CFOs must update finance's organizational structure to keep pace with evolving transformation objectives and business needs. Explore Gartner’s 6-step framework to simplify your organizational redesign process.
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Finance Org Structure: Guide for CFOs
How to effectively lead a finance org structure redesign
Evolving finance’s organizational design is a top priority for CFOs. In a growing number of organizations, the traditional finance department structure is becoming less fit for purpose as the rest of the business changes.
Download Gartner’s 6-step framework for CFOs to effectively navigate essential decisions for updating finance's department structure, including:
- Selecting activities for outsourcing
- Identifying the appropriate level of centralization
- Designing reporting lines to facilitate efficient work
About Finance Department Structure
Despite two decades of transformation, most finance organization charts today are strikingly similar to those of the early 2000s. At the same time, the demand for higher-quality insights continues to increase while business environments become more complex, technology rapidly changes the way people work, and budgets remain flat or are reduced.
Finance department structure changes can be difficult as some stakeholders fear the loss of decision-making authority, influence, autonomy and even job security. But CFOs cannot shy away from this challenge. Organization structure must evolve to enable finance transformation, break down silos, optimally allocate resources and increase the speed of insight generation and decision making.
However, department structure is only one element of the operating model that can be manipulated to achieve transformational outcomes. CFOs should be cautious about changing department structure without adequate consideration of the entire operating model and their vision for finance’s future. Furthermore, changing only department structure will be insufficient to address underlying challenges.
CFOs should not proceed with making changes to their department structure before fully understanding and answering the following questions:
What are the driving forces behind the organization redesign?
Does finance leadership have a clear vision for the future?
Does finance leadership understand all elements of the operating model that need to change in conjunction with the organization structure to achieve the vision?
Finance Department Structure FAQs
What is finance department structure?
Finance functions do not all look the same, and they divide work differently among subfunctions and teams. Accounting is the only subfunction present in all finance functions. Other sub-functions may include: Financial planning and analysis (FP&A), treasury, tax, finance IT, shared services, finance transformation, investor relations, and commercial finance.
However, most finance organizational structures have changed very little over the past decade despite increased business complexity, greater demand for higher-quality insights from the business and rapidly advancing technology. In a growing number of finance organizations, the traditional organizational structure is becoming less fit for purpose as the rest of the business changes.
What trends are impacting finance department structure?
There are four emerging attributes of finance organization charts. Each is becoming increasingly common and has the potential to enhance high-value capabilities that will be necessary as finance transforms:
Technology, data and analytics teams organized for cross-functional delivery
A CFO with capacity to assume enterprisewide leadership
Groups capable of managing a growing number of interdependent projects
Teams positioned to elevate finance analyses and deliver actionable insights to the business
CFOs should assess whether implementing any of these attributes would address limitations in their current structure. While no single organizational structure is “best,” finance should strive for a structure that aligns with the nature of its enterprise business, strategic ambitions and organizational culture.
What is the first step in redesigning finance's org structure?
The most important decision CFOs need to resolve, ideally at the beginning of a redesign initiative, is what activities the finance function should really own. CFOs should instruct their leadership team to produce a catalog or audit of all the high-level activities they currently support.
This review of activity ownership accomplishes a few valuable things. First, it allows CFOs to see where their teams have suffered from mission creep — the unintentional expansion of their mandate. Second, it allows CFOs to easily spot overlapping responsibilities that might otherwise be hard to detect. Third, this type of activity catalog becomes a tool leaders can use throughout the organizational redesign process to make decisions about responsibilities, team resources, sourcing and centralization.