About the Author:
Abhinav is the Chief-of-Staff at Fyle. He is responsible for all operations at Fyle. He is a Chartered Accountant & has done his Masters in Finance. He has previously worked with companies like EY, The World Bank, ITC & Treebo Hotels playing an active role in process improvement strategies, especially in the field of Finance & Operations. In this article, he shares his perspective of why it is time finance teams should look within and how an Internal NPS can help finance operations & the business.
The evolution of the finance function
Having been in the finance industry for almost a decade in various roles, I have been a part of several discussions over the importance of the finance function. It is safe to say that this decade has witnessed its transformation from being a support function to being a strategic business driver.
This change is widely evident as we see finance leaders involved in all major decisions of strategic importance to the organization. Finance teams today are not only limited to conventional roles such as accounting, payables, receivables, etc. They have extended their reach into areas such as revenue assurance, growth & development, and business intelligence.
Thus, at a strategic level the perception of how finance was perceived and functioned has definitely transformed. They interact on a daily basis with different teams for various operational purposes, such as; credit approval, follow up on receivables, contract negotiations & sanctioning, vendor payments, advance requests, processing reimbursement claims, exit clearances, and more.
Questions worth pondering here are:
- Has the transformation that has happened at the strategic level occurred at operational level as well?
- How much has the experience of internal users working with the finance teams evolved over the past decade?
An interesting perspective that has arisen to address these questions is in the form of a Net Promoter Score survey for the finance functions
What is the Net Promoter Score (NPS)?
Briefly, the NPS or Net Promoter Score is a widely used tool to measure customer satisfaction levels. Over 2/3rd of Fortune 1000 companies use it to gauge their customer relationships.
Respondents have to rate their satisfaction on a 10 point scale. Respondent ratings are categorized under the following:
Respondent ratings are categorized under the following
- 9-10 ratings are called promoters. These ratings indicate that they are happy with the service you offer and are likely to refer your service to others.
- 7-8 ratings are called passives. These ratings indicate that they are unenthusiastic about your service and are not entirely happy with the function.
- 0-6 ratings are called detractors. These ratings indicate that they are not fans of the service you provide.
Here’s how you can calculate the Net Promoter Score:
Net Promoter Score = (No of Promoters – No of Detractors)/No of Responses
The rationale behind this is that since finance functions are also largely service oriented with internal customers, NPS used internally can help measure its relationships and how it’s perceived. It serves as a satisfaction barometer, which will help gauge just how satisfied their internal customers. It further highlights the areas that need to be addressed. Internal customers, in this case, are not only the senior management or specific teams. It is all the different stakeholders at large.
Why is this important for progressive finance leaders?
The primary benefit arises in terms of helping finance teams identify areas within their function that need improvement. Additionally, working on these aspects can have a two-fold organizational impact. This can also be seen as an extension of the Promoter Flywheel suggested by Bain & Company.
It is a cycle wherein employees are enabled and happy with their internal systems and processes. This in turn, fosters their creativity and enthusiasm. As a ripple effect, it further allows them to proactively innovate and fix the problems that hamper the end customer experience. This ultimately leads to the business objective of acquiring and retaining loyal customers (read, employees.)
Loyalty strongly correlates with sustainable and profitable organic growth. As a result, even minor changes for enhancing employee experience can have a lasting impact on the growth and scale of the business.
Such programs also pave the road for ancillary benefits such as higher referrals for open positions, higher team morale, and an overall more positive relationships between teams.
How to successfully execute your internal finance NPS
Executing an internal NPS survey is not an uphill task. Nor is it a special project that needs special tools. In fact, short and time-bound surveys significantly enhance the effectiveness of this activity.
Many organizations already have tools in place to take employee feedback. Others can leverage upon simple free tools like Google forms or Typeform to serve the purpose. Once you gauge a baseline sentiment, you can engage independent research firms specializing in the same to delve further and ensure that the activity is delivering insights in the right direction.
Here are sample questions that you can include while creating your Internal NPS
- On a scale of 0-10, how likely is it that you would recommend how < insert specific process> is managed at <insert your company name> to a friend or peer?
- What’s the primary reason for the score you gave?
- How can we improve the process?
Before you proceed, the following elements need to be in place in order to create a reliable internal NPS metric –
Focus on specific processes rather than the entire finance function:
Since there are several interactions with the finance team at multiple touchpoints, a blanket survey about the finance team can leave the respondents confused, not knowing what to base their score upon leading to mixed or unreliable results. Hence focus on specific aspects to get precise feedback.
Get feedback from the right customers:
After establishing the premise of focusing on a specific process, it is crucial also to collect feedback from the right internal customers. The right customers are the stakeholders, who regularly work directly with the finance team around that process and can provide credible feedback
- To gather feedback around the Receivables process, Input from the sales team would be more appropriate than feedback received from the brand marketing department who may not be involved in the receivables process.
- Also, a sales trainee who joined the organization only two weeks ago or a sales leader who isn’t actively involved in the receivables process would not be credible sources to get appropriate feedback.
Ensure freedom from bias:
Once you narrow down the right internal customers, decide whether you want to survey the entire population or want to conduct a sample survey. In the case of the latter, it is crucial to select the right samples, as it can significantly alter the results.
Protip: Random sampling & assigning weights for an equitable representation of each stakeholder can be one approach to mitigate the risk of bias, to a fair extent.
Provide respondents comfort:
Whether the survey should be anonymous or not is an important parameter to decide. The former generally assures higher & more open responses. The latter, in turn allows identifying the respondent’s demographic with the option of reaching out for more information.. The decision should be based on the leader’s assessment of the organizational culture.
An alternative, in this case, could be to hire an independent agency which ensures anonymity to respondents while being able to elicit honest feedback from them.
Drive for High Response Rates:
Once the survey is released, it is important that it attains a good response rate. This may involve communicating with the stakeholders before & during the survey. Apprising them of the purpose and importance of the activity can help in increasing respondent participation. A response rate of at least 60% would be required to deem the survey results as credible.
Close the Loop:
Getting the feedback is not the end of the cycle. It is also important to reach out to specific feedback providers for deeper insights into their response (this is for cases where the survey’s respondent details are not anonymous). Also, communicating any proposed changes or actions on the feedback is an effective method of closing the loop. This makes the respondents feel more empowered and validated that their feedback matters.
These six pointers can help you lay the stone for successful internal NPS surveys.
Finally, what should be the ideal NPS score for an internal finance function is not benchmarked or publicly available. But then, there is no real use of comparing yourself with others, as well. Simply focus on improving your own numbers by deriving insights from your customers and addressing changes where needed.
Hoping we shall see more conversation around customer centricity in finance & the benefits of re-aligning processes in this direction.
Do you think it’s time to focus on internal customer experience in the field of finance? Do you have insights into how to refine the above-mentioned process? Or, do you have an alternative approach and methodology you’d like to share with the world?
Do let us know in the comments below!