Why small teams win

# # 18/08/2023

Everyone seems to be obsessed with growing; growing, scaling, growing fast.

What happens when a company grows? Everything becomes more complex.

To reduce complexity you have to reduce size. More or less.

why small teams win
Metcalfe's law

There is a law called Metcalfe’s Law that says that the more people you add to a network, the harder it is to communicate effectively. Scientists say that we can only maintain close relationships with about five people and less intense ones with fifteen others.

This is why small teams are more decisive in getting things done than large teams; more efficient and more effective.

That is why meetings of 15 people are not effective. They are only effective if they are held every so often and if they last only a short time and involve only a very few people.

Forward-thinking organisations have realised this and moved away from traditional top-down structures. Instead, they’ve created networks of teams that work together autonomously with less middle management.

Although when there is no boss or central decision-maker, communication has to be fluid and constant.

How do you measure the performance of your finance team?

# # 29/03/2023

The financial KPIs of the business are one thing and the performance KPIs of your financial team are quite another. They are confused and in fact, if you do a search on the internet you will only get the former. If you go deeper and do a search in directories of economic research papers (such as SSRN or Repec) you will also get the former.

The truth is that it is difficult to establish KPIs because the quantification is usually first the volume, speed and profitability. However, in the financial area, these concepts can go in the opposite direction.

I tend to use «quality» indicators, which for me are indicators of «accuracy»; our work must be precise, error-free in both execution and communication. From invoices that are well done, well collected, correctly transferred to accounting… to budgets and forecasts that are as close to reality as possible.

When you meet with the human resources department, they want to go beyond that, they want other kinds of indicators. The good thing about working in financial management is that you have to interact with all departments because you have to respond to all of them, and that requires that you have to create ad hoc solutions to their demands. These solutions always improve the understanding of the business and the measures to be taken.

I have extended these quality indicators to two other categories: agility and productivity.

You have to be very careful because accuracy is sometimes at odds with productivity KPIs.

In short, KPIs for the performance of my finance team:

1/ Quality (e.g. the number of errors, maximum deviation in expenditure against budget).

2/ Agility (e.g. having the accounts closed in the first 8 days of the following month, accounts closed on Friday of each week)

3/ Productivity (e.g. no. of issues solved per week)