Posts

[Top tips] Understand the people

/0 Comments/in , /by

In part four of a series of PM Forum articles on ‘the seven habits of a commercial adviser’ Ben Kent and Adrian Furner discuss how relationships drive business success. [Habit 4]

What was the last big business decision you made? Even when we believe we are making logical decisions, the very point of choice is arguably always emotional. Understanding people in business is critical to success; business is a social activity and relationships are fundamental. Professional firms are knowledge based businesses providing advice, in this type of people-based industry the importance of relationships is enhanced. The impact of advice, and the value that it can create depends on how it is delivered, and crucially, how it is received.

Being able to understand the people, their styles and drivers is fundamental to being able to successfully navigate the complex world of business and deliver success in terms of the desired outcomes. Whether we like it or not business is mainly about managing people and politics.

So how can advisers do this? A traditional approach is to perform some form of stakeholder analysis mapping the client team that we interface with, and potentially their internal stakeholders. This is a good starting point, but client expectations have changed. Clients now expect advice built on a deeper understanding of the context in which they operate and of their desired outcomes.
Advice must often be dovetailed with that of other advisers and stakeholders, both internal and external to the client. Not only who they are and their personal objectives, but how they work: what their processes are; how they will be using the advice; and how they will interpret it.

Stakeholder mapping

Carry out your stakeholder analysis, mapping the client team that you interface with and their internal stakeholders as early as possible after the kick-off meeting. Keep this updated as a live document and most importantly share it with your team.

Dig deeper

Find out about all aspects of a business situation. It is easy to think of a particular client as a collective represented by your main point of contact, rather than individuals with different views, motivations and thought processes. What does it mean not just to your clients business, but to them personally – does their promotion depend on it?

Do your research

The ‘soft’ more personal aspects of a business situation can have a significant impact. Build up profiles of each team member.  There is so much information at our finger tips spending time googling individuals or using LinkedIn is time well-spent. It can be really useful to capture initial observations from meetings and keep track of any side conversations that have happened. Don’t forget to ask if anyone from your organisation has worked with members of the client team before.

Think ahead

If you have a good idea of the position other advisers will take in a negotiation, use this information to anticipate and resolve issues that may arise ahead of time. Be open and collaborate with the client exploring scenarios together that drive the negotiation towards the desired outcome more quickly.

Simple actions

Understanding people is an art not a science. Simple actions such as taking time to meet individuals off the project for coffee can often be the most effective way to find common ground and build trust. This will set you apart as a friend or partner to the client, rather than a stumbling block to the client’s desired outcomes. Take a moment to think about relationships with your own suppliers, who are you more likely to work with and why?

A ‘trusted adviser’ is not someone you meet once a quarter in a meeting room. By getting to know your clients, you are much more likely to deliver advice that meets their expectations and achieves their outcomes.

[This article originally appeared in professional marketing magazine. For further details go to www.pmforumglobal.com. In the next issue: Habit 5 – Agree the scope]

Virtuous habits: embrace Commerciality to stay ahead of your peers

/0 Comments/in , , , /by

Research conducted by Meridian West and Financial Times shows financial professionals are perceived by their clients to be less commercial than other advisers. 34% of senior executives say legal professionals are excellent at providing advice that shows commercial insight, compared with just 15% for accountancy and finance professionals.

Why should this be? With their grip on the numbers, financial professionals are close to the heart of any business. Yet external advisers are becoming increasingly specialised – able to give clients a view on the intricacies of transfer pricing in Eastern Europe, say – often at the expense of being able to share a broader, more commercial perspective. Compared with lawyers, accountants are disadvantaged by regulation such as Sarbanes-Oxley, which create barriers (both real and perceived) about offering business advice.

With increasing frequency, information about other organisational priorities – risk, talent, technology, innovation and customer – are being given equal attention alongside financial data when boards take business decisions. External advisers need to respond to this appetite for forward-looking metrics and non-financial KPIs. One way to stay ahead of peers and keep ahead of changing client expectations is to embrace Commerciality.

What is Commerciality?

Commerciality is a much used, but ill-defined, term. Yet the nub of Commerciality is simple: it involves focusing on business outcomes when providing financial information and advice. To do this successfully means understanding the context in which decisions based on that advice will be taken. This is an area where many professionals struggle. Pride in being technically correct can lead to inflexibility. Lack of clarity about desired business outcome can lead to results that don’t quite hit the mark.

Take tax planning: this is an area rife with complexity where technical and specialist knowledge is vital and advantageous. To benefit from tax efficiencies it might make good financial sense to advise a company to operate a foreign subsidiary. However, a solution that is technically sound on paper may in reality throw up many operational challenges such as an increased cost of workforce mobility, and have a negative impact on corporate reputation by not being seen to pay a fair share of tax.

A truly commercial professional balances these competing demands to find a solution that helps an organisation achieve the best possible business outcome. This may require problems to be framed in new ways. In the above example, rather than dive straight to a technical tax-planning solution, it may be possible to achieve the desired outcome – freeing up cash for investment – through means that fewer reputational or operational drawbacks.

Commerciality in practice: seven habits

Commerciality is a mind-set. Yet this does not mean it cannot be taught to new graduates or honed further by experienced professionals. To translate Commerciality into pract7 habits of commercialityice it is important to focus on behaviours. Identifying behaviours that frustrate clients, consciously eliminating these and replacing them with more commercial ones through practice and repetition is the best way to ensure lasting improvements are realised.

Based on extensive research among thousands of finance professionals and their clients, Meridian West has developed a framework to help professionals identify, communicate and improve Commerciality. The seven habits of Commerciality framework can be applied by finance professionals to any client engagement, regardless of their area of expertise. [More on the 7 habits]

Virtuous habits in practice: three examples

First: understanding the people. Business is mainly about managing people, relationships and politics. Being aware of individuals, their competing interests and motivations is therefore imperative not only for determining the solution to a given problem, but also how the rationale for that solution is communicated.

For example, one firm spends time creating relationship maps for all of its client engagements mapping out all individuals within their own team and the client team. This includes stakeholders such as the CEO and NEDs, not just the direct members of the finance team they liaise with on a daily basis. It is important to pay close attention to the competing interests and preferences of this wider group of individuals who may have power of veto over any decisions made.

Next: agreeing the scope. When deadlines and resources are tight, it is tempting to launch straight into a piece of work to complete it as quickly as possible. This leaves little time to think through the strategy. The most commercial advisers set goals and metrics about what a successful client engagement looks like, communicating information about desired outcomes, tasks, resource and timelines.

Scoping is critical for external advisers grappling with a move away from traditional ‘time and materials’ pricing to fixed or success-related fees. Having a clear scope of works agreed up front helps accurately price an engagement to avoid writing-off large amounts of work when client needs change.

Lastly: communicating with impact. A common complaint we hear a lot from time-poor executives is that financial reporting is long, technocratic and has to be translated for non-financial audiences. They want information which is easy to understand, quick to assimilate and highlights the key points in complex or contentious issues. Simple changes such as prioritising risks, explaining implications clearly for non-financial audiences and communicating visually make a big difference.

The payoff: why bother with Commerciality?

Meridian West’s Mid-Market Monitor, an annual study of buying behaviour in the audit and advisory market, shows that Commerciality can be a significant differentiator when clients choose which external firms they work with. Being able to articulate knowledge of sector trends, provide foresight on relevant issues, and be proactive on scoping and project management can boost pitch win rates and the profitability of engagements.

One firm that has tackled this challenge head on has reengineered its delivery of pension advice to adopt an approach based on Commerciality principles. In doing so they have been able to virtually eliminate an average 20% write-off in fees for subsequent engagements.

So what next for finance professionals?

The seven habits of Commerciality framework focuses on virtuous habits that have both short-term pay off (greater efficiency or profitability) and long-term benefits (improved competitive positioning). Developing a strategy sheet for an engagement, creating a stakeholder map, or focusing on outcomes need not be a tortuous experience.

Any adviser can benefit from spending just a few minutes being more thoughtful about Commerciality and what this means for their interactions with clients. Small changes matter. At the beginning of an engagement have the courage to ask Commerciality-focussed questions: Who are the key stakeholders? What form of communication is preferred? What kind of solution is being sought? What is the desired outcome? The answers might just surprise you.

[By Alastair Beddow, Associate Director and Ben Kent, Managing Director at Meridian West. A version of this article first appeared in the July issue of ACCA’s Accounting and Business magazine. ACCA is the global body for professional accountants.]