How do you know that treasury or teams within the department are doing a good job? That’s one question that comes up often in NeuGroup peer group meetings. That’s because measuring job performance can be a challenge. Nonetheless, many members of NeuGroup’s peer group universe have developed effective approaches. For example, one member of the Global Cash and Banking Group explained at a late-2018 meeting how the key metrics her company uses to demonstrate treasury’s performance level have been working.
For context, in the GCBG’s pre-meeting survey, all respondents said they track performance in cash operations, while most (77%) do so in both bank relationships and cash and liquidity forecasting.
The member discussing her company’s program explained that it all starts with identifying the mission and guiding principles: value-enhancing financial transactions, risk management and financial counsel. It then aligns these to the company’s core values. Importantly, it doesn’t disregard the blemishes; instead, it acknowledges and addresses the existing pitfalls in the organization. The company then gets an external, third-party view of its performance and structure and puts all these “learnings from the journey” toward improvement.
What this company also realized was that to get success, it had to support success. That support, in the lean world of treasury, meant maintaining its engagement with technology and the solutions it offers. For TMS solutions, “Don’t wait to update,” the member said. “Invest in treasury tech when it’s needed.”
Aside from paying attention to the tech, it also helps to be proactive with talent acquisition and maintenance. “Treasury is not a natural career path when [prospects] come out of school,” the presenter pointed out. That means going after those high performers that might come through in a rotation program. These two factors, tech and talent, equal better performance overall.
Describing what her team aspires to, the presenter said the goal is to “be a leading global treasury organization that enhances shareholder value through optimal financial risk management and expert counsel.” She said getting there requires managing financial risks, increasing its influence, intensifying its capabilities, getting to greater centralization, investing in treasury tech as stated above, and attracting and building high-performing and diverse global talent.
The member also said that distinguishing what truly is a key performance indicator vs. an operational metric vs. a leading indicator can be a challenge. This means that the list of indicators must be culled and refined as necessary. Stay focused with the KPIs; that is, keep the number of them at two to three KPIs per objective. “Operationally, yes, there may be many more metrics being measured by a team but stick to a few key ones for overall treasury organizational performance dashboard,” she said.
It’s never easy to do a performance self-assessment, but if you start with the right tools—the right tech, talent, goals and path to reach those goals—treasury can stay ahead of the chaos. Finally, don’t go overboard on KPIs. Conduct a KPI brainstorming session to drill down and identify the indicator that shows the success (or failure) of the objective.