The Controller as Business Partner

Business Partnering With Managers and Experts

The words “business partner” have been on everybody’s lips lately. The term established itself very quickly – perhaps because it sounds American or because the word “partner” has such positive connotations. Related terms such as “economic conscience”, “adviser”, or “critical counterpart” sound more challenging and, on the whole, more complex.

Does every controller really need to become a business partner? So far, the community appears divided on this point. There is no question (as the WHU Controller Panel shows) in the case of heads of controlling departments, that is, the controllers who work closely with management. They should be business partners. Yet it is debatable whether every controller at clerical level really needs to follow this lead. On the one hand, there is the looming threat of a two-tier society: Those who do not want to be business partners risk outing themselves as second-class controllers and being labelled bean counters. On the other hand, you would be justified in asking why those controllers who have virtually no dealings with managers at work should have to establish a relationship with management. If they are tool and system specialists, then surely their contacts and clients are all in the controlling department itself.

There are two points of view behind the idea of the “business partner” which are still open to debate: On the one hand, the term can be equated with a specific perspective or philosophy (”support of and for management“) and, on the other hand, with a range of tasks. This includes all tasks that controllers provide in direct contact with managers.

If we accept the latter view, we are ultimately faced with the question of what to call those controllers who are not business partners? As yet, there is no name for them. We often hear the terms “professionals” or “experts” used in this connection. Whatever we decide to call them, they face a rather uncertain future professionally. The scope of their activities is under threat from such issues as standardization and automated IT solutions. This means that the proportion of experts in the total number of controllers will fall in the near future. We can already observe this in large companies today. The experts’ tasks are increasingly being bundled into shared service centers that are optimized for efficiency.

How much both fields of work will change in importance in future very much depends on developments in the field of IT. The latest developments in the IT landscape are having different effects on controlling than the "first wave", that is, the introduction of ERP systems. Back then, the resources in controlling departments that were freed up by this development were transferred to higher-order activities, additional analyses, or project work. This resulted in a corresponding improvement in the standing and influence of controllers. Today, at least some of this freed-up capacity is being cut back; the number of controllers will decline despite the fact that they have achieved acceptance and an important part in the company’s success. 

Nevertheless, experts are needed just as much business partners, though not in the same number as before: Indeed, the business partner’s success is dependent on the quality of the experts’ work. It is essential that business partners are aware of this and act accordingly. Their partners sit not only among the management, but also in the controlling department itself in the form of experts who do the preliminary work for them, provide them with evaluations, and ensure the quality of the figures.

Business partners should be aware that they have an important task: They must use their business knowledge to make sure that the experts, too, have an adequate and sustained understanding of what lies behind the figures, as well as the business and the factors driving it. Only then will the experts be in a position to fulfil their role as supplier, both now and in future. And only then will they be able to see where the business is going. Once again, it is down to the business partners to convey this knowledge to the experts. As is so often the case, by helping others they are also helping themselves. This must go hand in hand with acceptance and a sense of being equal. Even the much contended "on an equal footing" refers not only to managers, but also to experts.

For heads of controlling, this means fostering a spirit of cooperation and ensuring that everyone is treated equally despite differences in career progression, which see some controllers spending a longer time as specialists in the controlling department, and others following a management career with frequent job changes. In view of this diversity, everyone must judge for him- or herself whether being designated a business partner is actually beneficial for all controllers. In any case, it should in no way obscure the differences.

Professor Utz Schäffer and Professor Jürgen Weber

The Journey from “Master of Numbers” to Business Partner

Controllers have undergone a very successful transformation. It can be traced through three distinct stages that follow a certain logic. This process suggests that the much vaunted role of business partner is not merely a current fad but rather a concept that should be the strategic focus of the controlling function.

To start with, the controller’s role is that of "master" of financial data. He is there to ensure that the information required by management is accurate, consistent, and up-to-date, and he holds himself accountable for ensuring transparency. Managers and controllers work together in a customer-supplier relationship. The level of interaction required between them is small – as shown below in a diagram based on Albrecht Deyhle’s intersecting sets – and the relationship between manager and controller is hierarchical: The controller carries out preliminary work for the manager, and it is not necessary for him to act on an equal footing with management.

Fig. 1: The stage of "master" of financial data

The navigator stage is based on data transparency. Here, controllers also take responsibility for the business methods that are used, and they contribute to managing the company in a success-oriented way. The level of cooperation with management increases significantly in order to be able to fulfil this role. Controllers take an active part by not only unburdening managers but also by complementing and constraining them. As such, an important prerequisite for providing successful management support is that managers and controllers operate on "an equal footing". This is clearly shown in Albrecht Deyhle’s famous Venn diagram.

Fig. 2: The stage of navigator based on Albrecht Deyhle (taken from ICV and IGC 2012, p. 4)

In stage three, which again builds on the previous stage, the controller reaches the level of business partner, a role that allows him to work more intensively with management and on a wider range of topics. This is the result of changes on the part of both the manager and the controller.

On the one hand, managers today have – thanks to modern training programs and their successful collaboration with controllers – acquired very good business skills. Accordingly, they no longer need the help of controllers. On the other hand, today’s managers have effective IT solutions available to them, which mean they can obtain the information they require themselves (“self service”).

In turn, controllers have acquired extensive managerial know-how over the years. They feel just as much at home with organizational issues or employee incentive schemes as they do with traditional financial topics. Moreover, controllers have – by the time they reach the level of business partner – also acquired a wealth of business knowledge. All this means that they are in a position to provide extensive support to management.

All in all, the result is a significant overlap between the activities carried out by managers and controllers, as shown in Fig. 3.

Fig. 3: The stage of business partner (taken from Schäffer/Weber 2014)

The diagram not only illustrates the direction this development has taken to date, but also leads us to ask whether this trend will only end when the two ellipses completely overlap each other; in other words, controllers are no longer needed ("self controlling"). Key aspects to be considered when answering this question are the significance of the counterpart function and the degree of innovation in business processes, which both strengthen the case against dispensing with the role of controller. It remains exciting...

Professor Utz Schäffer & Professor Jürgen Weber