A new director of finance tackles this large and imposing job by first taking the time to review existing operations, charting a course to where the department and organization should be, and keeping these suggestions in mind:
1. Think Strategically
As finance professionals, it is far too easy for us to get overly involved in the day-to-day figures and reconciliations. In fact, I would argue that is one of the biggest mistakes a new director makes.
We have all collaborated with excellent accountants who have extensive institutional knowledge, know the system inside and out, and are never late on a reconciliation; however, they are not effective managers because they think and act like accountants.
Our primary value as finance directors is our ability to go beyond subject-matter expertise and use tactful thinking to create a more efficient and effective process. Using our capability to review financials, personnel, processes, and goals, we offer valuable, impactful guidance to the top-level decision makers to ensure that these processes create a positive ripple through the operational and fiscal environment.
We are expected to provide a fresh outlook on current challenges while simultaneously forecasting problems that may arise in the near future. We cannot do that if we are into the nuts and bolts on the balance sheet. Develop a staff review process for completing daily reconciliations.
2. Conduct Process Audits
One of the first things I do in a new position is conduct process audits of all existing workflows. These audits aim to document the current operations that flow in and out of the finance department and clarify how the output from finance impacts other departments and their timelines. Understanding these processes is integral to identifying strengths and weaknesses in the current workflow and providing a baseline for proposed updates.
Another aspect revealed in process audits is the timeline of the workflow. A single task often can impede a much larger process, creating stress and bottlenecks that can lead to slow reconciliation and month-end closes. Understanding the timeline of these tasks and how they integrate into the larger workflow is critical to ensuring a successful and transparent process.
Reviewing who is doing the work, why they have been tasked with that work, and the extent of their workload also provides insight. We often discover senior staff members taking on low-level tasks, which can create inefficiencies.
Sharing the results of these audits with peers in other departments is critical to achieving the necessary buyin when updating processes and establishing a defined timeline that shows why and when work needs to be completed.
3. Read, Digest, Translate
A favorite professor of mine used to say: “Remember that you are not the smartest person in the room. . . . You just speak a different language.” As finance professionals, this is one of the best bits of advice we can heed.
Our ability to influence the business comes from our ability to understand organizational strengths and weaknesses and, most importantly, to get that information into the vernacular so our peers can understand the decisions’ ramifications and drive appropriate actions. Accruals and their negative impact on the income statement in the upcoming months is important financial information, but if we can translate this into bite-size pieces for nonfinancial teammates, we can exponentially increase our impact on both the bottom line and the mission of the organization.
In contrast, explaining complex financial issues without putting them in a language that peers can understand often results in people shutting down, ignoring the information, or disregarding the messenger. One of the most important tasks for us as finance directors is to develop that trust through frank conversations that allow the team to build confidence in the figures we provide and the offered counsel.
4. Reach Out
Learning how and why tasks are completed is another opportunity that can start on day one. Listening to the “boots on the ground” staff, their supervisors, directors, and senior staff members will provide insight into not only the process, but also the staff’s understanding of the process.
Understanding where and why certain tasks are assigned to specific departments allows an effective director of finance to ensure proper separation of duties and note choke points and bottlenecks that lead to processes breaking down. It also allows one to see successful processes at work and to consider an application in areas that can use additional help.
5. Schedule Regular One-on-One Meetings with Staff Members
Knowing direct reports is fundamental to developing the trust and openness necessary to manage a successful finance department. Meeting one-on-one regularly shows the supervisor’s interest in learning how to further the team’s professional goals, ensuring that everyone has what they need to complete the job and assist with any roadblocks.
These one-on-one sessions also provide an opportunity to better understand the team’s dynamic: What motivates them? How do they prefer to be recognized when they excel at a job? What types of work do they prefer and what types do they dislike? Why do they enjoy certain tasks, but not others?
These responses will help managers adapt their leadership style and provide their team with the tools to engage, challenge, and motivate them to complete their tasks. A manager who understands the team creates a department that is less likely to turn over because of frustration and challenges and builds a highly successful team of professionals.
6. Review the Chart of Accounts
The multifaceted financial review that I undertake whenever I start a new position provides valuable insight into the skeleton of the organization. Understanding the technical issues is extremely important, and the chart of accounts, trial balance, budget, and financial documents are woven together.
In addition to learning the basics (does the trial balance, in fact, balance?), finance directors can begin to understand where reporting responsibilities lie. Reconciliation, compliance, accountability, and budgeting may not be housed in the same departments to which we are accustomed. Understanding why accounts are divided and subdivided, as well as why certain accounts are rolled up, is particularly important for a thorough understanding of how and why the department is run as it is and to determine whether that is the best practice for the business.
Asking questions of experienced staff members is also critical to understanding why the accounts are the way they are. There may be a perfectly valid reason to have an “Office Supplies Expense” and a “Supplies Expense, Office”; however, part of our job is to understand the “why” behind these decisions and determine whether this is the best practice.
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7. Be Kind
As finance professionals, we are accustomed to pivoting quickly when a situation changes. Change can be a significant disruption, but it can also be a fantastic catalyst for getting things done. Not everyone feels this way. In fact, some people are downright terrified of the slightest change to detail or routine. Adding money and complex finance concepts could be a recipe for disaster.
I’ve found that being kind goes a very long way. Being kind means being fair and transparent about regulations and expectations. It means taking the time to listen to folks’ comments and complaints and logging their feedback for follow-up at a later time. It means doing our best to show colleagues and peers that we are not adversaries but useful members of the highly motivated team here to make their work easier. Although we can’t (and shouldn’t) be yes people, we can usually say no in a kinder way.
Wrapping It Up
Being the finance director is an exciting opportunity to lead a group of seasoned and motivated finance professionals. Taking stock of the current situation in the first six months by meeting with peers and direct reports, documenting existing processes, and developing trust are all essential in this phase. These are the staff members who will help us understand why things are the way they are and why they have remained this way. Later, using our background and professional skills, we can assess the strengths and weaknesses of these processes and evaluate them to see whether there is a better system, or a more streamlined workflow option.
Using the interpersonal skills we’ve developed over the past months and with the strong backing of the finance team and necessary stakeholders throughout the system, we can begin to effect positive change throughout the organization.
Finally, we can document all the processes and updates into a living, transparent document that is available not only as a reference, but also as the backbone of a teaching tool for the staff.