Key levers for successful controlling

Communication & cooperation with all areas of the company

What distinguishes a successful controller is knowing how to communicate his knowledge and experience to his manager. The ability to communicate effectively is not only of immense importance within his own department, but even more so when dealing with anyone else who carries out a management support role.

Controllers receive a large number of specific requests from managers, such as short-term cost-cutting projects, and these must be expressed using clear and precise language both on the part of the manager and the controller. As we know from empirical studies, any ambiguity in this interaction reduces performance. It is down to controllers to make sure that instructions are as precise as possible. Moreover, the role that controllers play in the eyes of the manager must be equally clear and precise: Not every manager wants a pro-active, management-oriented controller. A controller’s ability to communicate is particularly important when interaction with managers is hindered due to a shortage of time or a lack of business know-how, or when it is negative news that is being shared.

There is another reason why good communication skills are indispensable: Controllers have to work with managers who are all very different, their customers are heterogeneous. This is true on a personal level: They need to address a paternalistic manager in a different way than they would a pure analyst. However, controllers are also responsible for keeping an eye on the company as a whole (read our perspective "The big picture matters"). This requires interaction with all areas and all levels within the organization, which not only carry out very different functions but have also developed their own mindsets and subcultures. Communication is based on understanding. This means that controllers have to be able to adapt themselves to a wide range of corporate subcultures and be able to understand – at least at corporate level – an R&D manager equally as well as a marketing manager.

Against this background, it is hardly surprising that controllers rate communications skills so highly: According to a study carried out by our WHU Controller Panel, they rank second in the long list of skills required of a controller behind the ability to question critically and to recognize fault lines (Schäffer/Weber 2015, Trends & Benchmarks, p. 133).

However, communication is not only essential for controllers addressing their customers: Controllers are not the only ones who support management with their executive tasks. There are a number of other management support services, some of whom have similar duties and responsibilities to the controller. This is most evident in the focus on financial data for accounting. There used to be a clear distinction between controlling and accounting; one was responsible for internal issues, while the other formed the interface to external stakeholders. The internationalization of accounting, at the very latest, was responsible for greatly increasing the relevance of annual financial statements for management.

There are close links with the strategy department as well: Strategic planning sets the course for the predominantly financial parts of the control system and is therefore extremely relevant for controllers. Close ties also exist with Mergers & Acquisitions, whose decisions can change the structure of the company and are consequently just as important for controllers. While accounting is effectively part of finance, in many companies strategic supremacy is in the hands of the CEO, which means it is essential that there is collaboration across all members of the board. Moreover, internal auditing is also relevant for controlling. Although traditionally its primary aim is to ensure compliance, in some companies it also monitors profitability. We could expand the list further to include investor relations, in house consulting, or profit center accounting (“shadow controlling”).

All this raises the question of how controllers want to form the relationship with these other management support services. Is there a basic template for what a good relationship should look like? Put simply, there are two alternatives to choose from: The other management support services can be regarded as competitors battling to gain favor with the management, or as trustworthy partners with whom controllers can collaborate in various situations and constellations. Both patterns of behavior can be found in practice. This has to do with the corporate culture, on the one hand, and the attitude of individual managers in the respective business areas, on the other.

Working well together is the preferred alternative from a social perspective. Fortunately, it is also more advantageous economically, as an overwhelming majority of empirical studies has shown. Cooperative behavior results in a higher quality of work which in turn has a positive impact on company results. So, despite the amount of effort involved, cooperation pays off. The same applies – as we know from several empirical studies carried out by our Institute of Management Accounting and Control – in the field of controlling. Good cooperation has a positive impact on all tasks carried out by controllers. In our studies, we differentiated between the quality of information provision, planning, management control, advising management, and acting as critical counterpart – and all of these benefited from close cooperation!

Given these empirical findings, all controllers should put "cooperation with other business areas" on their agenda. But what exactly can be done to improve this? We differentiate between two groups of levers: structural and relational.

Structural levers help support communication and cooperation with each other on an organizational level. The points to consider here are a high degree of spatial proximity, establishing interfunctional teams, setting up interfunctional training, and creating dedicated channels of communication (e.g., regular coordination meetings). Relational levers are more about basic attitudes. The aim here is to reduce rivalries. In addition, it involves providing reassurance that although it may appear at first sight that departments concede their position on an issue lightly and this is not sanctioned, this behavior is actually desired.

Just how effective cooperation is depends essentially on the controllers and their attitude toward it. We recommend that you take an active approach to others, show readiness to understand their mindset and language (be it a manager or a department), foster a close exchange of information, put common goals first and foremost, lift the "shroud of mystery" surrounding controlling, avoid playing the "knowledge-is-power" card, and, last but not least, ignore the urge to position yourself as the management’s "one and only" business partner. It is intuitively clear to all controllers that when communication with their managers is going well, then they are doing well, too. The message that we want to share is that the same applies to communication with other management support services. A silo mentality within the company should generally be avoided. The problem with this way of thinking is that it ultimately deprives controllers of a large part of their basic function: If they are not networked, they are not able to see the "big picture" of the business as a whole (read more about this in "The big picture matters"). Yet networks can only work if there is effective communication with each other.

What controllers need to consider

  • Effective communication is the pinnacle of good controlling.
  • Your way of communicating should be adapted to each individual contact person.
  • Bear in mind that communication problems can be caused by both the sender and receiver of a message.
  • Orientate yourself to the different ways of thinking within the company and the language that results.
  • Be aware that communication is the basis for working together and building trust.
  • Always seek to cooperate with others; do not foster rivalry.
  • Professor Utz Schäffer & Professor Jürgen Weber

Professor Utz Schäffer & Professor Jürgen Weber

  • Knollmann, Ramon / Hirsch, Bernhard / Weber, Jürgen: Strategisches Controlling durch Kooperation von Controllerbereich und Strategieabteilung?, in: ZfM, Vol. 2 (2007), p. 296-334.
  • Burkert, Michael / Fischer, Fritz / Schäffer, Utz: Application of the controllability principle and managerial performance, in: Management Accounting Research, Vol. 22 (2011), p. 143-159.
  • Weber, J., & Schäffer, U. (2016). Einführung in das Controlling (15th ed.). Stuttgart: Schäffer-Poeschel.