Why I think finance leaders should be “multilingual”

I know there are plenty of finance leaders who won’t agree. But I’ve had the fortune of being mentored by a leader outside of finance and have a deep respect for what an underrated role functional leaders play in our success. Many of those functional leaders don’t know their own team’s workflows. Which is not a criticism. It’s a fact. Most processes are undocumented. So finance can’t just ask, or asking leads you to false or incomplete premises. You have to roll your sleeves and investigate. Because if you want to implement an ERP workflow, you need to know that reality.

In this article, I explain why I think it is increasingly important for every CFO, controller, and aspiring finance leader to “speak” the language of each part of the business. It’s the only way to get information to flow.

This article is part of a series where Everest invites domain experts from manufacturing, supply chain, analytics, and operations to share their change management wisdom.

To set a goal, you must understand how it is physically possible

CFOs of the past could set budgets and demand greater performance from the sales organization, and actually expect results. But that hasn’t been my experience, especially as trends move faster and technology keeps changing. All those functional leaders could benefit from a thought partner. 

Say you want sales to increase 10%. If all you do is set that goal with your sales leader, they’re going to shift from long-term to short-term thinking. They’ll pressure big, strategic deals to close now, for less, to move them into this quarter. When you optimize for just one metric, you do so at the cost of others. 

Far better to make a mutual plan with that sales leader based on the levers that actually generate quality sales. Maybe you’ve studied the compensation structure, and have ideas on how to stop all the sandbagging. Maybe you’ve identified a new market and want to propose running a pilot. 

I call this full finance ownership. It is honestly the biggest joy I get as a finance leader—knowing that a number not only happened the way I said it was going to happen, but that I helped make it happen. It’s being involved in identifying the people and amending the process to achieve something new. 

This matters because accounting and forecasting are going away. Those’ll be taken over by software, if not offshored. And what’s left is tuning and interpreting those numbers to ensure the process gives us the data we need to be a strategic partner to every part of the business. This is why CFO job descriptions have grown 19% longer over the last five years. Our job is to be a friend of the process. You don’t just read the number, now. You understand the process and help the people.

There’s just one big problem. Most finance leaders don’t “speak” in terms that each part of the business understands.

Finance should speak every functional leader language

I’ve observed that every area of the business tends to speak its own vernacular. While finance is focused on EBITDA and bad debt, others are not. They think “bad debt” means a loan has expired. It’s part of my first 100 days plan to get out into the field, tour warehouses, and figure out how they describe information. That way, I can translate and understand the levers we can pull.

Below, some examples.

Sales

Sales sells whether or not those sales convert into revenue, or that revenue converts into cash. They are, more than most teams, dogmatically focused on maximizing their compensation plan which is a vital document over which you’ll need control. The question to constantly ask is, are those incentives aligned with other metrics? 

All admins celebrate a great EBITDA month or hitting a forecast, but completely miss that to do so, the company had to “sacrifice” the next two months of revenue. How can you help them achieve today’s profitability without sacrificing tomorrow’s, or at least make the profitability consistent? It is better to have a consistent result than a glorified month result. 

Sales administration

Many people think sales administration or “trade marketing” is a continuation of sales but it’s a different dialect. They are the translation from CRM to ERP. That integration is usually neglected, and they’re responsible for all the issues sales reps leave. As an example, people assume “it doesn't matter if there are grammar errors in the customer name or if the legal entity is not the same name as the commercial entity,” and neglect to properly communicate with sales admin, and with that, your AR problems just got doubled in size. All areas do it, just in their own way.

Human resources

Human resources is almost always organized in a unique way—look at 30 HR org charts and you will see 30 different charts. Every person on the planet complains about HR, which HR knows, and they want to be seen as strategic—which they can be. Some HR departments see themselves as the company glue, others, advocates for the company. HR speaks in terms of attrition and how efficient they are at hiring or why the company cannot let people go, but the moment you help them calculate the cost of a bad hire as, say, 75% of that hire's salary, you really change the conversation. They become aware that severance hurts the profit. Similarly, they are usually freewheeling about wellbeing without realizing that if people aren't incentivized to get profit and cash, it will hurt everybody’s wellbeing far more.

Legal

Legal teams think highly of themselves and have more affiliation to their profession than the company. They can be inflexible, precise, and like to be consulted when the hour could be billable or the DocuSign can flow smoothly into an inbox. Sometimes they are more worried that a contract does not contain their exact wording than in the effects of winning that contract; if they took the financial view, they'd fight harder to come to agreement.

Tech and IT

Nowadays, you can’t run a business without IT and they know it, and it’s a good idea to approach them consultatively. They tend to have a dim view of other departments, even though those departments are their ‘internal customers.’ Likely that’s because 85% of the fixes they are called in for involve rebooting the machine or escalating to someone with more access to reboot the machine. They are interested in tickets, ticket-close velocity, and getting a high rating on those tickets. In that way, they can be very numbers driven. But they're also interested in working on exciting projects which usually means capital outlays. IT can be highly responsive if you can gamify cost savings.

Marketing

Marketing thinks and speaks in its own metrics usually tied to activities, and when it’s outcomes, they talk about revenue. From a finance perspective, revenue is not cash and so there’s translation that has to happen. And even when our metrics are the “same,” we often didn’t get to those numbers in the same way, and so they don’t match. Marketing is always fighting for more budget to run more campaigns and I tend to play devil’s advocate to ask questions and think through what’s a good investment. They like to talk about clicks, campaign conversion ratios, but can we translate that into incremental revenue? Marketing tends to focus on first-order marketing metrics—they know new followers, but not average wallet consumption. However I find they are receptive to working together to analyze what's working in raw financial terms.

When you speak those languages, you create better information

It’s no longer enough for finance teams to report the numbers—those roles are going away. I believe that senior finance people have a window of opportunity in which we are being invited to help lead the business. To do that, I think we need to speak more languages. We need to understand each functional group's processes and terms and be able to translate into the financial statements—in their terms—so we aren't just calling the numbers, but helping them reach that goal.