Finance Business Partners- businesses’ unsung heroes?

This is the first of a series of articles I’ll be producing to get to grips with the huge variety of finance roles we see in the 2020s. Where better to start than with the rock star of corporate finance - the Finance Business Partner?

To get to the heart of who these people are, what they do and what makes them most effective, I’ve spent the past couple of weeks speaking with CFOs, Finance Directors and the pros themselves Finance Business Partners – so a big ‘Thank you’ to all of you out there who have given me your time and valuable experience.

Who are they and where did the role come from?

The concept of Finance Business Partnering has been around for some time now, but it really took hold following the financial crash of 2008. With cash flow a sudden issue and future revenue looking limited, many finance departments took up the challenge and re-evaluated what they could do to deliver value within their businesses.

Out of this period of soul searching came the Finance Business Partner. Rather than being hidden away in a back office, these go-getter types would step out into the wider world, working alongside leaders within the business – Commercial Directors, IT Directors, Heads of HR and many more, to achieve a number of goals:

• evaluate, explain and drive performance within the business
• give detailed analysis of industry, competitor and economic trends
• support and influence key operational strategic decisions.

While the majority of the Finance Team crunched historical numbers, the Finance Business Partners looked forward… How could contracts be worded to ensure profitability? What is the best exchange rate strategy for multinationals? Could the Procurement Team get greater long-term value from different suppliers? Finance Business Partners were able to quickly dig into the detail and come up with answers backed by clear evidence.

How can a business create an effective Finance Business Partner team?

You may well have seen a poll I put out recently asking ‘Which business elements help you to be an effective Finance Business Partner?’ The three options were elements that had come up time and time again in my conversations with CFOs, FDs and FBPs. Let’s look at them in detail below.

Business culture

For those I’ve spoken with over the past couple of weeks, business culture has been the biggest factor that helps FBPs to be as effective as possible. What did they mean by this? It appears that there have been many occasions where businesses have hired FBPs on the back of recommendations from Business Consultants before establishing the appropriate strategy or structure to get the best value from them. This has led to a cultural mistrust in their recommendations, with business leaders seeing them as ‘no-bodies’ who just get in the way of progress. Furthermore, the project becomes a huge waste of capital because, let’s face it, FBPs aren’t the cheapest resource. So how can businesses best create a culture where business leaders and FBPs work collegiately and see great returns on their investment?

Creating this culture isn’t always easy, but a structure can be formed in a variety of ways. KPMG recommend that in the early days of creating a Finance Business Partner team, they should report directly into the Finance Team itself rather than their internal customers. Then as their roles mature, reporting lines can evolve as appropriate. It’s vital to establish trust between FBPs and their business leader customers from the start. This is best done through real-life examples of influenced strategic and operational decisions. If you can’t gather these examples from your own organisation, then consultants from the big accountancy firms will be able to provide them (and do so on some of their marketing materials). As time goes on, annual customer surveys are essential - and they’ll provide the content for valuable internal case studies.

Further to this, the business’ leadership should have a laser focus on what they want to achieve in the early days of creating a Finance Business Partner team. Focus on the low-hanging fruit, where it’s clear that they create the most value. Businesses have made the mistake in the past of trying to tackle too many issues at once. By keeping your early efforts extremely focused, you can both test and improve processes whilst showcasing their real worth.

Team culture too can promote best practice. By having well-structured team meetings, individual FBPs can share the problems that they’ve faced and the solutions that they’ve created for their customers. By rotating your FBPs around departments, you can also encourage the sharing of knowledge whilst continually increasing their skillsets.

Systems

The main tools at an FBP’s disposal, systems need to be efficient, accurate and reliable for a business to create value. In my conversations with finance leaders, many examples were given showing how outdated and unreliable systems had stymied their work. Firstly, this goes back to our point on trust between the FBPs and their customers. If a system is only able to give limited and possibly inaccurate data, how can business leaders trust the recommendations on which they are based? When it comes to business decisions as important as those influenced by FBPs, the old adage of ‘a bad workman blames his tools’ just doesn’t stick.

Hire the right people and give them autonomy

On my LinkedIn poll, Which business elements best help to you be an effective business partner?, Autonomy was the winner, closely followed by Business Culture. I was surprised, as it was business culture that came up time and again in my conversations with FBPs and finance leaders. However, my surprise was misplaced. Research by the University of Birmingham has shown that higher levels of autonomy at work improves overall wellbeing and job satisfaction. Surely, logic dictates that this would lead to greater productivity for the business?

Autonomy within roles, then, is something that most businesses should strive for, but its benefits can’t be achieved without excellent recruitment. What has become increasingly obvious in my conversations with business leaders is that recruiting the right people for FBP roles is key to building an effective team. FBPs need a very different skill set from many of their finance counterparts. Yes, they need brilliant technical skills. As one interviewee who had spent many years partnering a sales team pointed out, sales people would come to him with a long contract proposal stating, “I need an answer on whether to go ahead with this by tomorrow”. With this limited time frame, he had no opportunity to brush up on any reporting skills (and others) that would provide a full and evidence-based decision for his colleague within 24 hours. But any top performing finance professional will have great technical skills, so what makes FBPs different?

The answer lies in soft skills. An effective FBP needs sound emotional intelligence in order to influence and guide business leaders towards good, evidence-based decisions. Because business leaders tend themselves to be strong minded individuals, the FBP needs to be able to listen, negotiate and challenge. As long as trust has been built through the business’s culture, FBPs can work as true partners to create strategies and make decisions in the best commercial interest of the business as a whole. Ultimately, this will lead to improved profit margins. Happy and effective Finance Business partners will result in happy business leaders which in turn will result in happy shareholders.

Finance Business Partners in a post-pandemic world

I’d almost done it… I’d so nearly written an article in September 2020 without mentioning the P- word. Having interviewed and researched to get the heart of what Finance Business Partners do and how they can be most effective, it’s become obvious to me that they have an extremely important role in our economy’s future. There’s a reason that the number of Finance Business Partners shot up post-2008, when companies found themselves exposed to financial and commercial risks. They were able to become business navigators, using increasingly varied and accurate data to turn around inefficient and often poor commercial decisions. With the economy already in recession and high levels of public debt not going away any time soon, Finance Business Partners and their particular set of skills will be in more need than ever.

If you would like to progress your career as a Finance Business Partner or need help building your own team, don’t hesitate to get in touch with Dan Hayes of Identify Finance Recruitment on [email protected] or 0121 429 8962.