28 Aug 2018

Business controlling: from business partners to pathfinders

Business controlling: from business partners to pathfinders

When discussing the development of business controlling, the ruling metaphor is still that of going from “scorekeepers” or even “bean counters”, to “business partners”. Business controllers should be close to business, helping management with forward-looking analytics, instead of focusing on reconciling variances in archival bookkeeping data.


Fair enough – but when you spend time developing business controlling, this metaphor very soon starts to feel pretty old and tired. Haven’t we been there, done that already? And indeed, when you look into the academic literature, it becomes clear that this particular lament is as old as the hills. It goes back at least as far as 1928!

The Scorekeeper

This metaphor has had serious staying power, but the issue it refers to has changed and evolved over time. A business controller in a modern finance function has precious little bookkeeping to transition away from in his job description. “Scorekeeper” and “business partner” mean a little more nowadays than they used to do. They refer to the two major information flows handled by a business controller: aggregating information upward, and conveying information downward through the organisation.

Consider business unit- or divisional controllers. One core part of their job is to make sure that all the relevant internal accounting information is available, communicated to local business management, and also transmitted to the next level of the organisation, be it region, division or group. This is scorekeeping, in its modern sense: aggregating internal information up the organisation. The information can be about outcomes or plans (budgets), it can be aggregated in various strange and mysterious ways in organisations with more complex (matrix) structures; this does not matter. What matters is the direction of the information flow. The aim is to make sure that business managers, at all levels of the organisation, know and understand what is going on in the part of the business they have responsibility for.

The Business Partner

However, companies are not actually managed and steered by aggregating information up, but by transmitting (and following up on) guidance in the other direction. In an organisation of any nontrivial size this entails and implies a whole raft of processes, systems and procedures: targets, incentives and scorecards, budgeting, performance management, strategy processes and must-win battles – the extensive paraphernalia of management control. Here, clearly, a modern business controlling organisation has a key role to fill, by coordinating performance management and indeed strategy execution through the entire enterprise. In this role, the business controller brings something new to the local business manager, beyond scorekeeping information about the local unit or division – information about the global, strategic context. A key part of the strategic guidance is now conveyed and coordinated through the network of business controllers, and because of this they can now step up to the role as business partners. They have the legitimacy and the capability to make valuable contributions to the discussions and processes of guiding the business and executing strategy. This, in well developed finance organisations, is the core meaning of “business partner” – the finance person with something valuable to contribute to management decisions. In effect, they now transmit information not just up but also down through the organisation.

The Pathfinder

In recent years it has been possible to see a third level of “controllership” (as Mr. Kester called it back in 1928) emerging – a level beyond, or on top of, scorekeepers and business partners. We are calling this level “pathfinders”. Here we have business controllers and business controlling organisations taking the responsibility for all the information flows to business management, irrespective of source. In this role, business controllers are not content to just aggregate, channel or convey existing information to decision makers. They are actively searching for relevant and interesting information to bring to the table, from internal and external sources. They see it as their mission, indeed their responsibility, to make sure that managers and management teams under all circumstances take decisions based on the best information set possible. This implies not just supporting and challenging what exists, but actively searching for and discovering new things.

Having this capability – pathfinder-level business controlling – available and deployed through the organisation can be surprisingly vital for the success and even the survival of the company. When managers and business units at all levels of the organisation can rely on a professionally curated and comprehensive information flow then they can experiment, try new things and learn from them, much more efficiently and with much greater confidence than otherwise would be the case. Wheels need not be reinvented, good ideas and best practices will be picked up and exploited to the full, opportunities can and will be seized – as long as the information flows are handled professionally. As a manager, having a highly skilled professional in your team whose job is to make sure that you know everything you need to know, will empower you and your organisation to an even surprising degree.

The core skill set that a business controller needs to acquire in order to step up to this role relates to networks. As a pathfinder business controller you can never know all the answers, but you need to be able to ask good questions and interpret and integrate the answers to a meaningful, business-relevant package for management. And in order to get the answers, you need a good network – internal and external, flesh-and-blood and virtual, spanning all sorts of skills and disciplines. Earlier this year we started a new development and benchmarking consortium for the Financial Accounting part of finance functions in big enterprises, and the vital role of business controllers as intermediaries between business and the various specialist competences like tax, transfer pricing, finance, and statutory / group accounting has been very much emphasised by the participants representing these functions.

The journey continues, and in the Controller Performance Program and the Accounting Performance Program we will explore – and drive – these developments further together with business controllers and finance professionals from participating companies.

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