FINANCE DIRECTION INITIATIVE
BUSINESS WITH CONFIDENCE
FINANCE DIRECTION INITIATIVE
Finance’s role in the organisation considers the challenges of designing successful organisations. The document consists of two articles previously published in
Finance and Management, the ICAEW’s Finance and Management Faculty
Magazine. It forms part of our exploration of the role of the ﬁnance function, the ﬁrst theme for the faculty’s thought leadership programme. The other two themes are managing the future and non-ﬁnancial measures.
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Reprinted February 2011
© 2009 ICAEW
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FINANCE’S ROLE IN THE ORGANISATION
How does the ﬁnance function best ﬁt within the design of an organisation?
Here Rick Payne looks at current practice and highlights the way thinking in this area is developing.
The role of ﬁnance functions, their contribution to organisational performance and how such contribution can be enhanced need close scrutiny. This has always been the case but is made more urgent now because ﬁnance functions are implicated in both the successes and failures highlighted by the current ﬁnancial crises. Their role will be examined along with wider questioning of the effectiveness of the ‘Anglo-Saxon’ form of capitalism.
You, our readers, are well placed to contribute to this scrutiny and inform the faculty’s thought leadership programme on the role of the ﬁnance function. This is the ﬁrst of two articles which highlight some of our thinking to date and the challenges and questions this raises. We would welcome your input on any of these points – and in raising those we may have missed (please see contact details on page 7).
In this month’s article we highlight some questions on the role of the ﬁnance function and emphasise the importance of organisational design. The second article will consider the need to consciously and proactively build functional structures and the challenges involved – and here, your insights and examples would be particularly valued.
SHOULD WE BE PROMOTING INCREASED INFLUENCE FOR THE FINANCE FUNCTION?
The ‘Anglo-Saxon’ form of capitalism which promotes free markets and light-touch regulation has been associated with the increasingly widespread acceptance of the need for an inﬂuential chief ﬁnancial ofﬁcer (CFO) supported by a strong ﬁnance function focused on business partnering. This is because of:
• the growing perception that measurement and ﬁnancial information are imperative in running an organisation and monitoring its success in highly competitive environments – witness the focus on shareholder value and on monitoring cash and costs;
• the globalisation of capital ﬂows with investors, lenders and regulators expecting to deal with a professional CFO and ﬁnance team,