Carlson Thought Leadership in Finance & Technology

Four KPIs of High Performing Finance Teams

July 16, 2015 / by Ethan Carlson

Key performance indicators (KPIs) are well known within business as a means to distill down the number of variables that move the dial within an organization. But rather than discuss the particular KPIs that a finance team should track, let us apply the concept to measure the more qualitative characteristics of a high performing finance function. While not all-inclusive, here are four KPIs that you can use to gauge your own finance organization’s performance:


KPIs-of-High-Performance-Finance-600-522Whether deserved or not, finance has the reputation of being a laggard when it comes to adopting the latest and greatest technologies. All you need to do is see how many finance teams are still reliant on spreadsheets for budgeting, planning and reporting. It’s not that spreadsheets are all bad; indeed, it can be a useful tool for ad hoc analysis. However, once your company attains a certain critical mass in revenue, growth and dimensionality, you should be using something else. Period. Foremost among the transformative solutions for financial planning and analysis (FP&A) are the variety of cloud corporate performance management (CPM) systems that have gone well beyond their teething stages and are delivering value for a broad spectrum of companies. One of the great benefits of these solutions is that they automate many of the onerous manual processes that distract finance professionals from more value-added activities. They also are much more efficient in getting data, reports, and dashboards to other areas of the business on a self-service basis – once again removing an overhead that typically falls on finance. Indeed, if you look at the highest performing companies, you will see that they embrace modern tools of the trade in ERP, CPM, the financial close, and others. Cloud solutions are among the most exciting and are recognized by the most reputable of analyst research firms of having the promise of the greatest ROI.
Strategy & Tactics

Finance leaders need to be generals as well as foot soldiers. They need to understand their company’s vision and strategy for success and the tactics to get there. One starting place where they can do this is by making sure their budget aligns to that strategy. Every budget cycle should kick off with executive-level participation and discussion of company strategy. Make sure it is clear how your strategy translates to business tactics and how every employee’s action and role has a direct impact on the success of this strategy. For more details on how to achieve strategic alignment, check out this companion post.

Agents of Change

Wielding the corporate purse strings provides considerable authority and responsibility to get things done. Whereas the traditional finance executive had mainly a supporting role in making sure initiatives were funded, they can also be the driving force for change. In other words, they should move from the back office to the front office at least in terms of visibility and action within the organization.  Finance leaders need to be able to speak the language of other stakeholders in the business and be able to help them succeed. This means they need to understand the jargon and non-financial metrics that are used in sales, operations, R&D, production, etc. As the primary analysis team for financial, operational and other data, it’s your responsibility to be tracking and communicating theses important metrics on a timely, if not predictive, manner. If, for example, you see a nascent trend in increased customer churn, you can raise an early red flag and ask the questions that uncover the underlying issues. Then, of course, you will want to measure the results of efforts to reverse the trend. As such, finance has the ability to get out in front of issues before they become crises, thereby positioning themselves as agents of positive change.

Team Cultivation

We all know that assembling a great finance team is difficult and that highly qualified talent has a propensity to move around to different companies to advance their careers. If this is the case in your organization, you are well aware that you are losing not only money and human capital, but competitive advantage. So, are you providing a career path that motivates your team and keeps them challenged and upwardly mobile? How does your own internal turnover compare to peer organizations? Have you made an effort to track this KPI? World class finance organizations establish a path to advancement and provide the means to climb that ladder. They mentor team members that are starting on their career path and help them navigate through the challenges and roadblocks that can demoralize them. Indeed, when one reconsiders the concept of performance management, it is clear that the concepts apply to individual employees. What makes them want to come to work on a daily basis and makes them feel successful? By identifying these individual factors, you will be able to incentivize your team and cultivate their talents to the long-term benefit of your company.

By measuring your own organization against these KPIs, you may uncover some areas where you need to focus. Keep in mind that you should revisit these areas often to make adjustments for continuous improvement. It’s a never-ending process but the benefits will definitely outweigh the effort!

Are you considering implementing a corporate performance management system?  Carlson is a three-time award winner partner of Adaptive Insights, the #1 cloud CPM solution.  Download your free copy of the Carlson Guide to Implementing Adaptive Insights.

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