Performance management offers valuable insights to senior leaders, revealing how well their employees are performing. These are especially useful to Financial Directors, who are responsible for ensuring all assets are managed responsibly and effectively. Here are the questions they should be asking.
Every business needs a solid foundation to grow from. Financial Directors (FDs) or Chief Financial Officers (CFOs) are often seen as the person to provide this, giving sound strategic and financial guidance and developing policies to ensure an organisation meets their commitments and managing their funds and assets.
These assets are often thought of being inanimate objects – the workplace, the equipment, the product – but just as important are the people. Without employees, there would be no business for the FD to manage. They need to be aware of how well this asset is performing, how its strengths are being maximised and what plans are in place to strengthen it. The answers to all these questions come from an effective performance management process. Here are the essential questions that every FD should be asking for:
Are employee objectives being met?
A huge part of an FD's role is planning and forecasting company performance. This can only be done accurately if they know that employees are likely to achieve their objectives. Information from a performance management system can identify which parts of the business are progressing well against their objectives and which may be struggling to achieve them. With this knowledge they can both adjust their forecasts and make sure plans are put in place to address any issues.
Are employees aligned with the objectives of the business?
Any FD wants to drive efficiency within their organisation. This means that all resources are being used effectively, especially the workforce. To ensure employees are working on relevant projects, the need to set SMART objectives that align to the overall needs of the business. Without this, there is no way to ensure efforts across the organisation are coordinated and everyone is pulling in the same direction. An FD needs to know that that objectives are being set correctly and regularly tracked to know all their resources are working to their full potential.
Are effective employee development plans in place?
High turnover rates are hugely expensive. It is estimated that to replace an employee it can cost on average of between six- and nine-month’s salary. This cost is made up of recruitment costs, training expenses and lost productivity as the new employee gets up to speed. It is in the FD’s interest to make sure turnover is kept to a minimum and the best talent is nurtured and developed within the business. They need to be reassured that development plans are in place and that each employee has a clear career plan to keep them motivated and engaged.
Is every department setting and reviewing objectives?
In successful organisations, every department needs to play their part. If one area is falling behind, failing to meet their targets, it can have a detrimental impact on the whole business. An FD needs to be confident that every team and every department is working to their full potential. An effective performance management process can identify any gaps, showing up areas where objectives are not being set and reviews are not happening. For an FD, this should start the alarm bells ringing and prompt scrutiny of that area to see what the issues may be. The earlier these are identified, the earlier they can be addressed and any damage limited.
Are employees getting relevant and timely feedback?
To be able to their full potential, employees need to know how well they are doing – what they excel at and what they need to improve. Without any kind of feedback, it is extremely difficult to spot areas of strength and weaknesses in an organisation. Rather than being focused and targeted, the training budget can easily be wasted, spent on the wrong people and directed in the wrong areas. FDs want to know that all employees are getting active performance feedback that ensures they get the help they need to be as productive as possible.
Are people getting recognised for a job well done?
The two, small words “thank you” can make an enormous difference in the workplace. 70% of employees say that both their morale and motivation would improve if their manager just said thank you more often. Employees that want to know they are appreciated. Half of employees say they would leave a company if they weren’t regularly thanked and recognised for their efforts, which as already discussed can be hugely costly. FDs need to know that employees feel recognised and appreciated at work to ensure they are engaged and motivated.
Making the move to CEO
When a company is looking for a new CEO, the first place they often look is at the FD. There are more CEOs in the FTSE100 with an accountancy background than any other discipline. If this move is to be successful, the FD needs to be just as comfortable dealing with people as they are with figures. By taking an interest in performance management and the key indicators it provides, an FD can not only make sure their business is working effectively, but they can also prepare themselves for their next career move.