Reducing key-person dependency in finance
On a finance team, there is always a looming threat of one or a few individuals being the only people capable of performing a key task, either because of their skills, knowledge or experience. This is known as key person dependency and can occurs in companies of all scales.
At Enable we have had customers telling us that they rely on certain individual for their rebates, they have been doing it for many many years and in fact, nobody else knows how to do it well, or even at all. But this comes with a high risk especially in times like today when everyone is remote working and your business evolves and grows with more and more suppliers. You will start to find that key person dependency will begin to hold you back.
To determine if your business has “key person dependency”, ask yourself these 5 questions:
First off you need to identify what critical information certain employees might know that no other employee has. Determine how much risk your dependency on those individuals poses to your finance team. You need to find a way for that information to be passed on if that key person leaves the organization and you need to be proactive about it. The more prepared you are now, the more seamless any kind of transition will be.
1. If I were to take a couple of weeks (or more) out of my business, will it run as efficiently as it does with me there?
2. What happens if my rebate person suddenly quits? They retire or unexpectedly leave the business?
3. Do I know the passwords and logins to our systems?
4. What if an employee leaves without providing documentation?
5. Will there be a greater expense and time to recruit a replacement?
Take control of your rebate management processes
One of the best ways to reduce key person dependency is to take ownership of the processes owned by finance. Rebate management processes are often complex, so they need to be structured. This means exercising thorough protocol. Have key finance personnel write guides, processes and procedures on the activities that comprise their daily work. By doing so, a new employee will be able to pick up complex processes in an efficient way.
When done well, taking control of processes is a tremendous way to mitigate key person dependency risk. It also ensures that procedures remain up to date. Processes should be reviewed effortlessly and objectively and any risks that may have been hidden can be addressed accordingly. A key component to controlling processes is leveraging collaboration within your finance team.
Encourage collaboration within your finance team
Deloitte defines collaboration in the workplace as: “Employees communicating and working together, building on each others’ ideas to produce something new or do something differently.” As businesses grow, so does the need for collaboration internally amongst finance teams. Although this is not always the case, according to a Deloitte survey, 51% of respondents said that either their organisation had no collaboration strategy, or that they were unsure if their organisation did.
When your finance team has strong working relationships with colleagues, the results are better business execution, higher efficiency rates and increased productivity. According to a Stanford report, participants who were primed to work together kept with the task 64% longer than those working solo and reported higher engagement levels, lower fatigue, and a higher success rate.
Better collaboration also reduces the likelihood of key person dependency because all of your finance team will be encouraged to share ideas, knowledge and their workload with each other. With a goal to work together to maximize the performance of their deals.
Don’t rely on spreadsheets
Having spoken to many customers managing rebates we have found the majority are working off manual, error prone spreadsheets mainly because they’re what finance are used to and widely available. In fact, a Ventana survey found that 59% of finance employees spend more than half their time working with spreadsheets, versus just 35% of front-office employees.
Using spreadsheets to manage rebates also creates a higher risk of key person dependency because one person will have the original file maybe on their desktop but then it gets emailed around, added to and then the original creator will only know how to fix any issues properly. Plus, the more spreadsheets you have, and the bigger they are, the more prone they are to human errors, resulting in misreporting. These mistakes can affect the whole business processes, even the bottom line.
Upgrade to a rebate management solution
Introducing new software can be expensive and disruptive. So, it’s not surprising that finance teams can be slow to invest in new IT, systems and processes. However, failure to upgrade tends to mean more reliance on manual tasks and isolated spreadsheets, as well as duplicated activity in your finance team. This not only reduces efficiency, but also increases the risk of errors and key person dependency.
Upgrading your rebate management entirely to a SaaS solution like Enable will ensure rebates are recorded in one stand-alone system, where all internal members of your finance team can collaborate efficiently. Therefore, reducing key person dependency.
5 key reasons why many finance teams have made the switch to a rebate management solution:
1. Removes key person dependency risk – Everyone in your finance team will have access to the rebate management software and because of the audit trail you can see who has amended what etc. We can also train new starters on how to use Enable properly.
2. Save time – Having the right rebate management software will automate a lot of the process and will save you time on things like data entry, fixing errors, and of course the time spent processing each rebate.
3. Clarity - A rebate management system may well and truly be the missing piece of your rebate management puzzle. With it in place, you will be able to clearly see the full rebate picture for your business to improve cash flow.
4. Report, collect and allocate money – With your rebates calculated, accrued and allocated correctly you will not only avoid disputes but also collect and pay out the right amounts.
5. Compliance – Trading agreements can be so complicated; you really need experts in rebate management to ensure compliance is guaranteed on each one.