The United Kingdom’s Royal Air Force (RAF), the world’s first independent Air Force, celebrated its centennial year in 2018. Its primary objective is to keep UK citizens safe, and to that end it is engaged in 15 missions on four continents. The RAF has a broad set of objectives, including responding to threats, delivering aid, preventing conflict and working in partnership with other organizations.
In many ways, Air Command finance operates within constraints similar to those of a division of a major corporation. It has its own priorities in supporting the RAF and developing its people, but operates within a finance operating model framework and uses technology chosen and operated by the parent company—the Ministry of Defence (MoD).
Despite those constraints, Steve Lock, manages to have a huge impact. Steve, the Head of Finance for Air Command, says, “if you’re going to make a change within a function, the change has got to come from the people. That’s where you invest and make a real difference.”
In 2017, the RAF initiated a major efficiency and transformation program, aiming to save over £6 billion from the RAFs ten-year expenditure plans. The RAF has consistently delivered on its defense responsibilities and has been on operations continuously for 28 years, but senior officers tasked with managing organizational spend and investment could not access all the tools and financial information they needed to effectively plan annual spend, manage budgets throughout the year and ensure the balance of strategic investment was undertaken.
The finance function was under increasing pressure to deliver. A previous reorganization had centralized activity and reduced staff to streamline the function, but investment in ways of working and building capabilities had not followed as originally planned.
And according to Steve, there were difficulties in how the individual finance teams worked together as a single unit. There were about 120 people in finance, split across 11 separate teams, and there wasn’t a sense of a cohesive finance entity. Many working practices were over ten years old, and relied heavily on the use of individual spreadsheets and underutilized current reporting technologies. Finance lacked a clear vision of what its role was and where it was headed.
Steve describes facing a significant challenge in changing the group’s culture. He wanted to encourage people to work together as opposed to seeing only their roles and the stovepiped teams they worked in. “One of the things that we did early on was benchmark the investment and the numbers of people in our finance function against other organizations’. That produced a startling result—we were underinvesting in heads. But we needed to invest in the right roles, not just more of the same.”
To make changes as quickly and effectively as possible, Steve turned to external help to support the RAF’s “Value Improvement” program. “I would describe the program as ‘lean’” he says, “which is powerful.”
The components are familiar: daily stand-ups, huddle boards, real clarity on what’s going on in your team, and how that’s impacting somebody else. While there was nervousness about change at the outset, now there’s real enthusiasm. As an added bonus of introducing these new working practices we’ve learned a lot about people’s skills and capabilities that we didn’t know before.”
The RAF’s finance leadership team first worked to build a shared vision and operating model that would support not just the finance function, but all officers in the organization with financial responsibility. At its core, the new model would adhere to the UK government’s OneFinance campaign, which places finance at the heart of decision making.
The process began with extensive discussions with the entire team about finance’s requirements. In this way, the group developed a vision that hadn’t existed before. Steve explains, “We were having conversations around what is it we want to deliver? How do we want to contribute?”
Teams thought pragmatically about how finance could deliver successful change in the months and years to come. To that end, Steve and his senior leaders worked with individual teams to strengthen their ways of working and build continuous improvement into their day-to-day activities. Clear, engaging communications were planned to involve all people in the function in the changes taking place.
Today, the finance executive team has united around a vision and operating model that will allow the function to support the organization’s strategic agenda, champion central government finance strategy, and attract and retain more people wanting to build their careers.
As a result of the Value Improvement program, finance teams now follow routines and problem-solving techniques in their daily work that allow them to manage variable workloads and load-share effectively, enabling them to provide support to financially accountable officers across the organization.
Everyone in the organization now understands how their responsibilities interact with others on the team. Steve reiterates the point about understanding skills and capabilities. “Now we’re identifying people that are good at communicating, are great at creating some visual piece of information that can turn a spreadsheet into a fact which the business wants, can understand and relate to,” he says. “People are more confident in stepping out of those boxes that had previously been limiting them.”
The teams employed supporting technology, balancing finance’s need to minimize additional expenses on technology solutions, to understand the benefits and limitations of the systems available and to demonstrate to the executive board what value technology could add.
As part of their finance transformation initiative, Steve and his teams piloted an interim business information dashboard that illustrated how technology will enrich the breadth, depth and accessibility of the financial information that teams have access to, making expenses transparent and allowing accountable officers to manage their budgets effectively.
The transformation initiative injected energy, pace, direction and creativity to a finance team that was struggling to meet everyday business demands, while lacking the capacity to operate strategically.
A clear communications strategy ensured finance’s people were brought on the transformation journey along with the leadership team. This was facilitated by the presence of many finance staff members who participate in change networks, off-site meetings and events.
As Steve explains “I think to be successful in finance much more now than ever before, you have got to invest time in your skills and capabilities and how you engage with people. We make a difference through working with the rest of the business. The rest of the business is populated by people who want to engage, don’t naturally understand some of the financial numbers, so it’s all about how you create that information and how you create that contact to be able to influence them in the future.”
While the RAF’s finance function continues on its transformative journey, it has already become a cohesive organization that offers better value to the business and better opportunities to the individuals within.
The transformation has changed the culture of the organization, increasing interaction across teams, and encouraging initiative, ownership and pace. It has built the capability of the function, developing a comprehensive approach to change, communications and stakeholder management. Finally, it has created momentum toward delivering the MoD’s finance strategy and government’s OneFinance vision, raising awareness regarding important gaps and communicating how finance transformation can resolve them.
And what’s next? “People feel we’ve invested in them,” says Steve, “and there’s an energy and enthusiasm within the function to push things forward. We’ve got a fantastic platform now to accelerate the changes that we need to make in terms of our impact into the business.”
This profile is part of PwC’s 2019 Finance Effectiveness Benchmarking reporting. PwC would like to thank the RAF’s Head of Finance for Air Command, Steve Lock, for his insights.
Consumer and Industrial Products & Services Finance Leader, PwC US
Principal, Finance Transformation Leader, PwC US
Director of Finance Effectiveness, PwC US
Brian J Furness
Global Consulting Finance Leader, Partner, PwC United Kingdom
Finance Benchmarking Lead, PwC United Kingdom