How to get future-ready: Five recommendations for finance teams
Whether from watching NASA launches (“Booster—go!” “Guidance—go!”) or reviewing our own weekend to-do lists (“Groceries—go!” “Yardwork—go!”), we’re all familiar with the process of running down a checklist to make sure that nothing important gets overlooked. And why not? Checklists are one of the best tools for ensuring that what needs to get done actually does get done.
Author and analyst David Parmenter is very fond of checklists, and he makes no secret of his enthusiasm. In his white paper How finance teams can help their organizations get future-ready, Parmenter defines a “future-ready” organization as one that is “fast and light on its feet and able to react quickly to events as they unfold,” calling it “an advanced adopter of leading-edge technologies” that “abandons the broken, ill-conceived management practices of the past.”
Parmenter outlines a list of specific, practical ways—including both things to do and things not to do—that finance teams can boost their efficiency. After highlighting outmoded practices that put finance organizations into catch-22 situations in which speed and agility become impossible, he describes innovative performance measures that can supplement or replace traditional key performance indicators.
For a taste of what he recommends, let’s look at some of his advice to accounting and finance departments, given with an eye to helping them become future-ready.
Stop doing end-of-month spring cleaning
Spring cleaning is a mundane but necessary household chore—for most. But for Parmenter, month-end reporting is not the time for “spring cleaning” in the accounting department—“no matter how tempting it may be.” Instead, he urges finance teams to adopt the practice of capturing “all material adjustments in a single ‘overs and unders’ spreadsheet” for processing in a quiet time during the following month.
Adopt scrum methodology
Named for a rugby formation, scrum methodology helps finance teams cope with the pressure of month-end and year-end deadlines. Each day during high-stress periods such as these, team members gather for a “stand-up meeting ... first thing in the morning.” The meetings last no longer than 15 minutes, and during the meeting, each participant gives a brief status report, identifying any barriers to progress. In Parmenter’s words, the daily scrum “replaces loads of emails” and heightens accountability—because “there is no place for a team member to cruise by unnoticed during this busy period.”
The Julian calendar, which became the basis for our modern Gregorian calendar, was introduced to address a peculiarity of Earth’s orbit: that our planet takes slightly longer than 365 days to travel around the sun. And although the Gregorian calendar accounts for those extra hours, it hampers business models by dividing the year into unequal periods. Accordingly, Parmenter suggests using a quarterly forecasting model based around two four-week months and one five-week month in each of what he calls a “4-4-5” quarter.
Abandon processes that do not work
One of Parmenter’s key recommendations he borrows from the legendary Peter Drucker, the father of modern management. Drucker believed that abandoning unnecessary processes was just as important as adopting new, innovative processes. When unnecessary process linger on, employees waste time on unproductive tasks simply because “that’s the way things have always been done.”
Use emotional drivers to boost sales
Parmenter urges his readers to sell ideas to their organization, observing that “many initiatives fail because we attempt to change the culture by selling logic, writing reports, and issuing commands via e-mail. It does not work.” Instead, he recommends enlisting the aid of a co-worker who has public relations savvy to road test your ideas before you present them to management.
Take a look at all David Parmenter’s checklists to find out how you can enhance the speed and agility of your finance team, then learn how innovations in advanced reporting, budgeting and planning technology can help make your organization future-ready.