Making the most of diverse ways of thought is central to getting your business to perform at its full potential
DIVERSITY is often a word thrown around in business without much thought. Too often, “diversity” is seen as a presentational device: something that looks good in a corporate social responsibility report. “What does our company look like?” is the question that’s asked.
True diversity isn’t about that at all. It’s not about how a company looks; it’s about how a company thinks, how its processes work, and how it manages its human capital. True diversity is about getting the most out of a business, taking advantage of creative tension, and making sure the way a company does business doesn’t miss out on the full potential of the talent it has and the talent it intends to recruit in the future.
For the modern finance function, getting a handle on diversity is particularly important. A post-financial-crisis combination of a broadening role and a renewed focus on finance fundamentals creates a highly diverse set of responsibilities for the finance team; all the while, businesses are becoming increasingly global in their approach and presence.
To be effective, the modern finance function needs a team of individuals with different experiences, different skills, and different ways of thinking.
There are several key ways that finance leaders can make diversity work for their teams: they need to understand cultural differences; they need to recruit effectively; they need to develop diversity where it doesn’t already exist; and they need to embrace more open ways of working.
Some of the necessary steps to be taken may seem quite obvious, but they are often not put into practice. A finance leader with a finance function spread around the globe might recognise that the team in one country is different to the team in another, but these differences aren’t necessarily reflected in the way teams are expected to operate. Embracing the differences between teams is important, says Robert Mello, the chief financial officer of GE Healthcare China: “Once you have respect for and an appreciation of differences, not necessarily thinking of one as better than the other, then you can really start working on getting the best out of people and situations wherever you are based.”
Likewise, a more open, collaborative way of working within a team may be recognised as an option, one of many management styles, but with an evolving finance function, it’s imperative that finance leaders are ready to be challenged and listen to the views of those around or below them – a collaborative approach that makes the most of a team’s diverse experiences and skills is needed.
Some finance leaders are already getting the message, especially when it comes to applying the softer management skills, according to Andrew Kakabadse, professor of international management development at Cranfield University’s School of Management. “It’s amazing to see how many people at Cranfield are now coming on to the emotional-sensitivity-type programmes to help them cope with their job as a senior manager of finance,” he says.
As well as process, people management matters too when it comes to developing a diverse team: bringing in the right type of people and providing existing staff with a diverse range of experiences.
Diversity starts with recruitment, so finance functions need to work very closely with human resources teams to search out the right type of team member. Recruitment can be particularly tricky issue for the finance function given the technical skills and qualifications required of team members. Compounding this is the fact that, too often, finance functions use a short-term approach to recruitment, hiring to fill specific vacancies without too much thought to what that role or individual might require or offer five years down the line.
However, even if a finance team hasn’t necessarily recruited the most diverse team members, there are ways to nurture diversity within the team. To do this, finance functions need to shift from viewing career trajectories as career ladders to career lattices: managers from developed markets should be given the opportunity to spend time in emerging markets and vice versa. Experience outside the finance function is crucial and a commercial role can be valuable in developing business experience and awareness. Job rotations might meet resistance from managers who don’t want to lose good staff; support from the top is vital to ensure job rotation becomes part of a business’s DNA.
According to group chief talent officer Datin Badrunnisa Mohd Yasin Khan, this is the approach taken by Axiata, one of Asia’s largest telecoms companies: “When we look for finance leaders, we try to play down their functional strengths once they reach a certain level and get them more rounded in terms of business experience. Of course, we’re looking for people who have grown up with the finance discipline, but that alone is not enough. We really want someone with a more developed business sense. If you leave someone in a function for too long, it won’t help with innovation because they end up being too focused on following the rules.”
DIVERSITY VERSUS STANDARDISATION?
One other diversity problem that particularly impacts on the finance function is how it sits alongside the need to achieve greater efficiency. Over the past few decades, as global footprints have expanded, the finance function has sought out the benefits that can be gleaned from outsourcing or shared services – according to consultants Everest Group, over 70 per cent of Fortune 500 companies use shared services or outsourcing for their finance functions; these bring cost and efficiency advantages but often at the expense of in-country resource. Here, the trick is getting the balance right.
Diversity and standardisation are not incompatible, but businesses need to think carefully about activities that need to be standardised and those that benefit from diversity. According to Stevan Rolls, head of human resources at Deloitte, “some activities in the finance function need to be robust and repeatable and so are good candidates for standardisation… other activities require local treatment or are more complex and so require on-the-ground expertise. Finance is a function in which there are places where you want innovation and places where you don’t want innovation. The key is deciding which is which.”
It might be easy to portray diversity as a luxury that must be balanced against efficiency, but it is vital that businesses and finance functions see diversity as capable of bringing value to business in its own right. A finance function that embraces diversity and values different perspectives and experiences stands to gain an edge over its rivals.
For more on diversity and the finance function, please see ACCA’s latest report, Building a Better Business through Finance Diversity online at: www.accaglobal.com/ en/research-insights.html