- Author
- Angela Dixon
- Role
- Managing Director
At SocietyWorks we believe in transparency. One of the ways we live this value is by working in the open, and giving our team members space on our blog to write about what they’re working on, something they’re interested in or even perhaps a mistake or challenge they’ve learned from.
This blog post has been written by Angela Dixon, our Managing Director, who shares her thoughts on financial forecasting and decision making in uncertainty.
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As well as being Managing Director of SocietyWorks, I am also an accountant.
This is not a confession about my number crunching roots, but rather a reflection on how leadership’s approach to utilising financial information for decision making can either enable or inhibit teams. Our approach can either carve out pathways through difficult budget and resource constrained terrains, or reinforce walls that stop our teams from even glimpsing the potential of the land beyond.
I have been a chartered accountant for twenty years and served in a number of financial leadership positions across industry and the third sector. This experience has provided me with a unique lens through which to assess decision making at the most senior levels of organisations.
At SocietyWorks, we are fast approaching our financial year end and have recently presented our analysis of the year-that-was alongside our plans and forecasts for the year-to-come to our board for accountability and scrutiny.
While I am incredibly fortunate to work with a mission driven board that recognises the important financial and non-financial variables that matter for effective evaluation and decision making, ‘year-end’ has also got me thinking about the scale and complexity of the financial and bureaucratic challenges in the local authorities we serve.
What follows are some humble reflections on year-end through a financial leadership lens, shared in full recognition that every organisation will have their own particular localised concerns, pressures, and complexities to navigate.
Reflections for public sector decision makers and financial leaders
When we operate in conditions of scarce resources, whether people or budgets, every decision counts. The bigger, more strategic, decisions we make in an organisation are the ones that have the most inherent uncertainties.
Uncertainty should not stop decisions being made, but rather challenge us to be more alert to the variables
All decision makers need to face up to the uncertainty in the environments we operate in. This should force us into meaningful collaborative dialogue about risk, proportionate mitigation strategies that may be available, and acceptance or non acceptance of risk that remains.
Uncertainty should not stop decisions being made, but rather challenge us to be more alert to the variables in our internal and external operating environments, known and unknown. We should train ourselves and our teams to be alert to signals of potential risks materialising, and symptoms of those that may already have materialised, and be ready to respond swiftly through collaborative dialogue, problem definition and appropriate problem solving measures.
Well presented financial modelling and indicators highlighting business critical variables can support the visualisation of potential future scenarios. This will support better quality decision making in uncertainty. While none of us has a crystal ball to predict the future, quality and iterative forecasting can help with futurecasting and the framing and defining of options.
Monthly, quarterly, and year end financial accounts and analysis of historic reporting periods are useful for the recognition and evaluation of where we have been, but it is important to remember that none of us has the power to influence and change the past. We may think it is worth investing time and energy to change the overarching narratives that tell the stories of the past, but all that energy investment reduces that which could be spent on collaborating for more quality decision making to carve out a better future.
Regular and iterative financial forecasting which highlights assumptions known and unknown, certainty and uncertainty, is more crucial to provide the critical information to inform decisions that will impact our future pathways. Quality financial analysis will support the revisiting of previously forecast futures and prompt collaborative reflection as to whether slight directional change, more substantial pivot, hold-our-nerve, pause or halt is the best response.
If experience has taught me anything it’s to experiment and take risks at scales that are acceptable within your own financial and organisational context and risk appetite
A financial year end is just a date. It is a line drawn in the sand. It is not tangible in the sense of a physical gate we pass through at a particular time. If a financial year end is treated as more than just a date when one reporting period ends and another begins, where an activity happening or budget spent on one day is so much more important than on the very next day, it will create perverse incentives that drive behaviours that will hinder effective prioritisation or distribution of resources.
Days follow days and our planning, delivery, and evaluation cycles should be more fluid and responsive to our emerging operating environments. If they are not, then we will certainly waste time and resources and focus scarce energy on building narratives and past storylines that do not help solve our ongoing and future challenges.
Final thoughts
I believe in failing fast and learning faster. If experience has taught me anything it’s to experiment and take risks at scales that are acceptable within your own financial and organisational context and risk appetite, and be happy to revisit past assumptions, decisions, and iterate or pivot when appropriate.
At SocietyWorks our conversations are had transparently and in the open with our board which provides essential accountability and governance for a mission driven business. We speak about potential risks before they materialise and operate on a no-surprises basis. This has built open and trusting relationships between the board and executive team. We encourage critical challenge which is received with a spirit of openness, and responded to with collaborative dialogue and shared ownership for resolution.
In this post, I have shared a handful of thoughts which I hope may be useful to prompt some reflection on the processes behind decision making in organisations. With leaders role modelling focus on the right things, we may open up the potential of our teams for better seeing the systems we operate within, and the different levers and variables that interact and influence our potential futures. This may in turn open up the space and creativity to work through pressing priorities in spite of challenging and difficult resource and budget constraints.
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If you’d like to chat to Angela about anything in her blog post, you can connect with her on LinkedIn.
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Image: Jordan Ladikos