FP&A and Operations: Creating Powerful Partnerships for Strategic Growth

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Episode 145: What happens when your FP&A team operates in isolation from the people actually running your business? Nothing good. The gap between finance and operations isn't just an organizational issue—it's a strategic vulnerability that could be costing your company significant competitive advantage.

Bridging this divide creates transformative opportunities. When finance professionals develop deep partnerships with operations teams, forecasting becomes dramatically more accurate, resource allocation improves, and the organization gains agility to respond to market changes. This alignment doesn't happen accidentally—it requires intentional leadership and cultural development focused on building mutual trust.

A well-aligned FP&A team operates as a true strategic partner rather than just a reporting function. They maintain a forward-looking mindset using forecasting, scenario analysis, and sensitivity testing to guide decisions instead of merely reporting historical results. Processes become streamlined, data grows more accurate, and finance professionals proactively engage with department leaders to translate strategy into measurable financial plans.

The alternative? Disconnected financial plans, unrealistic budgets, inefficient resource allocation, and the inability to respond quickly to changing market conditions. Operations may pursue initiatives that don't reflect financial constraints, while finance imposes limitations without understanding operational needs. Communication breakdowns reduce trust, weaken decision-making, and ultimately erode competitiveness.

Ready to transform this relationship in your organization? Start by developing a common language that translates finance terms into operational impacts. Build trust by providing insights that help operations succeed rather than just highlighting problems. Know the micro-details of the metrics you analyze, and be willing to step away from your desk to understand what's really driving performance. Remember: finance leaders have both the ethical and fiduciary responsibility to move the business forward through powerful partnerships.

Episode outline:

1. The benefits of properly strategically aligning your FP&A team,
2. What happens when FP&A is not aligned, and
3. A few steps to get started.

Please connect with me on:

1. Instagram: stephen.mclain
2. Twitter: smclainiii
3. Facebook: stephenmclainconsultant
4. LinkedIn: stephenjmclainiii

For more resources, please visit Finance Leader Academy:  financeleaderacademy.com.

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Episode Transcript

Stephen McLain (00:04):
Your financial planning and analysis team
performs many tasks supportingteams across the entire company.
Are they doing the right tasks?
Are they working on the tasksthat matter? How strongly does
your fpna team support youroperations team. Are they
aligned together and alignedwith the overall strategy? I

(00:25):
believe the more your fpna worksclosely with operations, the
more competitive yourorganization will be, resulting
in improved market positioningand more revenue. Let's dig into
why it's important to alignthese two important teams in the
company. Please enjoy theepisode. Welcome to the finance
leader podcast where leadershipis bigger than the numbers. I'm

(00:48):
your host. Stephen McLain, thisis the podcast for developing
leaders in finance andaccounting. Please consider
following me on Twitter,Facebook, Instagram and
LinkedIn. My usernames and thelinks are in this episode's show
notes. You can also followfinance leader Academy on
LinkedIn. Thank you. This isepisode number 145, and I'll be

(01:09):
talking about why aligning theFinancial Planning and Analysis
Team with operations will bemore beneficial to the
organization. And I willhighlight the following topics.
Number one, the benefits ofproperly strategically aligning
your fpna team. Number two, whathappens when fpna is not
aligned? And three, a few stepsto get started. Welcome back to

(01:32):
another fun and leadershipfocused season for the podcast.
I'm excited to share someinsights that aim to help you as
finance leaders, to grow yourleadership, to grow your
strategic mindset and othercritical skills in your
advancement to CFO and beyond.
As finance leaders, I want toencourage you to look at things

(01:54):
differently than how your peersdo. I want you to look through
the lenses of strategy andproblem solving, look for
opportunities and beware ofthreats in the marketplace,
understand risk and know when totake more risk to the benefit of
the organization and to thebenefit of yourself. In case you
missed it, this past summer, Ishared a series on internal

(02:17):
auditing. Please go back tolisten to those episodes if you
have not already, I covered avariety of topics that included
internal audit planning, therole of the audit team manager,
financial integrity, riskmanagement and forensic
accounting. I know you willenjoy those incredible episodes
this week. I am talking aboutaligning your financial planning

(02:38):
and analysis team withoperations. This is a critical
relationship. Your operationsteam generally oversees the
revenue generating functions forthe company. The better aligned
operations is with fpna, themore likely the organization can
find ways to find criticalinsights to grow revenue, reduce
costs, better allocateresources, optimize labor and

(03:02):
overall provide a betterexperience for the customers and
also for the employees. Whathappens when operations and fpna
are more aligned? I believe itbrings better results. You get
to solve the tough problemstogether, instead of doing it in
isolated bubbles, you get toshare the facts and assumptions,
so you build better models andbetter projections, and you can

(03:26):
dig into the data that mattersto get better aligned, I would
start with a shared vision andbuilding trust. We want to make
sure that the strategicobjectives get translated into
relatable finance terms, so thatthey can be connected to
financial targets. A sharedvision creates alignment within
a team by giving everyone aclear sense of purpose and

(03:48):
direction, which in turn, buildstrust when leaders and team
members know they are workingtoward the same goals,
communication becomes more openand transparent and decisions
are easier to understand andsupport. This shared sense of
purpose reduces uncertainty,minimizes conflict, and helps

(04:09):
people feel valued ascontributors to a common
mission. As trust grows,collaboration improves, and
individuals become more willingto rely on each other, share
ideas freely and commit fully toachieving results together.
Alignment brings betterforecasting for sales and
production or service delivery.
Better forecasting buildsconfidence and trust. It also

(04:32):
helps with reducing expenses. Weall want to order the right
amount of raw materials forproduction, so we don't have
capital tied to excess materialson the shelf, and when we can't
properly schedule the labor thatis required, your usual two top
expenses are, of course, laborand raw materials. When your

(04:53):
forecasting is more accurate,your costs can be better
controlled. I'm a huge. Huge fanof collaboration. Whenever you
have a chance to work withsomeone else on a problem, you
will most likely get a bettersolution. That's why I'm an
advocate that fpna andoperations work together more
closely. While serving in thearmy, I had the great

(05:14):
opportunity on severalassignments to work closely with
our sister services, the Navy,Marine Corps and the Air Force,
it was always a better outcomewhen we cooperated on a problem
instead of working separately.
Who can you work with moreclosely to solve a significant
problem? The fpna team can be apowerful tool for the senior

(05:36):
leadership. What does a wellaligned fpna team look like a
well aligned fpna team operatesas a strategic partner to the
business, rather than just areporting function, the team is
deeply integrated withoperations, the supply chain,
sales and leadership, ensuringfinancial insights are tied

(05:56):
directly to business drivers andperformance outcomes. They
maintain a forward lookingmindset, using forecasting,
scenario analysis andsensitivity testing to guide
decisions, instead of onlyrelying on historical results.
Collaboration is strong withfinance professionals

(06:17):
proactively engaging withdepartment leaders to translate
strategy into measurablefinancial plans. Processes are
streamlined, data is accurateand accessible, and technology
is leveraged for automation andadvanced analytics. Ultimately,
a well aligned fpna teamprovides not just the numbers
but actionable insights thatshape the strategy, improve

(06:41):
competitiveness and drivesustainable growth. Don't forget
to subscribe to the podcast onthe platform you are currently
listening to, and also pleasesubscribe to my weekly email.
When you subscribe to the email,you will receive a free guide on
becoming a finance leader. It'sfilled with many tips and
strategies to grow yourleadership. Thank you. I made it

(07:03):
one of my primary duties infinance and accounting to
partner with the teams that Isupported. I wanted to learn
everything I could about themetrics and the data that I
tracked and analyzed. I wantedto know all the variables and
conditions that would affect howeach metric behaved, once you
know how the metrics act inaccordance with the market
conditions, you can developbetter models, which can lead to

(07:26):
better decisions. Know thepeople whom you support and how
you can provide the right dataand insights for them to do
their job easier. Now let's talkabout aligning fpna and
operations number one, thebenefits of properly
strategically aligning your fpnateam. We expect to see more

(07:47):
accurate financial targets,especially when it comes to
sales and operations. When youplug in marketing, it gets even
better. We wanted to developrealistic, honest assessments on
how well or not so well thecompany will perform in the next
year, so we can order the rightamount of raw materials on time
and manage waste moreeffectively, or deliver the

(08:10):
services you provide on timewhen something significant
happens in the market, you canthen have a real conversation
about how This affects currentproduction and our projection in
the upcoming periods when youhave a trust built relationship,
you can have directconversations about adjusting
the projection without it beinga confrontation at the board

(08:33):
meeting about missing a target.
This, of course, becomes morecomplicated with a publicly
traded company versus aprivately owned company, where
meeting or exceeding theprojection is literally
everything. When we are aligned,we indirectly reduce risk
without even trying, becausewhen you operate with trust, you
can more easily and openlyidentify risks and

(08:55):
vulnerabilities before theymaterialize, which means we can
be more proactive and take onmore calculated risk. The
unknowns become more known whenwe are aligned and talking and
trusting each other more. Thebest benefit of all is improved
strategic decision making, thebenefits I previously mentioned

(09:17):
all contribute to betterdecision making. Our forecasts
are more accurate. We havemodeled risk better so that we
can make better decisionsaccording to the changes in the
market. Number two, what happenswhen fpna is not aligned? What
happens is that fpna operates ina stove pipe or a siloed way,
not understanding what is trulyhappening, and operations will

(09:41):
try to solve problems withoutaccess to all the possible
metrics and the expertise of thefpna team. It's a horrible
byproduct of not having trustand operating alone. And every
CFO out there should beexpecting a better partnership.
You. When the fpna team is notwell aligned with operations,
the organization experiencessignificant disconnects between

(10:04):
financial plans and actualbusiness performance forecasts
and budgets may becomeunrealistic because they are
built in isolation from therealities of production, sales
or service delivery. Thiscreates frustration across the
departments as financial targetsfeel imposed, rather than
collaboratively developed.

(10:28):
Misalignment often leads toinefficient resource allocation,
missed opportunities, and aninability to respond quickly to
changing market conditions.
Operations may pursueinitiatives that do not reflect
financial constraints, whilefinance may impose cost cutting
or investment limits withoutfully understanding operational
needs. Communication breakdownsalso emerge, reducing trust

(10:53):
between finance and otherdepartments over time, this
weakened strategic decisionmaking, erodes competitiveness
and limits the fpna team'scredibility as a true partner to
the business. Number three, afew steps to get started, we
should always begin withleadership. Leaders have the

(11:14):
ethical and fiduciaryresponsibility to do everything
they can do to move the businessforward, to be effective, we
need to develop a commonlanguage. We must translate
finance terms into operationalimpacts so non finance leaders
understand the implications.
Continue to bridge the culturalgap by ensuring finance

(11:37):
understands operations andoperations understands financial
drivers. Building trust is apriority in this endeavor. Act
as a business partner byproviding insights that help
operations succeed, rather thanonly pointing out over spending.
Promote transparency by sharingassumptions, methods and risks

(11:58):
openly. To build confidence infpna is recommendations
encourage accountability bylinking performance metrics
directly to financial outcomes.
We have to know the microdetails of the metrics we
analyze and support. The more weknow about the critical metrics
and how they are composed, themore we can help with the right
analysis. Don't forget to builda relationship with your IT

(12:22):
team. Also, they are critical inensuring the right data is
captured and recorded properly.
I believe that you have to stepaway from your usual duties
often to reach out to otherleaders. You have to find out
what is driving operations thatdoesn't show up in the usual
data. It's important to knowwhat is baked into the data that

(12:44):
isn't showing up as a separatevariable or metric. I like to
see metrics as continuallydivisible into parts that I can
either control or at least beaware of, so I can recommend
better decisions. As a verysimple example, on the PnL, we
show a total up for expenses,then we show each expense line.

(13:04):
Then for labor, for example, wefurther divide by regular versus
overtime, then we show thepayroll taxes. And can keep
going further by breaking thetotal into parts so we can know
the number to the lowestpossible that is also material,
and can help us make a betterdecision. You never know over a
large operation how much a smallpiece of a metric can account

(13:28):
for a material amount, itbecomes important when you have
limited resources, and this iswhen our strategy steps in for
action. Today, let's assess yourcompany's alignment of fpna and
operations first, is therelationship one of mutual
support, or is it hostile andmistrustful? Next, are you

(13:48):
seeing mutually developedsolutions when something goes
wrong? Or does fpna seem to onlyreport negative results to watch
operations drown in a meeting?
Or do we have a relationship ofmutual trust, where we present
results with solutions developedby all parties involved. We
often work separately, way toomuch, and because we don't have

(14:08):
trust, we build solutionswithout real data, and we
continue to have an adversarialrelationship, which helps no one
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(14:29):
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Today, you can find a link inthis episode. Show Notes. Thank

(14:51):
you. Today, I talked about whyaligning the Financial Planning
and Analysis Team withoperations can be beneficial.
Initial to the organization. AndI highlighted the following
points. Number one, the benefitsof properly, strategically
aligning your fpna team. Numbertwo, what happens when fpna is
not aligned. And three, a fewsteps to get started. A caution

(15:14):
we always need to be aware of isthat fpna still has a
responsibility to reportaccurate numbers. Quote,
unquote, becoming too friendlygives the impression that fpna
will hide missed goals, which isprobably why most people keep
their distance and don't developa professional relationship that

(15:34):
focuses on solving problems. Irespond by saying that fpna
should not have a gotchaattitude, but a professional
partnership to dig into theproblem. We show the numbers, no
matter what they are, and a wayforward to solve it when
something goes wrong, that's theexpectation and the standard. We
have a professionalresponsibility to present the

(15:57):
facts and to also be part of thesolution that's finance
leadership.
I hope you enjoyed the financeleader podcast. You can find
this episode whenever you listento podcasts. If this episode
helps you today, please sharewith a colleague until next
time, you can check out moreresources at finance leader

(16:18):
academy.com and sign up for myweekly updates, so you don't
miss an episode of the podcast,and now go lead your team and
I'll see you next time. Thankyou. You.