Traditionally, the divisions between finance and marketing have always been wide. The first Finance Directors’ Forum on June 26-27, organised by Richmond Events, looked at the role of finance directors and their relationship with other departments, under the heading “Finance director – friend or foe.”
For many of the attendees, it was a unique opportunity to share ideas and opinions with contemporaries, representing a type of open forum few had experienced before.
The meeting looked at the personal and functional relationships entailed in the job – ranking them in order of importance – and considered finance directors’ perceptions of such relationships and how they could be improved.
Of all the relationships under scrutiny, that with the marketing department was thought to fall most obviously into the category of “foe”.
Although most finance directors still believe the marketing department considers them “enemy number one,” they were keen to stress that this does not colour their perceptions of marketers.
Top of the list for sources of conflict were a lack of fiscal discipline, poor administration and over confidence and enthusiasm. Their pet hates included “numbers always being rounded up to 1,000”, “always spending up to or over the budget”, and “a strange lack of regular visibility in the office”.
Many marketers are thought to suffer from a desire to shine at all costs, even if their pet projects are not performing well, reflecting a perceived lack of willingness to be accountable for their mistakes.
The common adjectives used to describe marketing people were “brash”, “salesmen” – in the pejorative sense – “loose cannons”, “uncontrollable” and “wide boys”.
Most finance directors believe marketers have an equally jaundiced view of them. They feel they are perceived to be “boring,” “mean,” “cautious,” “risk averse,” “unimaginative,” “interested in the cost of everything and the value of nothing”.
On the positive side, many finance directors recognise that such criticisms are often justified. They accept that finance is partly to blame for not seeking to redress the situation.
Encouragingly, it was universally agreed, particularly by younger finance directors, that the marketing department provides the lifeblood of a company and that its creative spirit is essential for business growth.
They perceive that one of the key challenges is learning how to “manage” marketing. Opinion on how to do this falls into two camps: the old school and the new.
Rather than confront the conflict, the “old school” work around it. The traditional approach is to assume that marketing’s forecasts were wildly optimistic and hence protect the overall budget by making allowances elsewhere.
Such finance directors expect to cut the advertising budget before the end of the year to make up the difference – which is an easy way to generate instant funds without incurring a penalty. They prepare external audiences for the results they expect rather than those that the marketing department has predicted. The “old” solution is based on avoidance, resulting in a widely acknowledged compromise for both departments.
However, a new forward-thinking group of financial directors is emerging which sees an opportunity for marketing and finance to work together. Key to its thinking is communication. Almost all finance directors acknowledge that they rarely meet marketing people – often only twice a year. Regular dialogue in weekly or monthly management meetings would avoid confrontation at more formal board meetings, representing the first step towards a better relationship.
It is critical to educate people about business and change the present culture by breaking down formal barriers. Some more visionary finance directors are already involved in a regular internal education programme to help marketers understand the role of finance.
The hope is that after a period of “formal” courses marketers could automatically be encouraged to consult and share their plans with the finance department. Inter-departmental incentive and reward programmes to encourage participation, involvement and shared responsibility are in the pipeline at several international companies.
Once a good dialogue is established, the primary goal of most finance directors is to encourage monitoring and measurement systems to evaluate plans against success criteria.
Measuring the effectiveness of advertising is considered a critical target. Many finance directors are educating themselves about research and measurement techniques. Today, there is much more optimism about being able to collaborate with marketing.
Interestingly, a new clash may be looming. As finance directors have successfully transferred their responsibility for information technology to IT directors, they have given them more time to take a more consultative role. They paint a picture of a future where they will “shape and measure the business”, “provide a steadying hand on the tiller”, and “manage shareholder value”. They expect to become business facilitators and innovators.
Marketers, meanwhile, cite their three main roles for the future as “shaping the business and the market”, “influencing the customer” and “operating at the cutting edge”.
Perhaps the true challenge for the future, once a dialogue is established, will be fighting for the position of number two advisor to the chief executive officer.