Change management: Three perspectives on the CFO's roleWhat part should the finance chief play in the process of organisational change?
Peter Kiddle is the vice president of finance, Asia Pacific, at BT Global Services.
All change management projects are the result of the organisation’s not performing as well as it should, therefore the CFO will always have a hand in any change programme. However, the level of CFO involvement depends on the type of project. For example, if the organisation is going through financial restructuring, bankruptcy proceedings or a merger, then the CFO will play a lead role in how the project is designed, budgeted and implemented. If the project is more about changing IT systems or moving offices, the CFO will not take a lead role, though finance will have a strong input.
With any change project, the key issue is communication; people need to know why you are making these changes, how they will impact them, and what long-term changes they will make. There are always winners and losers in any change project, so it is important to engage with people early; those who want to oppose the changes can really slow the process down if they do not want to go along with it or feel threatened. It is therefore important to identify stakeholder groups that will champion change, as well as identify where the potential roadblocks might be.
Organisations need to be clear about what they want to achieve and how they are going to achieve it. Many change projects fail to deliver their stated benefits because the objectives were never clear at the start. It is also important that the change programme is flexible enough to accommodate changes to its own objectives and scope – project leaders need to be able to adapt to changes to the programme without getting overwhelmed or losing sight of the goals.
Mike Green is a visiting associate fellow in leadership and organisational behaviour at Henley Business School in the UK.
It is certainly true that CFOs should have a role in change management projects. As CFOs have taken a more strategic role and see themselves as “business partners”, then it is natural that they should have a role in change. However, CFOs can be pushed into a corner and be left to just crunch numbers rather than use their other skills.
There is also a danger of CFOs’ seeing the cost of everything but the value of nothing. Some aspects of change management do not have a financial angle. For example, getting stakeholders on board to drive the process forward can be as important as balancing the figures. In public-sector organisations CFOs may need to implement change management programmes that have massive consequences for the people who work there – job cuts, budget cuts, merged departments, shared services, delayed spending – and it takes more than just considering the financial aspects of change.
There are several ways of measuring the success of the change programme. From the outset, the project should have a set of quantifiable metrics in place, such as a Balanced Scorecard [see "The future of the Balanced Scorecard" for more on this tool] or by using reference class forecasting (RCF), a benchmarking tool that seeks to raise comparisons between the current project and those of a similar class and scale. Once these projects are compared, the organisation can then get a better view of the probable budget, time frame and actual deliverable benefits.
Once the change process has been implemented, the CFO should get the opinions and views of different stakeholder groups to see what they think about it and if they feel the benefits have been communicated properly and realised. Moreover, check that the scope of the project has delivered against its expected outcomes.
Tim Ringo is a partner at Maxxim Consulting.
The CFO’s involvement in change management projects is usually limited to determining its budget at the start of its life cycle and cutting costs to make sure that it’s on target when it is close to sign-off. This is a shame, because CFOs have the skills, experience and a wider, strategic view of the business that can help these projects be successful. For example, CFOs use metrics and data analytical tools that can have enormous value in checking the progress of change management projects. They are also the most skilled and experienced people within an organisation in putting controls and contingency plans in place to warn of project failure.
One of the major challenges that finance departments face is that they are often regarded as the opposition when change programmes take place: The organisation has realised that change needs to occur, and that it will bring benefits, but without the sign-off of finance nothing is going to move forward. There can also be issues about the scope of the project – finance can be seen as the people who limit the success of the project by sticking too rigorously to a budget that was set too low, or are too inflexible if the objectives of the project change. There needs to be a deeper understanding by CFOs about the value of change to the organisation, and less focus on the costs. Projects almost always overrun in terms of time and budget, and finance departments should avoid the temptation to pull the budget when the project begins to go “off track”. Cutting the budget may make the situation worse.
Change management programmes always affect staff and customers. As a result, the most successful change management projects often involve a good working relationship between finance and HR. Finance’s skills are about keeping the project moving and keeping track of whether stages in the life cycle have been completed successfully; HR is good at communicating what is happening and the beneficial impacts of the changes, as well as gaining the buy-in of staff to help the process go smoothly.