In a lot of organisations, Finance is seen as the guardian of data and its correctness, and the buck often stops with the CFO if there is an issue with it. Because of this there is a lot of focus on data and how to ensure its quality and there are a lot of discussions around master data, big data, data migration, data driven decisions as well as in-memory reporting (so we can crunch and report on more data).
At the same time as data is in focus, Finance is trying to move itself towards becoming effective “Finance business partners” (FBP), i.e. spending less time crunching data and more time up and about. There is an ongoing debate on exactly what this entails in comparison to be an accountant or controller which has made it hard to implement (or at least hard to tell whether you were successful or not). I don’t see an issue with it meaning different things in different companies, but within one company there is a need to be clear on what the role actually means and what skills are needed.
I think there is some level of agreement around the role in interpreting and explaining data to non-finance people (a.k.a. “the business), rather than sending them reports and consider your job done. There are some phrases casually thrown around like “get up from behind your desk”, “have conversations”, “be proactive” and “adding more value”. Sounds great but hardly precise. It is difficult to tell what skills would be needed for that other than being a generally extroverted and social individual. Commonly quoted skills are influencing, negotiation, being proactive, stakeholder understanding etc. These are all general skills and not finance specific. For sure, it can be hard to find these people… but wait; it gets worse.
Basic human errors causing more problems than the lack of “having conversations”
You may think it is hard to get accountants to “get up from behind their desks” but that is nothing in comparison to the challenge of turning data into understanding, and the many human errors that we make while doing this. To make it harder these are skills we all think we have, but most of us don’t. It’s the awareness about how different people perceive the same thing differently. It’s when you think “I can’t even begin to understand how he/she can think that way”. Take a break and think about this:
1. What you are used to seeing seems intuitively right
Have you ever seen a map of the world based on Peter’s projection? If you have you will notice that it looks skewed and wrong. Is it wrong? Well, it isn’t perfect, but it is hardly more wrong than the more commonly used Mercator projection where Greenland and Africa look the same size. The point is, what we are used to see seems intuitively right and what is different seems “off” or “wrong”. How often do you run a forecast that comes out a bit unusual and the question is not “why does it look like this?”. It is more commonly “That can’t be right, run it again”. Then we run the forecast again until it looks like what we are used to seeing, nobody is worried, and we can all start next month’s forecast instead of hovering over this one.
A planning survey done while I was at Deloitte stated that 71% of companies that participated (out of 500+) find a forecast to be crucial for a view on future performance, but only 17% actively worked on its accuracy. Check the box exercise?
2. Knowledge of statistics is generally appalling
Most people are generally terrible at statistics. We compare straight averages, making massive overlaps look like massive gaps, we tamper with the scale on the axis in graphs and we act on gut feels and false assumptions, to then find some data that seems to fit. We confuse correlation with causality and we are not slow to draw big conclusions and hit the action button. Look at matters such as the gender pay gap debate, not saying that it doesn’t exists but gender is hardly the only variable at play for the difference in pay.
This type of overly simplistic conclusions triggers emotion, intense disagreements, political fights, crusades and all other kinds of trouble, while making it harder to get to a reasonable discussion on what the actual problem is and how to deal with it. How much time do you spend on this where you work?
3. Diagnosis bias and commitment (i.e. ego)
Once we have decided about something, we will be biased to find information that strengthens our position and discard information that does not. This makes it more likely that we stick with the decision we committed to even if there is data suggesting that we should change our minds. Unfortunately, our ego often gets in the way of admitting that something was a bad decision and it should be stopped before we waste more time, money and effort chasing it. If you then operate in a harsh political environment where people will target you for admitting a mistake, even less likely that anyone will ever change their mind even if all the facts points to that being the reasonable thing to do.
Confidence vs. competence
Confidence is all we ever hear about. We need to always be confident, present confidently, be assertive and stand up to people pushing back. In fact, confidence has almost become more important than competence, and self-confidence has somehow gotten mixed up with self-worth (there is a difference between knowing that you are generally a good and competent person and being convinced you are always right or that you can do anything). A degree of self-confidence is good of course, but most of us also know the hours we spend in meetings that get no results as it just becomes an arena of useless confidence-posturing.
The skills you are looking for
These have nothing to do with finance but all to do with just being human. If you job is to use data, information, KPIs etc and turn it into understanding and solid decision-making support for other humans you are going to have to cope as well as you can with the above. Forget “adding value”, a finance business partner is a person who is strong enough to:
- Suppress the urge to make a snap judgment
- Understand dangers of misusing data and statistics
- Constructively doubt themselves and challenge their own bias
- Take other views onboard and change his/her mind
- Suspend their ego and agree that a solid decision is more important than being right
- …you can probably add to the list yourself
These are not easy things to do well. Personally, I find it incredibly hard. We all like to win and hammering home a strong point in the board room is a great ego booster. Just make sure that once you hammer it home, you have thought twice about it and asked some probing questions about the data.
Now, go look up what the difference in size is between Greenland and Africa.