As few (or as many if you’re someone who sees the glass as half full) as 52% of those working with FP&A (Financial Planning & Analysis) feel that their organisation is genuinely engaged and involved in the financial planning processes. This is important because a lack of engagement and involvement usually results in a lack of quality and accountability of the financial goals and forecasts.
In order to generate high accountability within your organisation, you need to create a process that creates engagement and involves all parts of the company – which is easier said than done. So, the million-dollar question is: how do you successfully involve and engage the organisation in the financial planning process? Keep reading to get the answer!
Earlier this year, we conducted a survey which resulted in a ton of very interesting data points and insights into financial planning, all of which are presented in our annual report The State of Corporate Financial Planning. The purpose of the report is to contribute with knowledge about how companies work with their financial planning. Among other things, the report concluded that companies that perceive their budget and forecast process to be of high quality – and that it can largely be used as a foundation for strategic decision making – are the ones who already have a process for involving and engaging the organisation in place.
Considering this, organisations should aim to create the right conditions to be able to design a high-quality financial planning process that contributes with concrete value in the financial and strategic decision making.
By involving more employees and establishing a culture where the organisation continuously talks about and follow-up on the financial forecasts and targets, you’ll increase both accountability and engagement. But how do you optimise your work and your process so that the organisation feels involved and can contribute with insights?
There are several key factors for how to successfully involve your organisation in the financial planning, and thus, increase accountability for the financial forecasts and targets. Below we’ve listed the five most essential tips for increasing accountability in your organisation’s financial planning.
To simplify the work for everyone involved, you’ll have to abandon the traditional structure and start focusing on building the forecast bottom-up, using KPIs and parameters that are connected to the revenue and cost drivers that are most critical for your business. By working driver-based with concepts that are familiar to the business, it’ll be easier for those involved to provide qualitative input. Key employees will get a better understanding of what drives revenues and costs and thus, a better understanding of the entire picture. This will in turn lead to employees feeling a higher accountability of their work and the entire process since they better understand the impact of their “own” parts.
There’s no doubt that Excel is a great tool, but there are few people within the financial department who perceive an Excel process to be clear and easy to manage. So, if you want the organisation to be involved in the process, it’s basically a requirement to work driver-based and to systemise the process in order to simplify your work and make input easier. A modern system doesn’t just offer an interface that makes it easier for the organisation to give input, but also features that simplifies and improves your work and increases employees understanding of the entire process.
It’s also important to delegate the responsibility and allow different levels of the organisation to give input. If you’ve systemised your process and already work driver-based, you’ve created a good foundation to be able to build engagement and accountability – but you still need soft values such as trust, discussions and follow-up conversations. You have to allow the organisation to take part in the follow-up of forecasts and targets, let the key employees with the most insight comment on differences and ensure that the financial planning process is a part of their day-to-day work. Trust, continuous discussions and follow-up conversations will lead to higher engagement and accountability.
Working more dynamically and frequently with agile and updated forecasts has become increasingly important given macro-economic factors and our rapidly changing world. Not only according to us, but according to 82% of the respondents in The State of Corporate Financial Planning. Working more frequently with forecasting and delegated financial management gives your budget and forecast the engagement it deserves, and also leads to higher quality of work.
To be able to work more frequently with financial planning, it’s important to set goals at a reasonable level and to work driver-based. If you only do the first and not the latter, the process will only lead to higher demands and an increased workload.
In order to truly involve your organisation in the financial planning process, you need to automate as many manual parts as possible. Both those who administrate and own the process and those who contribute with input need to reduce manual labour in order to work more efficiently. By eliminating manual tasks, you’ll also reduce the time spent on boring parts of the processes and create the right conditions for your organisation to focus on contributing with qualitative input and insights.
A dedicated system for budgeting, forecasting and planning is not a necessity for small of less complex organisations, but it will simplify automation. It will also give you access to current and quality-assured outcome data and thus, enable you to automate new forecasts with automated forecast suggestions.
In the end, it’s all about creating the right conditions to be able to use the financial planning to continuously optimise your company and your organisation. It’s about being able to retrieve insights and being able to model and dynamically adjust assumptions and scenarios to deliver the best result possible in a changing world.
If you’d like to know more about how your organisation can optimise your financial planning and create a process that increases engagement and accountability, you’re more than welcome to book a free consultation with one of my colleagues. Our passion is to simplify and streamline the financial planning för companies and organisations, so that they can make better and more informed decisions. We’ve already optimised the financial planning processes for more than 200 organisations – and we’d love to help you too.
* According to The State of Corporate Financial Planning 2023. Are you interested in reading more about the insights and data points and optimising your financial planning?
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