Leveraging the Finance Department for Growth
Effective strategic execution needs, first and foremost, a performance-based culture in which transparency and accountability are the norm, data is trusted and relied upon, and everyone in the organization is aligned with the mission.
As the keeper of the metrics and measures, finance understands the value of data integrity and is good at “getting stuff done.” This makes the department the de-facto driving force for ensuring that critical initiatives are completed in accordance with the timeline established.
Effective execution of strategy requires:
In addition to creating a performance-based culture, companies need to look beyond the typical financial Key Performance Indicators (KPIs).
Remain focused on its strategy
Determine critical initiatives to focus company time and resources
Communicate initiatives to all levels of the company
Measure initiatives against pre-determined measures
Within each category, there are critical initiatives for which teams and individuals are held accountable. Each initiative has a timeline, a predetermined target value of success, and a direct causal relationship to the company strategy. By creating this link, employees at all levels quickly understand where to focus their time and can understand the impact their daily work has on the overall company.
To further motivate employees, it is important to create an incentive compensation structure that is aligned with the execution of the company’s strategy. Employees should have their own personal Balance Scorecards, focused on achieving individual targets, which then serve as the basis for incentive compensation.
For the personal Balanced Scorecard to be most effective, the employee needs to buy into the target measures and believe that it is within his/her control to achieve them. By linking compensation to hitting targets, the company is communicating to employees at all levels that success is dependent on the achievement of each individual.
Source: Lisa Kaplowitz, Assistant Professor of Professional Practice, Rutgers Business School