Wolf-tamers and silo escapees: the future of performance management
By: Patrick Braunschweig, Senior Project Manager, Horvath & Partners
Performance management among CFOs, like anything else within the finance sector, is a numbers game. It ultimately comes down to how well a CFO is serving that single, all-encompassing master of their trade: the bottom line. A high-performing CFO is one that keeps the snapping wolves of financial ruin at bay with one hand, and paves the way to a secure future with the other.
Dexterity is definitely part of the job description.
But an agile approach to financial risk management is by no means the full extent of the skills required to succeed as a CFO in today’s cutthroat business environment. And defining that success can be difficult without the aid of a carefully structured performance management strategy.
Performance management has become a hot topic, but relevant resources are still fairly scarce. In a way it’s the new Sasquatch search of the finance world. Many are willing to testify to its authenticity, but few are armed with proof. Horváth & Partners Management Consultants are among the few organisations working to fill this gap. The firm recently released a study on the topic, titled “Successful performance management in the finance industry”.
Using responses from over 80 financial professionals, the study asserts that “only target-oriented performance management will enable companies to navigate their way through the transformation process, inject new impetus and take the right decisions”. Linking target-oriented performance management directly to the ability to make the right decisions is a fairly bold claim, but it’s one that they back up with in-depth data and industry insights.
Horváth & Partners’ research has found that regulatory, accounting and economic perspectives will soon take on equal levels of importance for CFOs. Respondents also pinpoint scenario-based planning as a key future trend, putting a glint in the eye of every corporate analyst with a penchant for predictions.
There is also a strong trend towards interdisciplinary and multifaceted work functions, marking a sharp departure from the old-fashioned way of working in specialized silos. Every professional now needs to wear a variety of hats – with bonus points earned for knowing how to sew them, market them, sell them, and build a closet big enough to store them all.
In the modern workplace, you can never be too multi-skilled.
The multi-skilling trend is affecting CFOs just as heavily as other key functions within a business – and according to Horváth & Partners, this is likely to continue. A majority of respondents see sales management and control of production becoming important factors in performance management for CFOs over the next three years.
The study concludes that the CFO function of the future “will have to report on multiple aligned and reconciled performance management aspects incorporating an increasing number of non-financial components.” It’s still about the numbers, but it’s no longer all about the numbers. CFOs might soon find themselves serving a new master: not the bottom line, but rather the multi-layer.
Performance management will be one of the key issues discussed by finance professionals from around the Middle East at the 10th CFO Strategies Forum MENA, sponsored by Horváth & Partners.