No matter the organization’s size, silos slow down the effectiveness and create inefficiencies hindering the organization from succeeding in the fast-changing world. Some of the more common types of silos include:
- Geographical Silos – companies that operate across multiple geographies might find it more challenging to collaborate across geographies, possibly due to cultural differences, challenges with various time zones, and different ways of working
- Project Silos – groups working towards the same objectives work in isolation and do not share their finding, best practices, etc.
- Functional Silos – occur when different functional groups do not collaborate, duplicate work due to breaking down of trust and communication
- Technology Silos – occurs when groups do not share technology across the organization
- Information Silos – occurs when there is a breakdown of information sharing between groups
Recognizing the existence of silos and removing them will reduce duplication of work, increase collaboration, organizational effectiveness, and will improve retention & engagement.
How can the Finance department become an ally to other departments and help improve effectiveness across the organization? Establishing frequent, transparent, and open cross-functional communication is critical for organizational effectiveness.
Working with the Business (Operations) leaders, Finance delivers value-driven forward-looking financial insights and guidance. Leveraging resources and technology, Finance provides value-added financial insights to ensure enterprise results and collaborates to optimize the business’ performance with a shared commitment to employees, customers, and shareholders.
With a constrained capacity to reinvest, prioritization is vital. Finance:
- supports business leaders as they evaluate strategic opportunities through forwarding looking financial insights
- provides accurate & timely recommendations through assessment of risks & opportunities based on a deep understanding of the business
In 2020 during the pandemic, leaders looked to the Finance department to maximize financial capacity and create a cost and cash-conscious culture. Examples include:
- Successful collaborations with the Procurement department resulted in increased cash retention (cash is king!) through improved payment terms and reduced scope of key contracts
- Strong alignment with the Collections team resulted in proactive management of select customers reducing the risk of delayed payments and write-offs
- Laser focus on reducing/eliminating discretionary spend and overhead
In today’s ever-changing world, strong alignment between the Finance and Human Resources (HR) departments is critical. Jointly they develop a strategy for Human Capital Management based upon the business’s current and future needs and the capabilities needed to succeed in the role. The resource strategy focuses on
- Developing, attracting, retaining, and engaging talent
- Creating a flexible and dynamic environment that has proven invaluable to employees over the past year. The reduced commute time and the ability to adapt the schedule (to respond to unexpected personal situations) on short notice have increased employee engagement and retention and increased efficiency and effectiveness.
- Upskilling to remain competitive and relevant; creating an environment of continuous learning with an emphasis on technology-based skills
- Developing leadership skills that are required to manage remote and hybrid workforce
Increased collaboration between the Finance and IT departments has never been more critical. With technology becoming a more integral part of the Finance organization, tight alignment between IT and Finance is essential.
- With joint strategic decision making, IT and Finance leaders jointly work on Cloud migration strategy, carefully balancing the need for new technology and the reality of being resource and capital-constrained
- Information security and data security are top of mind for the CFO, CTO, and the CISO. With frequent and open communications CFOs understand the IT and Security risks and the need for ongoing investment. Working together, the CTO/CISO and the CFO is responsible for funding the Security strategy at the right level to meet organizational needs
- Having the right Business Intelligence tool allows Finance to present data-driven insights to business leaders. The IT and Finance organization needs to work jointly to evaluate the available technology and invest in one that drives the right type of reporting required by the business
- There has been increased interaction between the CTO and Internal Audit (which frequently reports to the CFO) to ensure security and compliance risks are understood and mitigated
Silos are the enemy of any organization. Regardless of the enterprise’s size, open and transparent communication between departments, irrespective of organizational complexities, across regions will drive business effectiveness.
The Finance Department plays a key role in connecting the different functions through
- Developing Human Capital Management strategy with Human Resources
- Delivering value-added data-driven insights to the Business Leaders (Operational leaders)
- Working with other departments within Finance, maximizing financial capacity and creating a cost-conscious culture, and
- Ensuring funding for Technology investments; Information, IT, and Data Security