What does a vintage bus have to do with controlling and MICE crisis management? Nothing at all at first, but so Barbara Zimmermann and I met somewhere in Latvia in 2018. Your beautiful Vintage bus is simply striking! Our paths crossed from time to time on the journey. A brief nod at places of interest, a quick hello. Then we went our separate ways again. But we actually got to know each other on the return journey on the ferry from Liepaja to Travemünde. And we discovered synergies right away! Because we are both systemic business coaches! Since then, we have been exchanging ideas regularly.
Today I am pleased to welcome Barbara Zimmermann to MICE Crisis Management meets on the topic of controlling.
You have been working for Fresenius Medical Care as a Business Partner and Controller since 2002. You also have systemic coaching training. How do you combine systemic coaching and controlling?
Let’s just start with the coaching. In my opinion, systemic coaching can be divided into two groups. The people in group A want to change something about themselves. Their behavior, leadership skills, confident handling of conflicts or self-assured appearance. There is not necessarily a concrete goal, but type A wants to be helped to help himself, he wants to be asked the right questions and learn to intervene and react from this.
Type B wants a sparring partner to help them achieve a goal. He needs tips and information, and of course a listener.
This person has a goal and requires honest feedback in order to gain confidence in their decisions. When it comes to targets, planning and decisions, we are already very close to the tasks of the controller. In the past, the controller was a supplier of figures; today and in the future, a business partner is expected who speaks with the management on an equal footing and helps to release the “brakes”, as in coaching. It provides information in the context of KPIs, suggests solutions and helps the management to achieve the targets set. This means that there is always an assignment or a goal in coaching, and the same applies to controlling. Many business decisions often have something to do with “politics and psychology” – this is where we again have points of contact with coaching. The modern controller also has a facilitator function, i.e. to moderate, ask the right questions and ultimately play a key role in shaping the desired success.
I know the term controlling from the world of finance or business administration. What is controlling and where is it used?
Controlling is a discipline of business administration and helps the executive board and management to control and steer the company or business area.
Perhaps some controlling tools can also be seen as a “precaution”. If I know my processes, my costs, my profitable products or even the loss-making projects, then I can react accordingly as an entrepreneur.
For me, prevention means paying attention to the early warning indicators, whether costs are “getting out of hand”, employees are frustrated, hardly contributing at all, etc.
If you ignore these (early) warnings and there is a change in the market, for example a new competitor offers the same services, then as an entrepreneur you should know your figures, processes and contribution margins.
It quickly becomes clear that controlling not only takes care of the financial figures on a monthly basis, such as the monthly financial statements of the tax consultant – i.e. short-term operational – but also takes on long-term (periods of 3-10 years) i.e. strategic tasks. For this reason, controlling is also subdivided into strategic and operational controlling in the literature. Let me just explain this difference to you:
Controlling can be divided into strategic and operational controlling. What does that mean?
Although there are other ways of delimiting them, these two are the best known. As the word suggests, strategic controlling focuses on the future development of the company. Where does the company want to be in 3-5 years, which new products/services should be added, which should be expanded/cancelled. How does the UN position itself on the market, where does it stand in comparison to its competitors and what are the UN’s strengths, why does it offer precisely these services and what are the benefits for the customer. Are there new customers, or how can you make the existing ones even “happier”? What risks are there on the market, in the company, but also what opportunities does the management see Strategic controlling serves to secure the UN’s existence.
Operational controlling looks at whether the UN is making any profits at all, what the liquidity situation is, how much I am earning with which product/service and what I want to achieve in the next 1-3 years. Traditionally, the UN and all departments set targets, analyze deviations and initiate measures to bring the UN back on track or correct assumptions for the future. As a rule, the UN prepares a budget with all sub-plans for 1-3 years. Every company is special and has a different focus, whether it is liquidity or the decision as to whether a service should be purchased or created in-house. It can also be the development of new products or expansion – the establishment of new locations or cooperation with other companies. The area of responsibility is exciting and very extensive; for me, controlling belongs in a company from the very first hour of self-employment.
I find it exciting that controlling is also used in areas such as marketing. Can you draw up a controlling process for marketing here?
Depending on the size of the company, controlling is used in every functional area (HR, sales, IT, purchasing, etc.). As described above, it is about targets, actions and ultimately monitoring whether the measures were successful, whether the planned values were achieved or what corrective action should be taken. Marketing is classically about “sales promotion measures”. In other words, advertising, customer care, monitoring the market, etc.
For example, it measures whether advertising campaigns have paid off, whether customers like the new products or prefer to go to the competition, customer surveys are carried out and new sales channels, such as online consultations, are offered. Marketing and sales are in regular contact. In reporting, the self-defined key performance indicators (KPIs) are periodically reviewed and the necessary measures are developed by the marketing team.
Controlling uses crisis management tools. Is that what you call it in controlling, or does it have a different name, such as process review?
Before a crisis occurs, there are a number of early warning indicators. If a company has these on its radar, it can react before a crisis occurs. Larger companies have their own crisis management. Rules of conduct for employees in the event of risks occurring (e.g. pandemic) are defined and practiced in advance. A crisis team is in place to steer the company safely through the crisis.
However, a pandemic does not always have to affect the company; there are also internal early warning indicators that can signal an approaching crisis.
Many risks in companies are predictable, they develop slowly and gradually.
According to a survey conducted by the BDU, there are early warning indicators in the areas of finance (e.g. cash flow, liquidity, days sales outstanding, return on sales, etc.), corporate strategy (e.g. how high is the dependency on customers, suppliers, employees and investors, how is knowledge secured and is there a structured transfer of know-how, as well as the development of new products), market, environment, industry (e.g. sales growth, customer payment behavior, pricing compared to competitors, customer structure, changes in social conditions (change in values, climate protection), performance management (e.g. acquisition and order processing, incoming orders, procurement). sales growth, payment behavior of customers, pricing compared to competitors, customer structure, changes in social conditions (changing values, climate protection)), performance management (e.g. acquisition and order processing, incoming orders, procurement, human resources management (e.g. sickness rate, fluctuation rate, employee suggestions for improvement, age and gender structure, etc.), IT (e.g. Confidentiality (data protection), availability of IT systems, compliance (adherence to legal requirements and internal company regulations), security (cyber attacks), etc.
What does an early warning system in controlling look like? Is there a specific tool that you use for checking? Can you explain this using Z. marketing controlling, for example?
It’s really difficult to name a method now. I’m not in Marketing Controlling, but in Production. In general, it can be said that early warning systems are concerned with the future. In marketing, there are the 4 Ps: Product Glace, Price, Promotion – in other words, communication. And here the company must analyze whether it is communicating correctly with the right customers via the right channels (Facebook, newsletter, etc.). What prices do our competitors have, which trade fairs should we visit, can we offer our products in online formats, sell online etc. etc. One tool might be the Pestel method, but I have never worked with it
Is there an early warning system for each phase of controlling?
Sure:
Plan Actual values Deviations
The deviations are always analyzed and clarified as to whether the deviation is “sustainable” or whether the anomaly will clear up again in the next few days/weeks or has already cleared up.
What should you pay attention to in controlling so that controlling is successful?
Well, I think the controlling system should fit the company, not too big, not too small. As a small company with 2 – 5 employees, I would start with “controlling light”, focusing on solvency, liquidity and ensuring that there are few dependencies on customers, suppliers and employees.
If a company intends to grow, controlling should grow with it, at some point there are separate functional areas and then controlling also becomes very complex, especially when it comes to the calculation of products and services. An important success factor is to know and document your processes from the outset and to ensure the quality of the master data when using an ERP system. The better the database, the better and more accurate the reports and the easier it is to analyze the data. These are not only required by the management, but also by banks, investors or major customers.
Are there any helpful tools that you use for problem-solving processes?
The problem-solving tree is a very useful tool. This method can be used to describe a problem or an issue, the causes lie in the roots and the effects are shown in the branches. The simple description of the problem, the causes, the effects and, ultimately, possible solutions allow problems to be explained easily and decisions to be made quickly.
The method reduces the discussion time regarding the question of guilt and enables focused work.
What do you think of the keyword KPI (Key Performance Indicator) and controlling?
What you can’t measure you can’t manage. I believe this statement by the great “management thinker” Peter Drucker describes the importance of KPIs.
KPIs are key figures, i.e. ratios, and are a very important tool in controlling.
Are there any valuable tips you would like to pass on to readers?
For me, controlling is part of a company from the very first hour of self-employment. As a solo self-employed person or small business owner, you should start with light controlling. I believe that you should review your financial figures at least one day a week, preferably with a bit of marketing thrown in . The larger the company, the more important the key figures become, which of course do not only relate to the financial area.
Depending on the business purpose, these may be sales figures, clicks on the website per day, or production volumes, customer satisfaction, the results of clinical studies, etc., etc.
An acquaintance of mine regularly takes advantage of the preventive check-ups offered by his doctor. He has the values printed out and compares them with the previous year’s values. During this exercise, he noticed that certain blood values were still in the “green range”, but were steadily increasing. He had then spoken to his doctor and he had not noticed the change at all. Ultimately, cancer could be detected at a very early stage and a serious illness avoided.
‘In my opinion, prevention is better than cure, even in controlling.
I would like to close the MICE crisis management meets blog today with this statement from you. Thank you for the good insight into the topic of controlling.
My lessons learned for MICE crisis management from my conversation with Barbara Zimmermann
- Controlling is not only a tool for business management structures, but can also be applied to many other areas.
- Early warning systems are and remain essential in controlling, but also in crisis management. Prevention is always better than aftercare!
- The solution tree is a great tool for identifying the causes of the problem and analyzing the effects. In addition, good new solutions can be found and decision-making can be simplified. In MICE crisis management, I would use this tool in the preparation phase. Take a targeted look at the risks and then work out scenarios using the solution tree. In the ‘acute phase’ of a crisis, I would rather work with FORDEC.
Short biography Barbara Zimmermann
My name is Barbara Zimmermann. I have over 30 years of professional experience as a controller, business partner, tax expert, systemic coach and HR trainer.
I have been a Business Partner in the Controlling department of a DAX 30 company for almost 20 years. My coaching and training expertise help me to fulfill my tasks in an international environment every day. I really enjoy communicating with people, supporting them and combining psychology with the “world of numbers”.
I also set myself ambitious goals in my private life as a multiple marathon runner, my motto is “the proof of ability is in the doing”.
