Key competencies for finance business partnering

As companies worldwide struggle with rapid geopolitical, demographic, technological, and competitive changes, finance business partnering offers an opportunity to create a strategic advantage.

The complex and volatile environment forces midlevel managers to make more operational decisions that can impact performance. In a 2018 global Gartner study, 61% of business decision-makers and finance executives reported an increase in the number of operational decisions in the past three years. More than half (57% of respondents) said operational decisions have financial implications and impact profitability.

The Gartner study suggests that poor operational decision-making could compromise upwards of 3% of operating profit before depreciation, and that is not a small number.

It is then no surprise that business leaders need and seek active partnership and collaboration from finance professionals who can understand the goals and overarching strategies of the business, analyse financial and nonfinancial information, and present recommendations to support their decision-making.

While business leaders are happy for the finance team to continue playing the roles of operator (FP&A, core finance, etc.) and steward (compliance, controls, etc.), today's leaders want finance team members to increasingly focus on being strategists (collaborate with business folks to support strategy formulation and decision-making) and catalysts (challenge the status quo and champion finance as well as enterprise-level transformation).

In a loose way, the latter two roles form the essence of finance playing the business partner role.

Finance business partnering is what finance teams do when they create value by providing insights (often data-led), thus influencing their business counterparts to make better decisions.

The leadership hats I wore at Walt Disney Southeast Asia (and in companies I worked for before Disney) — including business operations, sales and distribution, general management, strategy and business development, and, of course, my core area, finance — convinced me of the difference such partnering can make to the business and, indeed, to one's own career.

Now, as a leadership coach and corporate trainer, I like to champion this partnering through workshops, where I am often asked what skillsets equip a finance professional to be a good finance business partner. My response is that it requires a set of new and enhanced skills and a change in our mindset.

But ahead of all that, it is critical to get the basics right: Do the steward and operator roles really well; deliver timely, error-free financial and operating results with unquestionable data quality. Without high-quality systems and data, you will get bogged down in reconciliations and lose insight opportunities, draining your time and credibility as an effective partner.

Next, work on the key competencies required for a finance business partner. From my own experience on both sides of the partnership and my extensive work with business leaders, I have developed a road map that I frequently use in my workshops (see the chart, "Key Competencies for a Finance Business Partner").

Key competencies for a finance business partner

These eight skillsets and six mindsets, based on my experience and conversations I have had with other CFOs, are at the very heart of successful business partnering and crucial for aspiring finance business partners.

To illustrate, a finance business partner who grasps the larger goals of the business and appreciates the changing market landscape will be able to work with the CEO and business unit heads to determine the key drivers for success in each line of business. From that, the finance business partner will arrive at a common understanding of the key performance indicators to be tracked and how they are to be computed.

If we were to think about which of the 14 competencies are flexed in this instance, those that come to mind include intellectual curiosity, commercial acumen, strategic thinking, business insight through analytics, stretching beyond the comfort zone, bias for action, and probably a few others. Depending on the industry and the specific role a finance team member plays, some of these competencies may be more important than others.

How finance business partnering worked at Disney

Here's an anonymised example of finance business partnering with sales that occurred regularly during my time at Disney:

The business case

The brand licensing business (where franchise characters are licensed to third-party merchandise brands) was facing pressure from a key customer for substantially lower royalty rates and more favourable terms for a contract renewal because of growth in volume of business over the years.

The finance business partner team partnered with the sales team to examine the merits of the customer's ask and put together a well-substantiated and compelling counterproposal by:

• Doing a market analysis (using secondary data) to substantiate this customer's market share claimed in different segments and how that had been trending, to verify the growing importance and further potential of this customer.
• Working internally with our content team across multiple lines of business to aggregate information on ongoing and planned investments to increase the appeal of the particular franchise characters (those that this customer sought to license and others we could recommend that they add on) among the target markets. This included (1) future content pipeline and marketing plans for movies/TV shows involving these characters; (2) our consumer insights team adding trend data on how consumer recall scores for these characters have gone up during the existing contract tenure with this customer; and (3) sales putting these in a presentation to show the customer how much they stand to gain by partnering with the highly saleable characters, and thereby aiding the sales team in fending off customers' aggressive ask for lower royalty rates.
• Collecting market intelligence on estimated royalty pricing by competitors (this required some sleuthing, working hand-in-hand with the sales team) and on royalty rates charged by our counterparts in other geographies for licensing the characters to similar product groups, for benchmarking purposes.
• Helping the sales team come up with a well-substantiated counteroffer that was compelling to the customer yet equitable for the company. An example would be to use multiple scenarios of step-down royalty percentages and link them to incremental sales as a win-win proposition and to compute the impact on revenue forecasts to help sales decide the baseline terms and our aspirational terms, ie, our initial offer. Or you could use your cost understanding to identify schemes and marketing support programmes that offer high value to the customer at low marginal cost to us.
• Better still (if the finance business partner has well-honed negotiation skills), supporting the sales team by participating in the actual negotiations with the customer.

Skills to learn

If you wish to equip yourself with these competencies and become an effective finance business partner, here's what you can do, starting today:

• Work to improve your commercial acumen. Understand the value chain of your organisation, and update yourself on industry developments, the competition, the economy, etc. Step out from behind your computer to walk the shop or retail floor, spend time getting to know members of the operating and sales teams, take on projects that give you cross-functional exposure, and follow trade publications and podcasts.
• Network with fellow professionals outside your organisation to share war stories and learn from each other. Join offline and online forums to learn how the latest technological developments can be leveraged to improve finance department productivity and help your business counterparts.
• Seek opportunities to learn and practise your written communication and presentation skills.

And my bonus tip for you is to reflect on what you are going to start doing to add more value and what you are going to stop doing to free up time and mind-space.

Raju Venkataraman, FCMA, CGMA, was CFO and head of strategy and business development for Disney in Southeast Asia before he became a leadership coach and corporate trainer who offers his services globally. He lives in Singapore. To comment on this article or to suggest an idea for another article, contact Sabine Vollmer, an FM magazine senior editor, at Sabine.Vollmer@aicpa-cima.com.