Why CFOs Play a Key Role In Tracking Non-Financial KPIs

Don Mal

Management experts say finance departments need to factor in data from other business units, but will this lead to a war over metrics?

Hopefully it never gets to this point, but eventually someone might get angry enough to ask their CFO something along the lines of, “Who died and made you KPI king?”

Metrics matter to everyone — or at least they should. Understanding business performance should be the foundation of how CEOs lead, and how other members of the C-suite collaborate around shared objectives. This is assuming everyone agrees on what’s being measured, and that there’s some way to gather and assess all the inputs that go into the act of measuring.

One of the best ways for an organization to improve its performance management environment is to have the CFO partner with the rest of the business in the development of more-balanced metrics.

Beyond the standard key performance indicators (KPIs) that finance departments have always used are an ever-increasing number of non-financial ones. Even those KPIs relate to activities that happen in sales, marketing or other departments, though, the data has to go somewhere, and a group of experts recently told CFO Magazine that they should all come straight into finance. Of course, this could rankle some members of the team, but it doesn’t have to turn into a turf war:

The answer is not for a single executive to police other executives’ use of KPIs, but for the executive to be a fulcrum for sharing the data. “One of the best ways for an organization to improve its performance management environment is to have the CFO partner with the rest of the business in the development of more-balanced metrics,” says Balogh. “The goal is not for the CFO to micro-manage or own the metrics, but to analyze their interrelationship.”

That kind of analysis doesn’t just involve technology (though of course that plays a crucial role). It also involves a sophisticated, diplomatic approach to working with all those various stakeholders so that they feel more empowered than scrutinized.

An executive from consulting firm PwC touched on this in a recent post that underscored why the CFO is uniquely qualified to play this kind of a role.

“In most organizations, almost all decisions tend to have financial impact. Key investment decisions, business transactions, resourcing and many more all require an element of financing,” the article said. “In order to be relevant, they must go beyond the numbers and always challenge status quo. The future is about being strategic, insightful, technologically inclined and commercially being a partner in the business.”

The CFO and his team is not merely the king of KPIs. They are the ones with a golden opportunity to make sure the crown jewels of that make measurement possible — the organization’s data — shines in as illuminating a way as possible.

The post Why CFOs Play a Key Role In Tracking Non-Financial KPIs appeared first on Blog | Vena Voice | Vena Solutions.

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