Today’s working environment is characterized by the increasing advent of joint project activities compared to the day-to-day business tasks that are mostly performed by individuals. The project teams often do not comprise members of just one department or discipline, but are gatherings of qualified people from various hierarchical levels, with different backgrounds and functional expertise, with the aim of working toward a joint purpose or goal.
It is no coincidence that management accountants are frequently included within such cross-functional groups. This is because, on the one hand, one of their main responsibilities is to regularly compile and provide information to other decision-makers. On the other hand, they often concentrate on a pronounced set of general technical competences and social skills.
Before referring to the personal qualities that management accountants can incorporate into multi-disciplinary teams, let us take a look at the arrangements and advantages of cross-functional groups. These groups collaborate to pursue a specific corporate target or solve a particular problem that affects larger parts of the organization.
Introduction: The power of cross-functional teams
The emergence of cross-functional teams has also influenced organizational processes and structures. In terms of hierarchy, we can state that such groups are defined by an idea of self-direction, which means multi-directional dynamics rather than a hierarchical approach, or decision-making based on internal consensus rather than the prescribed directives. This complies with the overall trend of advocating flatter structures within enterprises.
As cross-functional teams often accumulate team members from departments and disciplines lying far apart, there is also a broad spectrum of information demands that have to be satisfied. In order to make decisions, the project group might even need to draw information from literally all information sources available, as the level of information and the information gaps differ from person to person. So, for instance, engineers might lack information in terms of commercial and financial data, while business clerks may be in need of more technical background knowledge about the project’s problem definition.
Therefore, system integration plays an important role because it allows for information access through one or only a few interfaces. Hence, it is necessary that information is prepared in a form that is understandable for everyone within the team. That includes reducing specialized jargon, explaining difficult and complex issues, filtering information in terms of relevance, and interpreting results.
However, the multi-layered team composition also provides a breeding ground for knowledge and ideas within the team itself. Each member is an expert in his/her specific function, and can support the others with “exclusive” expertise in the individual discipline. This can save time in gaining important information and ensure a depth of information that would otherwise remain hidden.
Teamwork in cross-functional teams optimally leads to a lift of creative potential (out-of-the-box thinking). Each team member—having a different viewpoint or perspective due to the differing functional expertise—may come up with an alternative solution for the problem considered. Ultimately, valuable competitive advantages hopefully exceed the requirements necessary to broadly unroll a cross-functional team approach that pushes back traditional departmental or functional boundaries.
Management accountants’ input in cross-functional teams
Management accountants can play differing roles while being members of cross-functional teams. For instance, they could perform the core tasks of their conventional area of responsibility (e.g. budget monitoring, economic calculations), be limited to a moderating function only, focus on the implementation stage, or take on a team leadership role. In the following, we will introduce five typical varieties of such a group membership (that can also occur in combination).
I. A conventional management accounting role
That classical role focuses on the tasks and responsibilities that a management accountant already faces in his/her day-to-day practice. Primarily, it is not about simple number crunching, but involves assisting with problem-solving and decision-making by collecting, providing, and assessing crucial team information.
When it comes to financial or economical questions, management accountants are usually appropriate advisors. So, after preparing the information, they also give business advice based on the information that has been provided. Calculated financial figures like the return on investment on a certain project can, in addition, function as a common denominator within the cross-functional team in case of differing viewpoints on the next steps that should be taken.
Management accountants are already used to working with heavy amounts of data and information. Therefore, they are destined for performing data gathering and data analysis for the team, developing scenarios afterward, and making economic calculations on the outcome of alternatives or certain decisions made in the group, as well as initiating actions to measure and monitor the team’s success. In that last context, management accountants are also intended to keep an eye on the team’s budgetary discipline if the cross-functional team project is constrained by certain financial budget limitations.
II. A pure moderating and mediating role
Especially in team assignments that rely less on data and figures, it is possible that the management accountant primarily takes over the role of a moderator and, if necessary, a mediator. This is a role that quite a few management accountants might already be assigned to, for instance, in the common annual budget procedures and discussions. Just think of several internally competing departments fighting for the same tight budgets and resources, or a differing understanding in terms of achievable objectives between the operational units and the management. Eventually, the management accountant has to soften hardened positions and find a solution acceptable to all the concerned parties.
Cross-functional teams—in spite of their advantages described at the beginning—might still be fueled by an unhealthy condition of distinct departmental thinking. Let us assume that the team is tasked with developing ideas about cost savings at the corporate level. Will a team member endorse a proposal that especially plans a big cost-cutting program in his/her department? More likely, he/she will favor cost-cutting in other divisions that he/she is not directly involved with. Therefore, team conflicts between its members, resulting from such divisional egoism, or even just from pure personal vanities, need to be tamed.
In other words, the management accountant has to moderate and mediate between various departments, views, and interests. Being self-reliant, impartial, strongly communicative, cooperative, socially oriented, and empathetic, he/she advises in cases of difficulties and addresses them in a controlled manner.
Optimally, the management accountant integrates each member with his/her individual ideals, characteristics, and competencies into the team while approaching everyone without prejudices, fostering a team spirit, and showing an interest in all existing viewpoints and initial situations. This should hopefully lead to a cross-functional team climate that is more or less free of antipathy, fear, and distrust, as well as departmental or divisional self-interests, and instead give priority to the corporate objectives and its success.
Read on for Part 2, which introduces three other potential roles that management accountants can play within cross-functional teams:
Management Accountants’ Different Roles on Cross-Functional Teams (Part 2)
III. A consistent leadership role
IV. A mover-and-shaker role (implementation role)
V. A role that checks reality and focuses on the big picture
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Must-read blog posts about management accounting and financial control—classical topics, as well as modern subjects, latest trends, and current challenges in the management accounting discipline. Aimed to inform, inspire, and entertain management accountants and anyone with a deeper interest in management accounting.