Sales and Finance: Business’ Power Couple… or Another Divorce Story?
This week featured a holiday I quite frankly had not yet heard of – National Spouse Day. Sure, we know what your thinking … “Geez, they have a day for everything now!” (Seriously, this week was also National Breakfast Week). These two national recognitions had us thinking more about some of the classic power pairings – like Jay Z and Beyonce… or bacon and eggs – as well as parings in the workplace and the relationships between these individuals.
In the business world, the two that often come to mind are sales and finance departments. Both are at the foundation of any company, yet often there are huge gaps between the two. This happens for a multitude of reasons, one of the most common being a lack of alignment on spending. This is in large part due to the role spreadsheets continue to play within many companies.
Like in any relationship, sales and finance will have their occasional spat. In the business world, though, we hardly see sales and finance as a couple. More often than not they are more like adversaries. As different as these two departments are, they often rely too heavily on spreadsheets for many tasks such as measuring business performance, budgeting, or tracking sales commissions. The trick is, the numbers they are seeing are often at odds, different, or off alignment to the original promises they made to each other. Like with any relationship, this builds mistrust, which leads to bickering, discord and well, in extreme cases even divorce (in the business sense of the word).
So what are some common problems we see in spreadsheets that cause these issues? Miscalculated sales commission numbers can result in over-payment, instantly leading to financial mayhem. In extreme cases we have seen this mistake lead to a company having to restate their financial earnings numbers. I can’t think of anything that would erode trust with a CFO faster. Potential missed opportunities could also come about for sales teams who have zero clarity into their performance. Finance forecasts around goals that are set for sales, but sales reps might not understand how their performance is mapping to those goals or what they need to do to hit them.
Before you start looking up divorce lawyers, you should know that all of this can be avoided if the company is just a little more transparent. There are ways a better plan can be built to alleviate risk and maximize results. For starters, the sales and finance departments must both be involved in the planning process for sales compensation. Once that’s established, here are three steps to strengthen the relationship between sales and finance:
1.) Develop a Realistic Plan: It is common for companies to approve a plan they unknowingly cannot implement, making it essential to be sure you have the data and technology in place before you plan. Often sales will forge ahead with a plan without consulting finance. This can have a far-reaching impact on both the engagement of sales staff and the finance team’s annual plan.
2.) Analyze, Tweak … and Analyze Again: Once you have a plan in place, it’s easy to become complacent until the end of the quarter. Instead, analyze data frequently and make course corrections accordingly. There is no linear method when it comes to data analysis. That’s why it’s good to see what’s working while keeping everyone in the loop. And don’t forget the data! The best way to truly drive optimal performance with the least amount of risk is by analyzing and understanding the data around you. PS. In a relationship, it’s hard for anyone to argue with the facts, and data gives you exactly that.
3. Automate and Communicate: Ongoing communication is important in any relationship. By leveraging an automated sales compensation management system, transparent numbers will foster more transparent communication, and remedy any contention between sales and finance. The numbers won’t lie, and communication lines will become clearer.
Marriage takes a lot of work in order for it to look effortless. This can also apply in business. There’s plenty of work ahead. But if sales and finance can put their differences aside for the greater good, then productivity will increase, the bottom line will improve, and sales and finance can finally be a true power couple at your organization–just in time for Valentine’s Day.
Want to learn more about how sales and finance can work together instead of against each other? Download our guide: CFO Call to Action: Align Sales and Finance with a Cloud-Based Sales Incentive Solution.