Session 4 - Transforming the Finance Professional

Transforming the Finance Professional Lean Finance Conference:

Session 4 Master Class Series

© Copyright 2011 Stephen G. Lynch, All Rights Reserved

About Today’s Facilitator

•  Stephen G. Lynch

•  Principal at CSC Consulting in Finance Transformation and Shared Services

•  Focus on Finance Delivery Strategy, Process Optimization and Organizational Design

•  Served as a Public Accounting Auditor and as a Corporate Controller

•  Publish the Global Finance 360 blog (www.globalfinance360.com)

•  Live in Colorado, United States


Overview of the Master Class Series

v  The Value-Adding Finance Organization

v  Lean Assessment of the Finance Organization

v  Re-engineering the Finance Organization

v  Transforming the Finance Professional


Goals for Workshop 4: Transforming the Finance Professional

§  Benefits and Challenges of Human Capital Management

§  Understanding Organization Development

§  Types of Organizational Interventions

§  Transforming the Individual Finance Practitioner


Human Capital

Management


A Traditional View of Human Capital Management


•  Companies that receive high scores in HCM are twice as likely to be in the top third of their industry in terms of financial performance

•  Companies in the top quartile of HCM performance lose 8% of top performers as compared to 18% in their peer group

•  Companies in the top quartile of HCM performance are twice as likely to rank high in quality as their peers

Benefits of Effective Human Capital Management

Source: American Society of Quality as cited in Reinventing Talent Management, Schiemann, 2009, pgs. 10 – 11.


•  Companies have difficultly aligning people and competencies with strategic objectives

•  Companies have difficulty finding measures of value for their HCM investments

•  Budget pressures force companies to reduce or eliminate HCM investments

•  Companies have difficulty retaining top talent, even in slow or down markets

Challenges in Human Capital Management

Source: American Society of Quality as cited in Reinventing Talent Management, Schiemann, 2009, pgs. 10 – 11.


Less than 16% of CFOs in one study were satisfied with information related to Human Capital Management

HCM Information Management

Source: Society for Human Resource Management Foundation, Employee Engagement and Commitment, Effective Practice Guidelines, 2006. Table: Edward E. Lawler III, Talent: Making People Your Competitive Advantage, Jossey-Bass, 2008.

Information Effectiveness Effective or Very Effective Connecting human capital practices to organizational performance

9.1%

Assessing and improving the human capital strategy of the company

27.6%

Contributing to decisions about business strategy and human capital management

27.2%

Identifying where talent has the greatest potential for strategic impact

24.2%


•  Evolving role of Finance

•  Globalization

•  Dynamic labor markets

•  Changing business models

•  Workforce diversity

•  Leadership gaps

Trends Impacting HCM in Finance


As Finance Evolves, HCM Demands Change

Traditional §  Manager: Facilitates the efficient operation of

finance

§  Controller: Manages risk consistent with corporate strategy

Expanded §  Strategist: Partners with its business to

develop and enable strategy

§  Catalyst: Drives change in the organization to enable efficient growth


•  Workforce diversity is a major trend in the Finance organization

•  Managers can no longer manage by “walking about”. More emphasis is needed on virtual relationships and performance metrics.

•  Globalization is a core component of Finance strategy for many organizations. Consequently, managing diverse workforces is now a required competency for Finance managers.

Effec%veHCMIncorporatesaGlobalPerspec%ve


Organization

Development


Defining Organization Development

"Organization development is a system-wide application of behavioral science knowledge to the planned development and reinforcement of organizational strategies, structures, and processes for improving an organization's effectiveness.“

Cummings and Worley, "Organization Development and Change", Sixth Edition, South-Western Publishing, 1997, p.2.


•  It is a systematic method for gathering data about how organizations function as social systems and an analysis of the meaning of those data.

•  The OD practitioners job is to search for causes and consequences of organizational functioning.

•  Process: Ø Diagnosis/Discovery Ø  Intervention/Implementation Ø Evaluation

Source: Sharon Glazer, Ph.D., San Jose State University

Defining Organization Development


Managing the OD Process

Three basic components of OD programs:

Diagnosis / Discovery

Information collection about organizations, departments, and processes with the goal of identifying improvement areas

Intervention / Implementation

All activities and interventions designed to improve the organization’s functioning

Evaluation Collecting and evaluating information on the effectiveness of the intervention


Key Elements of Organization Development

•  Visioning

•  Organizational Transformation

•  Organizational Culture

•  Learning Organization

•  Total Quality Management

•  Business Process Reengineering

•  Quality of Work Life


When is OD Useful?

•  To help diagnose individual or team issues

•  To facilitate new and existing development for groups or individuals

•  To support individuals and groups in learning new skills

•  To support leadership development

•  To structure effective feedback and performance management programs

•  When there is an organization design issue that require assessment and diagnosis

•  To facilitate conflict management


Systems Theory in Organization Development

Organizations are open systems in active exchange with their environment

Environment

History

Resources

Culture

Input Output

Organization

Unit

Individual

Formal Organization

Informal Organization

People

Work


Systems Theory Should be Incorporated into OD and Professional Development

•  Vision

•  Strategy

•  Corporate Governance

•  Organizational Structure

•  Processes

•  People & Competencies

•  Infrastructure (Technology, Applications & Data)

•  Culture


Categories of OD Interventions

•  Individual Interventions

•  Group Interventions

•  Organization Interventions

•  Global Interventions


Group Interventions

•  Visioning sessions

•  Strategic alignment assessment

•  Group diagnostic meetings

•  Responsibility charting

•  Force field analysis

•  Conflict management

•  Meeting facilitation


•  We are polite, we are cautious, we are trying to get organized •  We ask ourselves, “How do I belong to this group?”

•  Issues, irritations, and problems surface, infighting •  We argue even when we agree •  Power issues “who’s in control” and “how is control

exercised”

•  We talk openly about our problems and issues •  We set new “ground rules”, processes and procedures to

resolve them

•  Our ground rules and processes are working •  We work together, we co-operate, we support each other •  We meet our high standards of performance

Forming

Storming

Norming

Performing

Stages of Team Development


Effective Teams are Characterized by:

•  A clear mission and action plan

•  An informal, comfortable atmosphere

•  Open communication

•  Full participation

•  Civil disagreement

•  Clear role expectations

•  Healthy external relationships (to other organizational groups)

•  Acceptance of style diversity

Source: Beitler, Michael, Strategic Organizational Change, Practitioner Press International, 2006, pg. 140


Organization Interventions

•  Mission, Vision & Values Development

•  Organization Design

•  Organizational Learning

•  Cultural Change

•  Accountability and Reward Systems

•  Diversity Training


Global Interventions

•  Virtual Team Building

•  Cross-cultural Training

•  Rotational Job Assignments


Transforming the

Finance Professional


My main job was developing talent. I was a gardener providing water and other nourishment to our top 750 people. - Jack Welch, former GE CEO


•  A clear, agreed-upon vision and strategy

•  Translation of the vision and strategy into clear organizational and unit measures

•  Cascading and communicating the strategy and goals

•  Meaningful individual goals and roles

•  Rational acceptance of the strategy and goals among implementers

•  Clear, timely feedback on goal attainment and the drivers of those goals

•  Strong internal customer service and collaboration

•  Meaningful rewards that reinforce strategically aligned behaviors

•  Culture alignment

Employee Development Focuses on Alignment & Competencies

Source: Reinventing Talent Management, Schiemann, 2009, pg. 112.


Aligns employee with vision and strategy

Develops required competencies

Aligns employee behaviors with corporate goals Motivates employee alignment with corporate goals

On-Boarding

Training

Performance Management

Compensation & Rewards

TheHumanCapitalManagementProcess

Manages employee departures Separation


Align employee with vision and strategy On-Boarding

The Human Capital Management Process

v First opportunity to create alignment with the vision and strategy

v Sets the tone for the employee’s career at the company

v Communicate key messages around organizational direction, values, and expectations

v Explain organizational chart and key liaisons with other stakeholder groups

v Have work area ready: Workspace, Network Access, Building Access


Develops required competencies Training


v Develop training plan that aligns competencies with individual and organizational goals

v  Ideal mix is a combination of formal instruction and actual experience

v Training should cover both hard and soft skills

v Leading companies use formal rotation programs to develop Finance talent (e.g. GE)


Aligns employee behaviors with corporate goals

Performance Management


v The ability to manage performance effectively often differentiates leading companies from average companies

v An effective performance management system should define the performance that is actually required.

v  It should align individual goals with departmental and corporate goals

v  It should guide employees to identify the skills and knowledge required to perform effectively

v  It should provide an incentive framework to motivate performance

v  It should provide feedback to HR for annual performance ratings


Motivates employee alignment with corporate goals

Compensation & Rewards


v Effectively combine both financial and non-financial rewards (extrinsic and intrinsic)

v Although it may seem obvious, rewards should align with and reinforce desired behaviors

v  Intrinsic rewards include additional responsibilities and visibility, and job rotations

v Extrinsic rewards include promotions, base pay, bonuses, stock grants, etc.

v Extrinsic rewards tend to be a short-term motivator while intrinsic rewards typically motivate over the long-term


Individual Interventions

•  Coaching / Mentoring

•  Training & Development

•  On the Job Training

•  Leadership Training

•  360° Feedback

•  Job Redesign

•  Conflict Management


Coaching / Mentoring

Coaching

•  Often targeted at executives with the goal of modifying a specific behavior

•  Can involve the use of an outside consultant to provide objective feedback

Mentoring

•  A broad-based program that focuses on pairing up employees with an individual higher up the organizational ladder

•  Can be an effective mechanism to acclimate new employees to an organization

•  Senior leadership must publically support the mentoring program if it is to be taken seriously


•  Assist in navigating the organization and building professional networks

•  Communicate clearly and often

•  Be available for information discussions

•  Provide frequent and relevant feedback

•  Identify opportunities for further professional development

•  Work to get employees recognition for accomplishments

Mentoring Behaviors


Training & Development

•  A subset of Organization Development but often the most visible component.

•  Virtual training can be effective if executed properly.

•  Training, whether physical or virtual, should be followed with opportunities to practice newly learned skills

•  Peer-to-peer training is acceptable as a part of a broader training curriculum if standards and materials are in place to ensure consistent training


On The Job Training

•  Any OJT program implemented should have a strong Champion/Sponsor

•  A framework for OJT should be developed and followed to ensure consistent training

•  Trainers chosen should have the knowledge, the communication skills and the willingness to transfer knowledge to another employee

•  Ideally these trainers will have formal training in teaching and coaching

•  Job shadowing, where a new employee follows an experienced employee around, can be an effective means for knowledge transfer


Leadership Training

•  Inadequate leadership is often the cause for ineffective execution of transformation initiatives

•  Key leaders should be identified and cultivated through formal training and key assignments

•  Leadership opportunities should be provided to people early in their careers

•  Assignments should support formal leadership training


360° Feedback

•  Provides feedback to managers that cannot be obtained through the traditional performance review process

•  Surveys can be generic (“off-the-shelf”), designed specifically for your organization, or a combination of the two

•  The 360 survey measures behaviors and competencies

•  Establish specific competencies for expected and superior performance by level and position

•  Typically occurs through an anonymous survey conducted by an outside firm to ensure confidentiality


•  Employees that receive timely, frequent and relevant feedback perform better than those who do not.

•  The feedback process should combine both formal and informal feedback.

•  Should be positive and constructive.

•  Effective feedback is very issue specific.

•  Managers need to be direct without being confrontational.

•  Don’t wait until the end of the performance year. No “Management by Surprise”.

Feedback is Essential to Human Capital Management

Source: E.A. Locke and G.P. Latham, A Theory of Goal Setting and Task Performance, 1990

1


Job Redesign

•  Job redesign as an individual intervention is based on Systems Thinking

•  As companies and department needs evolve, individual positions and their responsibilities may need to be redesigned to create greater alignment with corporate objectives.

•  Goals: alignment, reduced turnover, enhanced productivity

•  Key aspects of the design should include not only the specific activities conducted, but also include a review of the governance, policies and procedures, and the information flows related to the position.


Conflict Management

•  Focus is on minimizing conflict, not eliminating it

•  Identify nature of conflict. The “obvious” reason may not be the real reason.

•  Clarify behavioral expectations for all team members

•  Focus on issues, not personalities

•  It may be necessary to remove disruptive individuals from the team

•  Model the behavior that you expect


Ques%ons


Stephen G. Lynch

Contact Information:

Office: +1.719.481.2599

Toll-free (North America): 1.800.216.2512

On the Web: www.globalfinance360.com

www.stephenglynch.com

Email: [email protected]

Transforming the Finance Professional Lean Finance Conference:

Session 4 Master Class Series

Session 4 - Transforming the Finance Professional

Documents

Transcript of Session 4 - Transforming the Finance Professional