COVID-19 and its effects forced short-term changes on many finance functions, including changes to organization design — structures, networks and workflows, and role design. Finance leaders will need to account for these new realities in their long-term plans for the shape of the finance function.
Finance function structures will be permanently flatter
Finance function organizational structures have typically been hierarchical. However, many finance positions were eliminated in 2020, essentially flattening most finance organizations — and requiring staff to operate more autonomously and adapt quickly to change.
Finance managers will now manage more employees, making it critical for them to be clear about the finance activities they do or don’t need to perform, while allowing employees to work more independently.
Read more: Top Priorities for Finance Leaders in 2021
To respond effectively to these shifts, finance leaders can:
- Determine the potential for autonomy by capturing feedback from the hardest hit areas of the finance function on how employees managed more autonomy and where better support is needed.
- Identify the tasks most suited to automation by asking staff, for example, which tasks have the lowest rate of rework or inaccuracies, aren’t critical-path activities or have limited impact.
- Establish a “default go” culture in which employees feel empowered to make routine decisions independently within certain thresholds beyond which escalation is required.
Finance function networks will fade
With a hybrid workforce model, internal networks on which finance staff rely could dissolve. Finance function leaders and managers must create opportunities to maintain employee engagement as finance staff remain remote — whether temporarily or permanently. To do that:
- Use digital collaboration tools (and model their use) to connect employees with peers, including those working remotely, on-site and in hybrid arrangements.
- Develop a “Connector manager” culture. Managers who build connections within and beyond the finance function and refer employees to others who can provide specific answers and development support are the most effective.
- Hold finance function employees accountable to increase the motivation and engagement of staff. Also establish the expectation that finance employees should lean on peers for support and collaboration.
Adapt finance function workflows
Finance function leaders have long focused on standardizing workflows and roles to increase efficiency, but standardized models proved brittle during the volatility of COVID-19. To strike a balance between standardization and flexibility that can organizational resilience:
- Determine probable disruption levels by tracking more qualitatively leading indicators, such as changing customer demands, shifting regulations, workflow vulnerability and the level of side-of-desk work. Also identify “steadier state” business units that are less likely to face disruption.
- Prioritize standardization, focusing first on activities with lower levels of disruption risk. Reduce standardization for workflows with higher disruption risks and instead provide more decision-making tools and principle-based (rather than rule-based) recommendations on how to react in more ambiguous situations.
You still need a ‘best fit’ approach for the finance function
Despite these shifts in organizational design, finance leaders shouldn’t make decisions on how to evolve the finance function in a vacuum. Gartner research shows that it’s still important, for example, to make decisions about the level of centralization in finance activities.
The ongoing standardization and automation of processes and transactions lends itself to centralization, but a range of options across the centralization spectrum serve different objectives. Gartner research found that on average, finance leaders place two-thirds of their staff at the corporate center and 10% to 15% in shared locations, though finance activities are more likely to be centralized as companies grow in size, complexity, and finance functional maturity.