What is the best way to structure a finance department?
When structuring or restructuring your finance team, the key is to remember that there is no single perfect solution and that different sizes of organisations and teams need different approaches.
There are eight core steps to take in your approach to structuring your finance team:
1. Assess the current finance team’s capabilities
Identify the strengths and weaknesses of your finance team. There may be areas that can be outsourced to specialist firms, or maybe some training is required to enhance skills, or there could be services that are highly developed and can become a centre of excellence in their own right.
2. Assess the finance processes
Review all the processes within the current structure and identify those that can be centralised, automated or outsourced.
Some repeatable processes or processes may need improvement or streamlining before they can become centralised or automated. Identify these processes and include them in your implementation plan.
Processes that are resource intensive, repeatable, low value, and low risk could be ideal candidates for outsourcing.
3. Evaluate different finance function models
Consider whether a centralised or decentralised model will work best within your organisation to deliver the finance services required throughout the business.
For example, repeatable processes that are transactional and used throughout the business could be centralised and automated with technology.
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A decentralised model could be required to support specific business units, where a closer alignment to the business is required to provide strategic decision-making and finance insight and analysis.
4. Define your outsourcing strategy
Consider whether the business should outsource some financial processes, then develop an outsourcing strategy to support this.
Review all the activities currently being performed by the finance team and identify candidates for potential outsourcing.
This will enable the finance team to focus on higher-value activities that support the business and its corporate strategy.
5. Define your finance team's organisational structure
The specific organisational structure of your finance team will depend on the size of the team, the services that the team provides, the overall finance function model, and the alignment to the business.
You may want to consider structuring your finance team to align with the finance processes, such as budgeting, planning, forecasting, decision support, management reporting, finance systems and IT, and compliance and controls.
Clearly define the scope of each function’s activities to avoid confusion, overlapping areas, and duplication of effort.
6. Roles and responsibilities
Define specific job descriptions, roles and responsibilities for each member of your new finance team structure.
Build the roles and responsibilities in collaboration with the team members and use role definitions, incentives and performance measures to drive the required behaviour of the individuals, rather than a strict reporting structure.
This empowers the team members to own their roles rather than have a new set of roles and responsibilities imposed on them.
Visit ourstrategic CFO hubfor more tips and resources to help you lead a finance team.
7. Create your implementation plan
Define the implementation plan to restructure the finance team, considering all the steps above. Appoint a project manager to drive through the implementation of the structuring of your team against the plan.
Depending on the size of the restructure, this may also require involvement from HR, specific business units, IT, and business change management.
8. Plan Do Check Act
Whatever approach you take, consider usingThe Deming Cycle or Plan-Do-Check-Act– a four-step iterative model to improve organisational processes, developed by Dr William Edwards Deming in the 1950s and is still used for Continuous Process Improvement today:
- Plan– Investigate the current situation, develop a plan and framework to implement, and specify the desired outcome and result.
- Do– Implement the plan, starting small, so as not to disrupt the organisation if the solution does not work as expected and can be rolled back.
- Check– Monitor the impact of the changes and check that the desired outcomes are being met.
- Act– Make any changes as required until the desired results are achieved.
Repeat this cycle as often as necessary to ensure you achieve the desired outcomes and results.
Once you have your ideal finance team organisational structure in place, you can focus on creating a high-performing team. Our blog onHow to Build a Highly Effective Finance Teamdiscusses the challenges facing the finance team and the key people, processes and technology characteristics required to build a highly effective finance team.
Visit ourStrategic CFO hubfor more resources to help you succeed as a strategic CFO.
