Lean principles part two: Eliminate waste in your finance team
In part one of this article series, I explored how efficiency and consistency can be used to remove ineffective and time-wasting processes within your finance teams. This week we’re looking at how compliance and confidence can eliminate waste in your teams.
It’s important to remember, when undertaking any review of a team’s performance, processes and systems using lean principles, we must always aim for perfection.
The goal here is to reduce the waste of waiting to zero – perhaps not likely in reality, but it encourages us to practice kaizen; a Japanese business philosophy of continuous improvement of working practices, personal efficiency, etc.
I’m not going to bore you here with compliance to accounting standards, as this is our bread and butter, and it’s pretty obvious compliance is required in these roles. CPD is vital for ensuring your team have up-to-date knowledge – please insist on this practice and make the company pay for it.
Compliance in the finance team is adherence to service level agreements (SLAs) bilaterally. Finance teams should adhere to the SLAs set by their “customers” (eg HMRC, other departments, the board of directors etc), but also the finance team’s “suppliers” (eg procurement, warehouse team etc) must adhere to the SLAs set by the finance team.
The first step here may be simply to define these SLAs. It is important to understand the whole process to understand whether these SLAs are achievable let alone sustainable.
There is absolutely no point setting a rule that will be broken, but this may be tempting just to adhere to the SLA of providing the board of directors with their management reports on a set day each month.
To analyse why either the finance team or their suppliers fail to comply to an SLA, you can use the “five whys”. Harness your inner child and ask “why” five times to get to the bottom of the problem.
For example, the warehouse team cannot provide a list of stock to be impaired at the month end:
- Why? Because that would involve going around the warehouse checking every shelf and testing each piece of equipment
- Why? Because we otherwise won’t know what’s damaged
- Why? Because when anything arrives it gets put away immediately
- Why? Because the next delivery will be arriving shortly after
- Why? Because we order everything to arrive on the same day when there are two of us in
Before asking the five whys, our solution may have been to throw more resource at the month end impairment check, even involving some finance team members to hurry things along.
Asking the five whys lets us look at the big picture and come to a solution that may involve staggered deliveries and testing of equipment as soon as it arrives in the warehouse.
A recent webinar I listened to by FlexMind introduced me to two new phrases: “People’s minds matter” and “A happy crew is a productive crew”.
No human reacts without defence to criticism or complaints, even when you believe it to be framed “constructively”. It is important to create a psychologically supportive culture to instil the confidence in your team that will reduce wasteful waiting.
A lot of this confidence comes from improvements in soft skills throughout the team. Feedback may need to be filtered to certain team members so as not to have a detrimental effect which slows down a whole process because that individual is now not sure of themselves.
This is why a massive part of our finance transformation service is not within our systems, automation or process transformation, because they are easy to perfect on paper. It is pinned on our team development services which uses data analytics to discover the traits and opportunities that will allow the individual to grow these softer skills.
Analyse your team and create 90-day development plans that will challenge their thinking in the areas where they may be less confident. Include appraisals, general workload and your own process improvements into these plans so they remain relevant to what each individual is doing.
This development can increase innovation in new strategies and ways of working which will ultimately reduce the waste of waiting.
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There are many options to improve sustainability by preventing waste. It is important to link sustainability to People and for us to share in our experiences of what works well and what doesn’t.
Please use the comments section to help each other become more sustainable.