Decisive Leadership: Effective Decision-Making for Management Accountants: Management Accountants Are Now Closer to the Business Than Ever before. So How Can They Improve Their Ability to Make Effective Decisions - and Fast?
Yates, Kevin, Financial Management (UK)
The overall cost of the finance function to the organisation has now been reduced to circa 0.5 per cent of revenue, a figure that is unlikely to drop lower. Instead, the focus has shifted towards extracting more value from finance professionals by having them undertake value-added roles through business partnering, and to do this successfully they will require leadership skills.
Arguably, the most important skill a leader possesses is effective decision-making. How can management accountants improve their decision-making during their day-to-day business life?
The four elements of decision-making
1 A clear understanding of the goal - what are we striving to achieve in the future?
2 A sound grasp of what has happened so far - information about the past, including all varieties of management information.
3 Ideas on how the goal can be achieved, bearing in mind the information we have from the past.
4 A decision taken in the present, with a strong commitment to follow it through.
The least influential finance professional might predominantly provide information about the past (2). Furnishing other areas of the business with data may be their only involvement in the decision-making process.
A more influential finance professional has an appreciation of what is to be achieved in the future (1). They use this to select and present data from the past in such a way that it becomes useful information for the decision-makers.
The most influential finance professional has a stronger appreciation of the business's overall goals for the future (1), which allows them to provide not only useful information from the past (2), but also ideas and options on the most effective decision to take (3,4). They therefore play a full part in the decision-making process and are a partner to other areas of the business.
As shown in the progression above, the higher the quality of a finance professional's input into key discussions, the more influential they become and the more likely they are to be called upon to take part in those discussions at an early stage.
Each element of decision-making provides opportunities to improve the quality of a finance professional's input and consequently their level of influence. Let us consider each in turn.
1 Strategy - the guiding principle in decision-making
Decisions are taken in response to a desire to achieve a goal in the future. If we are to provide useful input into a decision-making process, it is imperative that we understand our business or department's strategy. The more detailed our knowledge of the future decision-makers are striving to create, the more we can shape our input to help achieve those ends.
And the earlier a finance professional is involved in any strategy-creating process, the more effectively they will be able to help guide decision-makers away from unproductive lines of thought and towards more fruitful areas for exploration.
Action plan for developing leadership
1 Learn the strategy
* THIS WEEK: Decide who you will have meetings with to learn more about the strategy they are pursuing, diarise those meetings and prepare questions.
* THIS MONTH: Arrange an invitation to a strategy or planning meeting you do not normally attend and prepare questions - particularly on how you can provide further assistance to the group you are meeting. …