REINVENTING THE CFO: Transforming Finance Staffers into Better Business Partners

Lorne Hartman, Ph.D., Founding Principal, Psybase Network Inc.

Contact: Psybase Network Inc. | 905.764.2696

From a Speech given by Dr. Hartman at the Reinventing the CFO Conference hosted by Federated Press


This conference, "Reinventing the CFO" focuses on "how new, strategically-driven CFOs are revolutionizing business operations". The process of change and the effective management of change is a key element in this agenda.

This article will provide: 1) an overview of a model of change; and 2) an approach or methodology for transforming finance staffers into better business partners. The model and the methodology are based on a synthesis of contemporary research and practice in the management of change.



Change management is not rocket science. It is, however, behavioral engineering. Organization change is a discipline which can be harnessed in order to efficiently foster desired performance outcomes.

Most organization change efforts, are unsuccessful. The majority of failures are because of errors in not building mechanisms that are critical to successful implementation. Another way of saying this is that change failures are failures of implementation, not direction or strategy.

A planned change strategy needs to address three critical questions for key stakeholders:

1. Why change?

2. What are we changing to?

3. How are we going to get there?

A sub-question to #3 is how will we know if we’re heading in the right direction or not; that is, measure our progress?


Step 1: Establish motivation for change

Ten years ago discussions with CFOs and/or company executives about the finance function tended to focus on how to control costs and audit operations. Today, these discussions need to address the link between finance and the corporation’s strategic goals:

What has changed in the environment?

What are the key success factors in the business and how do financial processes need to run differently in order to ensure the survival, profitability and growth of the company? (or shrink and close it in an orderly manner).

What are the critical, make or break tasks and how will the finance professional’s role need to shift in order to handle these situations in an exemplary manner?

What would that look like behaviorally? What specific decisions would they take and what actions would they perform?

The data from these discussions, really interviews, can then be used for two purposes. First, to create a sense of urgency for change. And secondly, to create a vision of desired behavior at the individual, group and departmental/organizational level. But that’s part of Step 2.

Step 1 is about getting people willing to undertake change. The key to creating a sense of urgency is to make the status quo seem more dangerous than launching into the unknown. In other words, business as usual (i.e., traditional financials) is totally unacceptable.

You need a critical mass of converts that support the urgency and new direction if the implementation is going to be a success. It can be extremely helpful to create a snapshot of key players’ anticipated commitment to the initiative and do some interviewing to understand the potential causes of resistance.

The effects of peer pressure, incentives and the desire to belong to an elite group can then be leveraged.

One of the biggest mistakes in any change effort is underestimating how entrenched people are and what it will take to move them. The CFO as the change champion and senior finance managers as change sponsors can utilize a number of different intervention levers to develop the organization’s readiness for change. All of these require effective communication (the last bullet-point is somewhat redundant in that it is embedded in each of them):

In order to enroll or enlist finance staffers effectively, the CFO and senior finance team should be able to identify the core problem or opportunity in a clear and compelling way in five minutes or less, with specific data that characterize the problem. Accordingly, it is important to monitor organization metrics to identify patterns of change that may reveal a more complete picture of the root problem(s) facing the company.

Metrics to monitor include financial, service, operational and technological. Examples of core problem statements:

A baseline measure of performance can then be used to evaluate whether or not there is an impact within 12 to 24 months of introducing the change. Part of Step 3 in the model of change presented here is to generate unequivocal evidence of success defined by, for example:


Step 2. Create a vision of the desired finance culture

Help finance staffers begin to see what it will be like behaviorally to be better business partners. How will they need to think, feel and act? What will that look like at different levels -- individually, in teams and across the organization?

People need to understand the new performance expectations and how they are different from past practices. In particular, for example, there will often be an increased requirement for cross-functional co-ordination of processes. In my experience, the greatest opportunities for performance improvement often lie in the functional interfaces -- those points at which the baton (for example, the transfer of customer billing information from Sales to Finance) is being passed from one department to another.

What are the dynamics to interfacing effectively across departments or businesses? There may be a disconnect in terms of values and beliefs. Different performance drivers may be in play. Organization systems may be incompatible.

People need an opportunity to think through and talk about how it will work. What are we going to do differently? Can we do that? What are the obstacles that need to be removed?

Some of the obstacles are related to organization systems. For example, the company’s information systems may not be aligned with the new way of doing business. Often, the performance management system has not been reconfigured from the outset to reward people for delivering on the new performance expectations. A comprehensive change process includes a plan to identify and remove these systemic obstacles.

The new "business partner" culture almost always will require new and different competencies. These need to be clearly defined and an assessment process used to identify individuals’ strengths and weaknesses against these new and different competency requirements. Competency-based assessment, feedback and development is a powerful driver of behavior change. The second section in the article will outline a competency-based methodology for transforming finance staffers into better business partners.

It’s particularly helpful to have run a pilot or controlled experiment on the change strategy. An experiment can refute the null hypothesis (i.e., that the changed culture makes no difference). This lends support to the alternative hypothesis that the desired change in the finance culture will result in specific performance improvements that can be measured in reliable and meaningful outcomes for all key stakeholders.

In addition to measuring the benefits and the costs of a change effort in a controlled way, the strategy experiment also provides useful data on critical mechanisms of change, including unanticipated consequences and other lessons learned, that can benefit the full-scale implementation. These experiments, when conducted as independent P&Ls, usually are found to pay for themselves.

Effective communication is a necessary element in this step as well. It is important to communicate consistently in both words and deeds. In fact, actions are most powerful. Behaviors, particularly those of leaders, must be consistent with the new vision.

Whereas frequently the responsibility for communication in step one, creating the case for change, is that of the change champion (likely the CFO with the support and commitment of the senior finance team); in step two, the communication process is more effective when it cascades down from the top, level by level, each stratum receiving the information and seeing new behaviors demonstrated from their direct supervisors. Additional characteristics of effective communications in step 2 include:


Step 3. Show the way

How are we going to get there? In particular, identifying and removing barriers in order to create alignment is a key element in the road map. Critical steps in the action plan include clarity around how to:

The managers and staff in the finance group need to see how the transformation will be implemented. Specifically, the new "human performance system" needs to be addressed. The human performance system includes the following key variables:

A five-step methodology for creating and maintaining competency-based alignment of employee performance in the context of organization change is presented below:

Strategic Systems Model for Competency-Based Performance Improvement in Organizations

The next section of the article provides a brief synopsis of Step 2 - Competency Model Development.



Competencies are defined as characteristics of an individual that contribute to effective and/or superior performance in a job. Characteristics may include knowledge, skill, ability, personality, interests, values, attitudes, etc. but only as these are manifested by observable behavior. Competencies may also include in their definition the circumstances that influence an individual’s job performance (e.g., training, certification, or specific application).

Competency profiles have a number of strategic human resource applications including:

In the context of the current agenda, the question is how to transform finance staffers into business partners?

The first step then is to identify and define the competencies of exemplary business partners from the perspective of the finance function. What are their characteristics in terms of:

Competencies are then defined in terms of specific, observable behaviors that result in exemplary outcomes, particularly in handling critical, "make or break" situations or incidents. The structure of a competency profile is illustrated below.


Competency Profile Structure

The principal methodology for development of a competency profile is through job analysis. Each job analysis method has advantages for a particular application. For example, task/responsibility analysis is relevant for design of compensation plans whereas MBO is useful for performance appraisal.

A behavioral approach to job analysis is most appropriate for developing competency profiles because competencies must be manifested by observable behavior. Other job analysis methods may be used in conjunction with a behavioral approach, but behavioral data are essential.

The most effective approach to job analysis is the critical incident technique (CIT). The primary focus of the CIT is the identification of effective job behavior; that is, behavior that defines effective or superior performance. The emphasis is not on results, but what has to be done to achieve results.

The CIT typically is embedded in a performance mapping process. Questions to ask when developing a job performance map are detailed below.


1. Job Mission

To identify the mission or purpose of the "finance as business partner" (FBP) job/function, ask the following questions:


2.Key Customers

To identify the customers of the FBP job/function ask these questions:


3.Customer Requirements

When identifying what customers expect from the FBP job/function, ask these questions:


4. Measures

To get at measures for the FBP job/function, ask these questions:


5. Competencies

To identify competencies of the FBP job/function required to meet customer expectations, ask these questions:

(i)?What are the competencies (i.e., skills, characteristics, etc.) required to perform the FBPjob/function effectively?

(ii)?Can you think of an employee who within the past ?year demonstrated that competency?

(iii)?What were the circumstances surrounding this incident? In other words, what was the background? What was the situation?

(iv)?What exactly did the individual do that was either effective or ineffective?

(v)?How is the incident you described an example of effective or ineffective behavior? In other words, how did this affect the task(s) the individual was performing?

(vi)?What changes are likely to impact the FBP job/function in the future? What will people need to do differently?

In part (v) of the interview, the objective is to obtain a clear understanding of the incident and the context -- that is, why it is critical to the job -- before defining effective behaviors. Then, continually probe and seek clarification until you have a clear understanding of the behavior. This process continues until redundancies begin to appear in the interview notes.

Clear behavioral statements can then be written from interview notes. These behavioral statements are clustered to create competency dimensions which are then reviewed and edited in a focus group.

A major function of the competency profile is to provide the means for assessing potential to transition to the new role and identification of training and development needs. A rating form can be developed for this purpose and a sample is illustrated below.

Major Areas of Competence: Monitoring and Controlling

Skill Element

Able to monitor and control territory performance and regional support services.


Considerable                                               Some                                                     Skill is Fully

Development Required                                Development Required                        Developed

DEFINING BEHAVIORS: Behavior rarely occurs Behavior does not always
occur when appropriate
Behavior occurs
when appropriate
Requests, analyzes and interprets multiple sources of information to monitor performance of overall territory and territory offices (e.g., territory office reviews; financial data, personal contact with agents, territory staff, Territory Support Units, Regional/ABC Officers)
Identifies Territory and Regional/ABC sources of information and develops reports necessary to monitor specific Territory performance
Uses personal interactions with territory and Regional ABC staff and others to gather and verify information
Analyzes information on the insurance marketplace, and seeks out additional information as required
Analyzes information on the external environment (legislative, regulatory, economic, etc.) and seeks out additional information as required
Provides timely responses to regulatory complaints and refers to Regional/ABC and Home Office where appropriate
Projects trends to forecast territory performance to maximize opportunities and/or address potential problems in a proactive manner
Reacts quickly and decisively to any variances from territory objectives
Communicates a sense of urgency, by word and example, to achieve territory objectives
Regularly reviews statistical results and underwriting review reports from individual Territory offices

In my experience the format of this rating form is easy to use and to understand.

The rating form has the potential for use as both an individual and an organization assessment tool. Individual finance staff may be assessed by their supervisors on the skill elements and behaviors and the feedback would be highly valuable in terms of reviewing the potential to perform in the new culture and setting individual objectives and career goals.

In addition, the organization benefits from the cumulative data obtained. These data provide a picture of the relative strengths and weaknesses of the finance group and identify the training and development needs within this group in order to migrate to the new business culture.

The format of the rating form is designed in order to maximize the dual purposes of this assessment tool. For example, supervisors are asked to rate both behaviors and the skill elements that the behaviors define. They are also asked to rate the behaviors first and then the specific skill element. This procedure ensures that each specific behavior which has previously been identified as being critical to the successful performance of the new "finance as business partner" role is rated so that a comprehensive picture of the training and development needs is derived from these ratings. The ratings of the behaviors within a given skill element therefore define the overall competency rating on the skill element.

The rating scales for the two types of ratings are slightly different. Behaviors are rated according to how frequently they are observed on-the-job at the required standard of performance. Rating behavior in this manner ensures that supervisors are focusing on the behavior that defines successful job performance rather than individual characteristics or traits. In addition, in the context of training, the function of rating behavior in terms of whether it occurs on-the-job will be very important. Since the object of training is to change behavior on-the-job, rating behavior according to the frequency that it occurs will directly measure the effectiveness of training.

The rating scale for the skill elements is a more traditional evaluative rating scale which gives supervisors an opportunity to summarize behavioral ratings into one summary rating that indicates the skill or competency level in this area. This rating scale should verify the supervisor’s judgments on the behaviors and give another clear indication that training in this area will be required.

In other words, the two types of rating scales together provide a more comprehensive picture of the training and development needs of the finance staff as a group as well as providing a means for discussion and feedback to each individual job performer in terms of the potential, goals and objectives.



The role of finance and the kind of people who are successful in these roles is evolving. Although there are common characteristics, these need to be defined in terms of the specific objectives of the finance function in the context of the vision, mission and values of individual organizations. There are still many unanswered questions such as:

As we get ready for the next millennium, corporations are recognizing an evolving need for the finance function to operate as a business partner. This new role creates an opportunity and a challenge. Some of the change management challenges have been identified here as well as an approach to identify, select and develop talent for this new role.