Pillars and walls: balancing your finance department
Editor’s note: This is taken from a blog I wrote in 2018. In light of the uncertainty, chaos and disruption of 2020 with Covid-19, it is no less true than before, and if anything, those businesses I work with have benefitted this year from some of these principles and values held within the finance teams that I lead.
Recently I’ve been thinking about how the finance department sits within the overall running of the agency and how it’s so much more than just the elusive ‘guys in accounts’. I’m going to paint a picture about the role that a good and successful finance department holds when working alongside the more tangible outputs like creative, development, product or strategy.
We’re not just the guys busying away paying the bills (or making sure the agency is getting paid). When I talk about the finance team, I include governance, company secretary, corporate structuring, treasury management, risk management, financial performance and include profitability, financial effectiveness, efficiency and productivity. Because when these things are managed well, they enhance the long-term value and ROI of the company.
But, if they become the sole or dominant overlord, they can wring out any hope of producing creative work that clients (and their customers) will love, it’s an important balance in creative businesses.
Welcome to our house
A great finance department is only as good as the sum of its parts, and that includes individual team members and a leader with vision. The way I see it, an agency is like a large, open building, and the finance team become the load bearers acting as the pillars and the walls. Don’t get me wrong, I recognise the huge importance of other teams within the business, but they each have their own role within the building too.
Pillars of the (agency) community
By definition, pillars keep the building standing over a long period time – come rain, shine or high water. Factors external to the agency and therefore out of our control, such as global market crashes, pandemics(!), booms, inflation and interest rates all change with an undulating ebb and flow. Even during the stormier seasons, the building not only needs the strength to weather the storm, but also the ability to stand and appreciate the good weather when it comes too!
So, as a finance department, one of our top priorities is to ensure the agency has financial security and access to resources on its balance sheet to be able to provide for long term sustainability, whether we’re navigating hard times or good.
Protect, don’t dictate
Walls are not only there to protect the building from external elements, but also serve as boundaries for what happens within – protecting from loss or stopping things from spilling over. There is a great deal of internal value and influence placed on the finance leader, and for some it could be tempting to use that power to get overly involved with the day-to-day creative output (design, strategy etc). Be it personal opinion or shooting down an idea because of an overly-cautious budget, the draw can sometimes be there to meddle where you may not be as qualified as other experts such as the Creative or Digital Directors of the agency.
A gentle boundary, not a prison
If the walls are too enclosed, you’re too goal-orientated and there’s no freedom for the creatives to play, explore or discover something truly unique, then congratulations – you’ve stifled the creativity out of your agency. Having everything solely driven by financial metrics, or measured to the Nth degree isn’t conducive to encouraging creativity to flourish.
On the flip side, if there are no boundaries, no walls, no understanding of what’s affordable for the business then those pillars I mentioned before are going to suffer. Without measuring the cost of activity, unnecessary pressure is put on the pillars and can have the potential to destabilise the whole structure. Creative agencies with no financial control can often find they come unstuck over time, and may not have prepared enough for high-risk scenarios, or have the knowledge of where the walls should be places.
Like hitting a brick wall
No matter how lenient, or strict you are with the boundaries you place for the rest of the agency, eventually those teams will come up against one of the finance department’s walls, and when they do, they’ll know about it. It’s hard, resolute, and unswerving – and it’s there for their best interest. But, if the department has a smart leader, then those creatives will have had to go some way to find it, and were able to have some freedoms of choice along the way before financial matters became a significant, and important consideration.
Be there when they need you
Let’s face it, if you’re running a finance department it’s because you’re fantastic with the numbers, that’s where your strengths lie and are celebrated. So, when it comes to the delivery of work, resist that temptation to meddle from the word go. Have the competence, experience and confidence to let the staff or departments that are responsible for delivery know when their activity is having a detrimental impact on the financial performance as a whole...but only if it reaches that point.
The opinion and information included in this blog may provide some context, or a basic introduction to a topic. However, the practical realities of any person’s tax position, or a business’ structure etc. may mean that the content either does not apply, or is not relevant. Furthermore, as is often the way with tax regimes, the rates, ules and application may change at any time, and as such this blog may be out of date at any time after its posting. We recommend that you seek further professional advice if the topics covered are relevant to you, or if you think they might be. This article does not constitute advice, and 3D FD and its representatives do not take any responsibility for decisions you make, or actions you take as a result of reading it. However, we are keen for businesses to flourish, and if you think we might be able to help you, please do feel free to contact us (or your existing professional advisers) for bespoke advice.