Identifying the characteristics of a high-performance finance function

Abstract

Purpose The concept of the high-performance organization (HPO) receives much attention nowadays. To create and sustain an HPO, all parts of the organization must contribute, especially the finance function, whose relations with every part of the organization mean that it can be regarded as the spider in the organizational web. The paper aims to discuss this issue. Design/methodology/approach This study develops the high-performance finance function (HPFF) framework based on the HPO framework, a scientifically developed and validated approach to transforming organizations into HPOs. Based on an extensive literature review, potential characteristics of an HPFF were identified and subsequently linked to factors in the HPO framework. Subsequently, using a questionnaire and statistical analysis, these potential characteristics were clustered into five HPFF factors that showed a significant positive relation with the finance function’s performance. Findings The five HPFF factors are: Finance Function Improvement, IT Focus, People Development (of financial professionals working in the function), Role Clarity (for each of the various types of role in the function) and Strategic Role (of the finance function in the organization, especially in supporting management). Originality/value The HPFF framework is a practical improvement framework based on a solid scientific foundation. It also fills the current gap in the academic literature on how to develop HPFFs, thus giving the frameworks described in practitioner literature a robust scientific grounding.

Future-Proofing the Finance Function: An Empirical Approach

“…In this context, the term 'finance function' refers to all the financial processes of an organization. The professionals responsible for financial processes usually work in the finance department, but can also operate in other parts of the organization, for instance as business unit controllers (de Waal et al, 2019). Closer examination reveals that such studies mainly concern creating a world-class finance function (O'Connor et al, 2014(O'Connor et al, , 2015 or a high performing finance function (CFO Research, 2014;de Waal et al, 2019).…”

“…The professionals responsible for financial processes usually work in the finance department, but can also operate in other parts of the organization, for instance as business unit controllers (de Waal et al, 2019). Closer examination reveals that such studies mainly concern creating a world-class finance function (O'Connor et al, 2014(O'Connor et al, , 2015 or a high performing finance function (CFO Research, 2014;de Waal et al, 2019). Very little literature can be found that discusses making the finance function 'future-ready' so that it can deal with changes in its environment, i.e.…”

“…We chose this function as we consider it as the most important supporting function in any organization, as it sits in the middle of the "organizational web" having connections and relations with all other functions in the organization. As such the finance function can have a pioneering role: when improving itself it can function as a role model for the other functions to follow suit (de Waal et al, 2019). To this end, we extended our previous study conducted into megatrends and disruptors (Linthorst and de Waal, 2020) to focus specifically on the finance function.…”

“…Based on an extensive literature, Linthorst and de Waal (2020) identified fourteen megatrends and disruptors that are expected to have the most influence on organizations over the next decade. In this article, we match the fourteen megatrends and disruptors with the characteristics of the high-performance finance function (HPFF) created by de Waal et al (2019) to specifically identify their effects on this function. For this, we apply the method used by de Waal and Linthorst (2020) and use a scientifically validated HPFF framework (de Waal et al, 2019) as the analytical model for our study.…”

“…In this article, we match the fourteen megatrends and disruptors with the characteristics of the high-performance finance function (HPFF) created by de Waal et al (2019) to specifically identify their effects on this function. For this, we apply the method used by de Waal and Linthorst (2020) and use a scientifically validated HPFF framework (de Waal et al, 2019) as the analytical model for our study. The HPFF framework makes it possible to evaluate the strengths and weaknesses of the finance function and it describes the characteristics of a finance function that operates at the highest level of quality.…”