In the finance world, innovation isn’t on the tip of everyone’s tongues. Often, financial management systems feel antiquated compared to the technologies used in our personal lives. The key to better performance management is creating an environment that promotes innovation in finance.
An article on the Journal of Accountancy website highlights several ways to create an environment conducive to innovation in an effort to improve performance management. This effort includes three factors: promotion, support and incentives.
1. Promotion: Recognize that innovation sometimes comes from customers. Your front-line employees are continuously gaining feedback from them about your products. Challenge yourself to capture their ideas. In addition, get outside of your niche. Don’t just focus on what your competition is doing; look at what people in other industries are doing. How can you apply those principles to your business?
2. Support: Everyone feels like they have a full schedule and wonders where they’ll find time to innovate. Be sure to provide employees the time to pursue innovation. Clear their calendar for a few days and allow them to work on an innovative idea. To create a mindset toward innovation, executives need to set a vision for every layer of the company. No one can be left out.
3. Incentives: Rewarding people for good ideas is paramount to innovation. Consider allocating a portion of the budget toward rewarding people who innovate. Always recognize those who sought something, pursued it and successfully completed their goal.
Remember that innovation needs to benefit the company, and this requires cash flow models, financing approaches and allocation of resources.
Finally, managing risk can smother innovation, and yet it needs to be done. To balance the two, the Journal of Accountancy article suggests defining the company’s “risk appetite” and considering the soft and hard risks. Management needs to “create a framework that promotes clarity, transparency and discipline across the total portfolio of innovation projects.”
Using these tips, you can boost innovation and improve performance management in the finance world.
By Matt France, from: http://www.gcecloud.com/