Improving productivity is about working smarter to optimise inputs and outputs. When achieved, it gives organisations a competitive edge and ultimately forms the basis of economic growth, which drives up living standards.
Faced with uncertainty and a dynamic economic environment, organisations engage in productivity-enhancing projects and management accountants are key to driving these strategic initiatives by devising and monitoring productivity-related KPIs.
AICPA & CIMA recently published a report that looked at how finance leaders can enhance productivity throughout the organisations they serve. This calls for both strategic thinking and operational optimisations on a granular level.
Here are three ways finance leaders can enhance productivity in their businesses:
Consider how productivity is defined and measured
Productivity has been equated with modernisation, ensuring the effective growth of the business, value for money, and agile transformations. In modern service-driven economies, many resources and outcomes are intangible. For example, the contribution a customer service agent makes to a business can be more subtle than the number of queries they answer. It is also about the problems they solve and the lessons the organisation can learn from them. Finance leaders need to develop a deeper understanding of productivity that captures this value.
Focusing only on inputs and outputs that can be measured would be a mistake. In our research, senior finance leaders agreed that creating a culture of freedom, empowerment, and collaboration encourages innovations and drives continuous improvement and learning. Such initiatives are meaningful because they improve productivity, among other things.
Optimise the finance team’s skills
Achieving both productivity and agility requires the right skills and mindset. In agile organisations, the role of the finance team has evolved. As well as its traditional reporting tasks, it now needs to capitalise on its holistic view of the business and work creatively. The ability to connect facts and data from different parts of the organisation and integrate them is where finance can create value.
What is more, because of their integrity and objectivity, finance leaders can see things differently from other colleagues and voice that view, thus adding a critical angle to plans and discussions. In addition, while staying open to a variety of options, finance professionals are good at making sure ideas are realistic, which gives structure to and solidifies idea generation initiatives.
Earlier CIMA research indicated that the biggest barrier faced by finance leaders looking to enhance productivity was related to human capital. That means finance leaders need to be investing the time and resources in upskilling their teams, so they can exploit potential productivity enhancements.
Our recent report highlights some of the skills and attitudes that can enable finance professionals to support productivity efforts. For example, curiosity is about being inquisitive, questioning how reporting and analysis could work differently, enquiring about numbers and situations to prompt new ideas and solutions for the business’s products or processes. Linked to that is creativity, which for finance means seeking original ways to understand or measure performance and communicate and visualise the insights gained.
Work effectively with business partners
Productivity optimisations can be tricky — making one business area more productive can mean less productivity in another. Therefore, optimising productivity needs to involve the whole organisation, and accounting and finance professionals are ideally placed to drive it. Finance teams see the big picture of how the business fits together and functions, and the context it is operating in. That puts them in an ideal position to break down siloed thinking, find linkages, and connect people and data together in new ways.
Finance teams drive efficiency and growth by interpreting and sense-checking financial and nonfinancial information. Some of the routine and strategic activities they engage with are indicated in the following chart:
Addressing suboptimisation challenges
The key to using finance’s “big picture” position to effect agile transformations is prioritisation. A danger of constantly looking for improvements wherever they can be found is that you can lose strategic focus. The CFO needs to set up a prioritisation framework and cascade the framework down to business partners at all levels, so that everyone is working towards the main goals.
Once the framework is in place, the finance leader can facilitate solutions to issues created by conflicting needs or resources. This is another area where the finance team’s holistic view comes into play because the team can make decisions based on its knowledge of the whole organisation and its strategy.
Agile transformation allows finance teams to drive productivity enhancements by thinking at the level of processes and systems. Our research indicated that several large organisations are already starting to implement these ideas. It is a fair assumption that many others will soon follow suit or risk being left behind.
— Irena Teneva is associate technical director–Research & Development at AICPA & CIMA, together as the Association of International Certified Professional Accountants. She is author of the AICPA & CIMA report The Role of Finance Professionals in Driving Productivity. To comment on this article or to suggest an idea for another article, contact Oliver Rowe at Oliver.Rowe@aicpa-cima.com.
Resources
Reports
The Role of Finance Professionals in Driving Productivity, AICPA & CIMA, March 2023
Tackling the UK Productivity Puzzle, AICPA & CIMA, December 2021