Financial planning, often perceived as a tedious and bureaucratic process, can be transformed into a powerful tool for strategic alignment, driving the success and cohesion of the entire organization.
For leaders across various departments who face challenges in engaging their teams with the company’s financial goals, there's a significant opportunity to redefine how we view and utilize financial planning.
Here are six steps (and tips) to transform financial planning into a platform for strategic alignment:
1. The kick-off meeting: Setting the foundation
The first and most critical step in the financial planning process is a well-structured kick-off meeting.
This meeting should lay out the goals for the planning cycle and clearly explain how these goals connect to the company's broader strategic objectives.
During this session, the role and responsibilities of each functional leader must be defined, ensuring they understand their part in the process.
Most importantly, the meeting should emphasize that planning is a collective exercise. It’s not just about the finance department dictating numbers, but rather a collaborative effort where every leader contributes their insights and expertise to align departmental strategies with overall business objectives.
This initial meeting creates a shared understanding and sense of ownership, making it easier to foster commitment and engagement throughout the entire process.
Finance Alliance
2. Financial education for non-financial managers
The next crucial step is providing financial education to leaders outside the finance function. Equipping managers with financial knowledge not only enhances their understanding of the numbers, but also fosters a partnership mindset.
When managers grasp the financial impact of their decisions, they are more likely to align their strategies with the broader objectives of the organization. This understanding creates an environment where financial goals are no longer seen as arbitrary figures but as shared targets to be achieved together.
3. Engagement and alignment with financial goals
Engaging business units with the company's financial objectives is key. This alignment starts with clear and consistent communication.
Managers should be encouraged to take part in the financial planning process from the outset, offering valuable insights and feeling invested in setting targets.
Implementing methodologies like Beyond Budgeting can revolutionize this process, making it more agile and adaptable.
Beyond Budgeting promotes a continuous, flexible approach, moving away from rigid fixed budgets and encouraging a culture of innovation and accountability.
4. Building strong relationships
Building strong relationships between the financial planning team and other departments is essential. This relationship should be grounded in mutual trust and respect, where the finance team is viewed not merely as cost controllers but as strategic partners.
Regular meetings, cross-departmental workshops, and open communication all help to strengthen these ties, ensuring that everyone works towards a shared goal.
Sabrinthia Donnelly
5. Performance tracking and continuous feedback
For the financial planning cycle to truly serve as a platform for strategic alignment, it must not end once the initial plan is set.
A robust system of performance tracking and continuous feedback is essential. Regularly monitoring financial and non-financial KPIs ensures that departments remain aligned with the company’s strategic objectives throughout the year.
To make this effective:
- Establish Key Performance Indicators (KPIs) that are closely linked to both financial targets and strategic goals, ensuring that progress is measurable.
- Schedule regular review meetings where progress is assessed, and any necessary adjustments to the plan can be made. These meetings should include open discussions on challenges and opportunities, with a focus on keeping departments aligned and agile in response to evolving market conditions.
- Foster a culture of continuous feedback, encouraging leaders and teams to share insights, learn from both successes and shortfalls, and collectively recalibrate their strategies as needed.
This ongoing process of monitoring and adjusting the plan ensures that financial planning is not just a one-time event but a dynamic tool that supports strategic agility and long-term success.
6. Benefits for all stakeholders
When financial planning is treated as a platform for strategic alignment, the benefits extend to all stakeholders.
The company is able to meet its financial goals more effectively, while teams in other areas gain a greater sense of ownership and involvement in the outcomes.
Investors and shareholders see a cohesive, well-managed organisation, which can boost confidence and investment. Customers, in turn, benefit from an organisation that operates more efficiently, delivering higher quality products and services.
To conclude...
In summary, transforming financial planning into a platform for strategic alignment requires a shift in mindset and the adoption of innovative practices.
Financial education, continuous engagement, the building of strong relationships, and performance tracking are the pillars of this transformation.
As financial planning professionals, we have the opportunity to lead this change, fostering a culture of collaboration and partnership that benefits the entire organisation.
Let’s reimagine financial planning together and build a future where all stakeholders emerge as winners!
Join Daniele at the FP&A Summit in London
Want to learn more about how to transform your financial planning approach and harness the power of human skills in the age of AI?
Don’t miss Daniele Martins’ session, "Beyond Automation: Elevating Human Skills in the Age of AI", at the FP&A Summit London on November 6, 2024!
Discover how to blend cutting-edge AI tools with critical thinking, creativity, and strategic insight to lead in today’s evolving financial landscape.
Gain insights from industry leaders and walk away with actionable strategies to not just adapt, but thrive.
