you think about some of the examples where we've seen this working really well in terms of collaboration within a business, one of the things that I always look for is the frequency of engagement between the CFO and the CIO or IT Director, in terms of shaping the strategy for technology and applications across the business. 

Obviously with the introduction of software as a service, SaaS solutions, cloud-based solutions, we've seen a bit of a switch in emphasis to those types of projects being led by the function, so being led by Finance or it being led by the Chief People Officer. And sometimes I feel like IT are kept at arm's length, rather than everybody working really collaboratively to think about how it will impact the architecture of the business, and bringing all that tech expertise to think about things from an integration standpoint, a data standpoint and a security standpoint, as well as the business perspective. What are your thoughts, Katie, from a people perspective?

Katie Nightingale:

I think the one challenge that I found, whether I've been involved on the client side with implementations or supporting clients through the changes, is that HR, IT and Finance all have different languages that they speak.  

Often these projects start with finance and then they gradually navigate themselves to HR... and they often feel a little bit like the poor relation when it comes to, 'oh, you know, we'll just bolt on on HR', which is the wrong way to look at it. 

Engaging at the front end around that digital roadmap and how it all intertwines, because there's a clear need for HR data to flow seamlessly into the finance systems, there's a clear understanding around the support and the functionality that the tech will enable. And often, our HR colleagues are not as tech enabled. They don't really understand the language. They know they need data to be collected, they know they need to improve the employee experience, and they want to know how they're going to do that with a system. Often it can get lost in translation, and then you get frustration from the HR stakeholders. 

I think there's a bit more around each understanding each other's motivations, their agenda, and how to communicate with them. Business analysts often bridge that gap, but I think there's still more to be done around that, and that's where from that change journey and making sure there's enough emphasis on change and adoption and really understanding the stakeholder landscape to understand well, how do we interact with each person? How do we understand their requirements? How do we share what the system can do the business benefits in that way? I think if they can really align on that, I think that'll be helpful.

Mark O’Sullivan:

I think that's a great point, isn't it? Technology used to be the preserve of IT, and it was owned by IT, and it was this domain that nobody went near, and everybody was a little bit scared of as consumers. Now we consume technology in our day-to-day lives, and can adapt and go with the changes that are introduced in our smartphones, via our TVs, via even new fridge freezer and actually, businesses now need to recognise that technology is a C-suite level agenda item, not something that's owned by the techies in IT. It's a business problem and a business opportunity, and therefore it needs to be discussed at a strategic level, and all parties brought together. 

It won't work with the traditional siloed ways in which we've seen it done in the past, where it's almost those who shout loudest get heard, and they get to drive the project, rather than it being actually, this is a strategically important project for us, let's get cross line of business participation, to make sure we maximize the opportunity.

Katie Nightingale:

I completely agree. I think that the biggest thing that I keep talking to my HR colleagues about is that you need to talk the same language as your key stakeholders. Data is king. Upskilling around that is really important. 

The role of HR and business protection is huge... there's a lot of things around data protection and making sure that you're minimizing any liabilities around your people, and often that can create nervousness around AI in particular. I think being able to bring them along that journey, and understand how we learn from being consumers, but how we can make the employee experience great, but also then really, really leverage that business partnering opportunity by using data around strategic workforce planning. That's where I really want to see HR really leveraging the tech that's in the business.

Mark O’Sullivan:

It's that move from thinking about tech in terms of being an efficiency driver. Of course, automation will drive efficiency. It will make processes more consistent. But it's what's the true potential of your function? What can you do as a people business? What can you do as a finance function when you've got accurate, timely data to make better business decisions? That's where I think it gets really exciting.

I would say that you need to start with the business problem that you're trying to solve. You don't lead with the technology; the technology is an enabler to a solution, but you have to have absolute clarity as to why you're doing something. It's that clarity of vision, clarity of purpose, that then drives the actions that follow. I heard a great phrase once that culture is defined by the processes that you implement within an organisation. You can be very process light, and that will drive a particular kind of culture. In other situations, you might be looking for much tighter control, much more of a centralised process and clear, consistent processes that allow you to control quality globally. 

Really, technology should be chosen once you're really clear on what the business problem is and how best you're going to solve it. But I always think of business process, the technology and tools that are available and the people as being the three component parts that that drive the solution, and you can't do one without the other.

Too often you and I have have been reviewing programmes that have gone wrong where people have identified the business problem, found a fancy bit of technology and thought 'brilliant, everything else will take care of itself'. We know that doesn't happen, right? That's where you do get the lack of adoption. Equally, if you don't pay attention to your technology choices, you may have a great business case, you might have the entire organisation on board, but you end up with a bad solution and something that doesn't meet your functionality requirements. So you have to address all of them. But my view is, start with the business problem that you're trying to solve.

Katie Nightingale:

I agree. You can look to tech to be a solution, but with people, I think… when I look at any sort of digital transformation, the tech bit is 'the easy bit'... getting the people to adopt it is the hard bit, and I have heard CFOs say that to me as well. 

We need to understand what the tech can do, we need to know what the questions are that you want answered, so that we understand how to build the requirements to give you the outputs you're looking for, and we really fundamentally need to understand what this means for your people... so how do you do things now, and how do you want them to be done in the future? What does that mean for your culture? And how are you going to make sure that your culture enables that? And do you have a clear understanding of why you're investing - whether it's from an efficiency perspective or is it actually about saving costs? Is it enabling you to be lean, so that you can grow quicker and smarter?

I'm definitely very passionate about the idea that a great operating model and a great system can't overcome poor culture. But I'd be really interested in your in your thoughts on the matter. 

Mark O’Sullivan:

I agree, people will look at a fancy piece of tech without considering the implementation of that, and the importance of how they currently run, and the sensitivities around that. I think what we've seen around going in where implementation hasn't gone well, in terms of doing it once, and doing it well, it's really important that clients, or anyone who's putting tech in, really thinks about the partner that they work with, in terms of whether they understand your values, what you're trying to achieve, whether they're going to be your critical friend and challenge you around every step of the way to make sure that you're constantly course correcting to make sure that adoption is right? The amount of times that we've seen huge amounts of money spent on implementations and a system but then you suddenly find there's these workarounds that HR or Finance are doing, because there's this nervousness or lack of thought around how to bring people along the journey. 

My advice to a Finance Director going through any sort of transformation is to really leverage the skills HR can provide in terms of skills, org design and more to really understand the implications for your people. 

Katie Nightingale:

Yeah, I love that. I think that appreciation of the value that each group bring - the technical skills, the commercial, data driven skills you might get more in finance, the understanding of people and the organisation - you put all of that together, and you've got a really powerful recipe for success in a programme.

What is the CFO’s role in driving change?

I see a CFO as a linchpin to several different elements of a transformation. They have a key role from a communication perspective… so communicating across the business, communicating to their own teams, but then also to investors and to the Board. Being able to balance those communications and the way in which they deliver them, and varying them to the right audience, is really important to have maximum impact. 

They also have a really important role from an incentivization perspective as well. One of the key aspects of making changes is ensuring that people are all on the bus, and one way of doing that is ensuring that their measures of success and their personal incentives are aligned with the strategy and the transformation from a business perspective. The CFO plays a really important role in that incentive structure, working alongside the CPO and the board to make sure that that is at the right level for the business. 

What sets successful change leaders apart?

People are critically important. It's them that change the business, and it's them that are changed in the business. It’s important that the CFO has a finger on the pulse and doesn’t rely on anyone else in the exec team or in the business to understand the impact that change is having on people. 

From a strategic point of view, they're seen as the sort of organization-wide go-to people from a value creation perspective. So they are that linchpin in the executive team and in that strategic group, so making sure that they hold that team together is really important. If teams are allowed to head off in different directions and make decisions in silos, then the transformations will not be successful. 

Finally, from that resource management point of view… and that risk management point of view… there’s a need to not just have a keen eye on the business case that needs to be delivered by the transformation, but also to make sure that there's that flexibility in the delivery of the business case as well. Because of the dynamic nature of transformations, they need to show that as transformations succeed, or if there's a change in sort of direction at any point in time, that they're able to respond to that in effective way. For example, from a resource point of view, they need to be able to pull back on resources, or pull down on additional resources that might be needed to deliver the transformation faster or in a to a broader scope than they originally expected. 

From a CFO’s perspective, what will make it successful is being able to manage the dynamic nature of transformations, particularly from a resource management point of view. They need to be able to understand that the transformations aren't clearly steady in their state, and they don't follow a single pathway. They are very dynamic. 

They have competing priorities with the business as usual, and they will also be impacted by other events that go in in the world as well, so recognising that dynamism and having governance systems and processes to be able to respond to that, and to be able to pull back on investment and on resources where needed, where it's permitted and is ultimately needed, we see make a big difference to the success of a transformation. 

What should step one be for leading new change initiatives?

If a CFO is about to take on a new change initiative, I would recommend that they start by ensuring that they have absolute clarity on the direction for the transformation personally, but also in the exec team as well. 

That alignment is absolutely key to make sure that they don't go off in different directions, that the portfolio doesn't get pulled apart by competing priorities. Ultimately, next, I'd say they really need to have clarity on the timings that they're working to. They need to understand the roadmap for the change and make sure that they don't overload themselves. They don't want to go off too fast at the start, with too many competing projects. 

From a time and capacity perspective, there's only so much capacity in the business to take change. Ensuring that the road map is steadily paced is really important, and the road map also needs to have flexibility. They need to ensure that they've got the systems, the processes, the governance in place that will allow that, and that way they've got the chance to change course if they need to in order to continue towards their ultimate objective - that shared north star or vision.

I would also say to keep focused on the people. They need to make sure that they have the right people in place, that they're listening to people, they're taking the time to understand how people are feeling at any point in time during the transformation initiative. People need to be ready to make a start on the transformation, and having a measure of that is important… knowing the level of willingness within the business to be able to take on the changes that are necessary is really important.

And finally, the ability to change. Different people in the business will have different experience of transformation… and although the CFO has a broad remit, understanding that and understanding that abilities might need to be shifted and supported is important as they go through a transformational change. It’s also worth protecting their diary… on a personal note, zero basing their diary is no bad thing, given the level of challenge that they're likely to face!