Changing the operating model is strategy and change management. Many finance organizations don’t develop those skills naturally. Hence the material importance of a strong governance structure that monitors changes to all target operating model dimensions. The five key tenets of a good governance program are:

1. The right configuration: Clear decision-making hierarchy set up for monitoring performance and issue resolution. Typically, process owners and key stakeholders chair process reviews; multiple related processes are reviewed by leaders; and finance leadership collectively reviews finance strategy. Review meetings are held in cascades with more senior teams meeting with inputs from underlying teams.

2. The right mandate: Governance teams must be empowered to act on issues they oversee. For example, process owners should be empowered to create and monitor progress against delivery of a target process model irrespective of their position in the company. This requires ownership of a multi-year plan that incorporates process, policy and technology changes globally. Leadership reviews clear obstacles and aligns multiple process plans into one coherent finance plan.

3. The right people: Members of governing bodies must be encouraged to challenge and question norms where appropriate. Responsibility assignment matrices are usually developed to assist globally distributed process teams in making joint decisions.

4. The right metrics: The metric framework employed to govern performance must be:

• End-to-end.All participants in the value chain must know how they contribute to the outcome. This requires understanding of the process inputs, outputs and performance drivers. For example, Accounts Receivable (AR) performance must provide inputs on customer satisfaction and contribute to better understanding customer preferences.

• Cascading.Good structures connect corporate goals to business drivers, performance metrics, and levers that impact those metrics (see Figure 1 below). Shared services centers and leverage of external services also introduces improved measurement practices across finance by introducing rigorous measurement of SLAs and processing costs.

• Balanced.Both effectiveness and efficiency measures must be included, as should both reactive and predictive measures. Scorecards should also measure soft metrics such as the effectiveness of training programs, and succession readiness sometimes on a different cadence than the performance reporting.

Many finance programs—including process enhancements alongside large system rollouts, and especially organization realignments—may take months or years to generate planned returns and must be measured with separate scorecards and targets, thus separating the agenda to measure ongoing operations and step changes.

5. The right tools: To be efficient on process owner time, leading organizations invest in tools to continuously gather and enhance visualization of performance. These bolt-on tools enable leaders to visualize performance across SLAs, and drill down to analyze root causes.

Governance teams must also establish the cadence for scorecard generation and distribution to facilitate review of the operations they are responsible for, and informing all internal and external stakeholders, such as outsource service providers, sales and operations.