FP&A and Operations: Creating Powerful Partnerships for Strategic Growth

Your financial planning and analysis team performs many tasks supporting teams across the entire company. Are they doing the right tasks? Are they working on the tasks that matter? How strongly does your fpna team support your operations team.

Are they aligned together and aligned with the overall strategy? I believe the more your fpna works closely with operations, the more competitive your organization will be, resulting in improved market positioning and more revenue. Let's dig into why it's important to align these two important teams in the company. Please enjoy the episode.

Welcome to the finance leader podcast where leadership is bigger than the numbers. I'm your host. Stephen McLain, this is the podcast for developing leaders in finance and accounting. Please consider following me on Twitter, Facebook, Instagram and LinkedIn.

My usernames and the links are in this episode's show notes. You can also follow finance leader Academy on LinkedIn. Thank you. This is episode number 145, and I'll be talking about why aligning the Financial Planning and Analysis Team with operations will be more beneficial to the organization.

And I will highlight the following topics. Number one, the benefits of properly strategically aligning your fpna team. Number two, what happens when fpna is not aligned? And three, a few steps to get started.

Welcome back to another fun and leadership focused season for the podcast. I'm excited to share some insights that aim to help you as finance leaders, to grow your leadership, to grow your strategic mindset and other critical skills in your advancement to CFO and beyond. As finance leaders, I want to encourage you to look at things differently than how your peers do. I want you to look through the lenses of strategy and problem solving, look for opportunities and beware of threats in the marketplace, understand risk and know when to take more risk to the benefit of the organization and to the benefit of yourself.

In case you missed it, this past summer, I shared a series on internal auditing. Please go back to listen to those episodes if you have not already, I covered a variety of topics that included internal audit planning, the role of the audit team manager, financial integrity, risk management and forensic accounting. I know you will enjoy those incredible episodes this week. I am talking about aligning your financial planning and analysis team with operations.

This is a critical relationship. Your operations team generally oversees the revenue generating functions for the company. The better aligned operations is with fpna, the more likely the organization can find ways to find critical insights to grow revenue, reduce costs, better allocate resources, optimize labor and overall provide a better experience for the customers and also for the employees. What happens when operations and fpna are more aligned?

I believe it brings better results. You get to solve the tough problems together, instead of doing it in isolated bubbles, you get to share the facts and assumptions, so you build better models and better projections, and you can dig into the data that matters to get better aligned, I would start with a shared vision and building trust. We want to make sure that the strategic objectives get translated into relatable finance terms, so that they can be connected to financial targets.

A shared vision creates alignment within a team by giving everyone a clear sense of purpose and direction, which in turn, builds trust when leaders and team members know they are working toward the same goals, communication becomes more open and transparent and decisions are easier to understand and support. This shared sense of purpose reduces uncertainty, minimizes conflict, and helps people feel valued as contributors to a common mission. As trust grows, collaboration improves, and individuals become more willing to rely on each other, share ideas freely and commit fully to achieving results together.

Alignment brings better forecasting for sales and production or service delivery. Better forecasting builds confidence and trust. It also helps with reducing expenses. We all want to order the right amount of raw materials for production, so we don't have capital tied to excess materials on the shelf, and when we can't properly schedule the labor that is required, your usual two top expenses are, of course, labor and raw materials.

When your forecasting is more accurate, your costs can be better controlled. I'm a huge. Huge fan of collaboration. Whenever you have a chance to work with someone else on a problem, you will most likely get a better solution.

That's why I'm an advocate that fpna and operations work together more closely. While serving in the army, I had the great opportunity on several assignments to work closely with our sister services, the Navy, Marine Corps and the Air Force, it was always a better outcome when we cooperated on a problem instead of working separately. Who can you work with more closely to solve a significant problem? The fpna team can be a powerful tool for the senior leadership.

What does a well aligned fpna team look like a well aligned fpna team operates as a strategic partner to the business, rather than just a reporting function, the team is deeply integrated with operations, the supply chain, sales and leadership, ensuring financial insights are tied directly to business drivers and performance outcomes. They maintain a forward looking mindset, using forecasting, scenario analysis and sensitivity testing to guide decisions, instead of only relying on historical results.

Collaboration is strong with finance professionals proactively engaging with department leaders to translate strategy into measurable financial plans. Processes are streamlined, data is accurate and accessible, and technology is leveraged for automation and advanced analytics. Ultimately, a well aligned fpna team provides not just the numbers but actionable insights that shape the strategy, improve competitiveness and drive sustainable growth. Don't forget to subscribe to the podcast on the platform you are currently listening to, and also please subscribe to my weekly email.

When you subscribe to the email, you will receive a free guide on becoming a finance leader. It's filled with many tips and strategies to grow your leadership. Thank you. I made it one of my primary duties in finance and accounting to partner with the teams that I supported.

I wanted to learn everything I could about the metrics and the data that I tracked and analyzed. I wanted to know all the variables and conditions that would affect how each metric behaved, once you know how the metrics act in accordance with the market conditions, you can develop better models, which can lead to better decisions. Know the people whom you support and how you can provide the right data and insights for them to do their job easier. Now let's talk about aligning fpna and operations number one, the benefits of properly strategically aligning your fpna team.

We expect to see more accurate financial targets, especially when it comes to sales and operations. When you plug in marketing, it gets even better. We wanted to develop realistic, honest assessments on how well or not so well the company will perform in the next year, so we can order the right amount of raw materials on time and manage waste more effectively, or deliver the services you provide on time when something significant happens in the market, you can then have a real conversation about how This affects current production and our projection in the upcoming periods when you have a trust built relationship, you can have direct conversations about adjusting the projection without it being a confrontation at the board meeting about missing a target.

This, of course, becomes more complicated with a publicly traded company versus a privately owned company, where meeting or exceeding the projection is literally everything. When we are aligned, we indirectly reduce risk without even trying, because when you operate with trust, you can more easily and openly identify risks and vulnerabilities before they materialize, which means we can be more proactive and take on more calculated risk. The unknowns become more known when we are aligned and talking and trusting each other more.

The best benefit of all is improved strategic decision making, the benefits I previously mentioned all contribute to better decision making. Our forecasts are more accurate. We have modeled risk better so that we can make better decisions according to the changes in the market. Number two, what happens when fpna is not aligned?

What happens is that fpna operates in a stove pipe or a siloed way, not understanding what is truly happening, and operations will try to solve problems without access to all the possible metrics and the expertise of the fpna team. It's a horrible byproduct of not having trust and operating alone. And every CFO out there should be expecting a better partnership. You.

When the fpna team is not well aligned with operations, the organization experiences significant disconnects between financial plans and actual business performance forecasts and budgets may become unrealistic because they are built in isolation from the realities of production, sales or service delivery. This creates frustration across the departments as financial targets feel imposed, rather than collaboratively developed. Misalignment often leads to inefficient resource allocation, missed opportunities, and an inability to respond quickly to changing market conditions.

Operations may pursue initiatives that do not reflect financial constraints, while finance may impose cost cutting or investment limits without fully understanding operational needs. Communication breakdowns also emerge, reducing trust between finance and other departments over time, this weakened strategic decision making, erodes competitiveness and limits the fpna team's credibility as a true partner to the business. Number three, a few steps to get started, we should always begin with leadership.

Leaders have the ethical and fiduciary responsibility to do everything they can do to move the business forward, to be effective, we need to develop a common language. We must translate finance terms into operational impacts so non finance leaders understand the implications. Continue to bridge the cultural gap by ensuring finance understands operations and operations understands financial drivers. Building trust is a priority in this endeavor.

Act as a business partner by providing insights that help operations succeed, rather than only pointing out over spending. Promote transparency by sharing assumptions, methods and risks openly. To build confidence in fpna is recommendations encourage accountability by linking performance metrics directly to financial outcomes. We have to know the micro details of the metrics we analyze and support.

The more we know about the critical metrics and how they are composed, the more we can help with the right analysis. Don't forget to build a relationship with your IT team. Also, they are critical in ensuring the right data is captured and recorded properly. I believe that you have to step away from your usual duties often to reach out to other leaders.

You have to find out what is driving operations that doesn't show up in the usual data. It's important to know what is baked into the data that isn't showing up as a separate variable or metric. I like to see metrics as continually divisible into parts that I can either control or at least be aware of, so I can recommend better decisions. As a very simple example, on the PnL, we show a total up for expenses, then we show each expense line.

Then for labor, for example, we further divide by regular versus overtime, then we show the payroll taxes. And can keep going further by breaking the total into parts so we can know the number to the lowest possible that is also material, and can help us make a better decision. You never know over a large operation how much a small piece of a metric can account for a material amount, it becomes important when you have limited resources, and this is when our strategy steps in for action.

Today, let's assess your company's alignment of fpna and operations first, is the relationship one of mutual support, or is it hostile and mistrustful? Next, are you seeing mutually developed solutions when something goes wrong? Or does fpna seem to only report negative results to watch operations drown in a meeting? Or do we have a relationship of mutual trust, where we present results with solutions developed by all parties involved.

We often work separately, way too much, and because we don't have trust, we build solutions without real data, and we continue to have an adversarial relationship, which helps no one at finance leader academy.com you'll find a collection of practical, downloadable PDF guides designed to help you excel as a finance leader, whether you want to coach your team to higher performance, master the art of financial storytelling or sharpen your Excel skills, we've got you covered. Each guide is available for instant download after purchase, no waiting, no hassle.

Visit finance leader academy.com click store in the menu and start upgrading your skills. Today, you can find a link in this episode. Show Notes.

Thank you. Today, I talked about why aligning the Financial Planning and Analysis Team with operations can be beneficial. Initial to the organization. And I highlighted the following points.

Number one, the benefits of properly, strategically aligning your fpna team. Number two, what happens when fpna is not aligned. And three, a few steps to get started. A caution we always need to be aware of is that fpna still has a responsibility to report accurate numbers.

Quote, unquote, becoming too friendly gives the impression that fpna will hide missed goals, which is probably why most people keep their distance and don't develop a professional relationship that focuses on solving problems. I respond by saying that fpna should not have a gotcha attitude, but a professional partnership to dig into the problem. We show the numbers, no matter what they are, and a way forward to solve it when something goes wrong, that's the expectation and the standard.

We have a professional responsibility to present the facts and to also be part of the solution that's finance leadership. I hope you enjoyed the finance leader podcast. You can find this episode whenever you listen to podcasts. If this episode helps you today, please share with a colleague until next time, you can check out more resources at finance leader academy.

com and sign up for my weekly updates, so you don't miss an episode of the podcast, and now go lead your team and I'll see you next time. Thank you. You.