It’s inevitable in a finance consultant’s career to be confronted with a new industry. One of the first things the client may ask is “How are you going to be able to help?” A standard reply would be to say, “A P&L is a P&L is a P&L,” or “A cash flow is a cash flow is a cash flow,” and so on. Finance skills are transferrable across industries, right?
Not quite. The notion of transferrable skills only carries water from a tactical standpoint. As a consultant gets more familiar with an industry, other partners from different lines of business will lean on them for strategic support in translating their needs into a financial plan (e.g., a budget, a forecast, or a cash flow forecast). Being well-versed in industry knowledge also helps finance folks communicate with rooms full of executives, who might be interested in hearing the story of last quarter, for example. It can also come in handy for stakeholder management, particularly in complex situations.
Stakeholder Management: A Case Study
In some instances, a finance consultant will work primarily with a single department or a single business unit, which requires a unique sort of immersion. That consultant might need to learn how to “speak tech” if they’re working with an IT department, or “speak VOD” if they’re working in the entertainment industry on film ultimates. Then they must be able to translate and interpret financial figures to a general audience and interested executives using that specific language.
Then there are more complex scenarios, in which a finance consultant will work with many stakeholders with a wide range of objectives. In one client engagement, one of our consultants was working for a large organization that acquired a company and then sold off parts of that acquisition to a few other entities. A condition for all these splits was that transitional service agreements (TSAs) would be in place between entities to ensure smooth separations. These agreements included (but were not limited to) accounting, finance and HR support, access to different networks and bifurcating third-party licenses.
Imagine managing the cash flow for each TSA, the ins and outs of all the scope changes and the communications between entity leaders and division leads providing the services. Not only was it important to get the numbers right, but the consultant also had to “speak” Department A-ish, B-ish, C-ish as well as External Stakeholder X-ish, Y-ish and Z-ish. This project necessitated strategic stakeholder management on top of the linguistic gymnastics: intermingled cost sharing meant that communication with stakeholders could not reveal sensitive information about the other stakeholders.
A typical interaction might go like this:
- In a weekly meeting with the organization’s project management office (PMO), external Stakeholder X would ask a clarifying question about the fiscal impact of a change request on one of services being received.
- The finance representative for the organization would bring the question directly to the department lead for the answer.
- That department lead would meet internally with the PMO and the finance rep for the change and how it affects all the external stakeholders (X, Y and Z). For example, it could be a labor rate change or a deal renewal, the details of which would be too sensitive to share.
- The finance rep would then boil down the information provided by the department lead to only offer a high-level view of what that department’s changes were, in general enough terms to external Stakeholder X, so as not to reveal information sensitive to the organization or to external Stakeholders Y and Z.
- Rinse and repeat.
For our more visual readers, this is another interpretation:
Some examples of requests that might require this type of stakeholder management are reporting on:
- Stakeholder X’s # of active users of an app versus all other Stakeholders as a % of total
- Stakeholder Y’s costs in $ and what it represents as a % of the total
- The organization’s general position on passing costs and reasons for making exceptions to the rule
Every now and again in this scenario, an external stakeholder will ask questions that require digging into more detail, not knowing that they are asking for sensitive information. This is where management of expectations becomes important. Having an open dialogue between partners without revealing too much information requires a balance that is developed over time and through experience with each partner. It is the job of the finance consulting professional to gauge the comfort level of the client they are supporting and to touch base with the in-house legal counsel, if available, on what is appropriate to share.
Stakeholders will be sensitive to the changes being made and will have to justify significant dollar variances to their leadership teams as well. That requires them to ask for as much detail as possible, and to drill into root causes at times. The organization can maintain a good relationship with stakeholders through open communication, choosing when and where to divulge details and limiting disputes that could delay payments and/or end up in dispute resolution.
Tailoring the Management to the Project
An important caveat from the Project Management Book of Knowledge is recognition from the PMI that the best practices or standards provided will not necessarily be followed verbatim in all programs or all projects. The guidance therefore needs to be tailored to the individual specific needs of the project at hand. In this instance, the tailoring comes down to stakeholder management. The financial project manager typically maintains a stakeholder register, and lessons learned regarding individuals on that register, as well as a management plan on how to best communicate with each person given their requirements.
One of the challenges to the aforementioned TSA program was that while a regular cadence to discuss scope and timing with these stakeholders was already in place, we needed to develop financial communications over time. It’s one thing to provide a cash flow on a monthly or quarterly cadence. It’s a different animal altogether when the components of the services are not easily distinguishable between different external entities.
While sending a zip file full of everyone’s data to one of the external stakeholders (“Here’s everything we have. Have fun!”) would’ve been quick, doing so would have disclosed information to an outside party that may have invited further unnecessary scrutiny. So calculations would be communicated in tandem with changes in scope. The management of external stakeholder expectations not only includes the receipt of partial, high-level information, but also asking stakeholders to allow for time while the (now white-haired) financial consultant patiently researches the answer.
The Language of Stakeholder Management
If you need someone to support your strategic objectives, translate the language of industry-fluent stakeholders and drive your project forward, consider 8020 Consulting’s team of accounting and finance professionals. Our team offers wide range of specialties, experiences and perspectives that can create provable value and advance the office of the CFO. Contact us to learn more. You can also learn more in our service explainer:
About the Author
Seena has been with 8020 Consulting for more than eight years and has worked in a variety of industries including, but not limited to, entertainment, education, health and retail operations. During that time, he has continued his education to receive several certifications, most notably a Project Management Professional certificate (PMP) and a Certified Valuation Analyst certificate (CVA). Prior to joining 8020 Consulting, Seena served as a retail analyst for Harbor Freight Tools and consulted with a variety of companies executing projects in the financial, academic, food and beverage, retail/wholesale, legal and investigations industries. His specialties include project management, financial modeling, systems implementation, budgeting and forecasting, valuation, compensation, data mining and strategy. He attended the University of Connecticut, where he received his bachelor’s and his master’s degrees with a focus in quantitative sociology, and later on went to Pepperdine University, where he received his MBA.