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No Pain, No Gain: Move The Needle With Business Reviews

Welcome to part 5 of this 9-part series on FP&A. So far, we have covered:

• Week 1: An overview of the FP&A cycle

• Week 2: The long range plan

• Week 3: Budgeting

• Week 4: Monthly management accounts

As we said at the start of this series, FP&A is a complex system of different processes that work together. Today, we dissect the feedback loop that keeps this system together; monthly performance reviews (MPRs.)

Compare this part of your FP&A cycle to a central heating system:

• Budget would be your thermostat setting. Where you want things to be.

• Actuals are the room temperature.

• Management accounts are your display, showing you what’s really going on.

With a central heating system, if your temperature gets too hot or too cold, the system kicks in to gently nudge it back to where it should be.

If only business were that simple. In a complex system like a business, nothing that is important self corrects. Things drift, and once they start, it can be hard to reel them back in.

That’s where feedback loops come in:

• Daily KPIs catch micro-variations: cash, support tickets, customer service issues.

• Weekly reviews steer you through the month: pipeline reviews, overtime, campaign spend.

• But what about a gross margin blowout, a sales miss, or costs falling behind budget? That’s no longer a nudge. It’s a full course correction.

And MPRs are where that course correction happens. The override system. Correcting performance drift before it becomes a blowout.

Feedback Loops

The world runs on feedback loops (not just your HVAC system). It’s the vital cog in complex systems.

A feedback loop is a process where the output of a system influences its input, which influences its output, and so on…

To apply this to business:

• Inputs = the actions taken in a business

• System = business operations

• Outputs = business performance

And to narrow this even further to FP&A, inputs are the budget/operating plan, and outputs are measured through the management accounts.

But to close the FP&A feedback loop, we must convert the results from the management accounts into actions that impact future performance.

Thats the role of the MPR:

Each Business Unit will have a Monthly Performance Review. Each key department should too (e.g., procurement, operations, sales, finance, etc.)

The MPR is the vehicle for the exec to put tension back into the business where it's needed.

The tone at the top is important. You want to ensure that this monthly rigor gets replicated down at each level within the team. A connected web of feedback loops to create a ‘Golden Thread’ through the business.

The tighter this thread, the more control over performance.

And this is no different for big businesses or small businesses. In a small business, a single 1-2 hour monthly meeting of the 2-3 key leaders in the business might be enough. In a large corporation, it could be a system of 8-10 meetings spread over 2 days.

CFO–CEO: The Loop Behind the Loop

MPRs don’t just align the business. They align the leadership.

In my experience, MPRs are often the most valuable recurring touchpoint between the CFO and CEO (and the rest of the exec team). Some months, we’re deep in the trenches together. Others, we’re fighting our own battles, chasing different fires, leading different workstreams.

But the MPR is the reset moment. It guarantees we reconnect every month. Strategically, operationally, and financially.

And it’s not just the meeting itself. It’s the prep calls, the wrap-ups, the hotel/airport chats. The forced rhythm ensures we’re never too far out of sync. If we disagree on something, we sort it out during that 1-2 day MPR cycle. This ensures we are delivering consistent messages to the business and the board.

It’s the loop behind the loop.

That’s the theory, anyway…

Now let’s talk about some of the key principles for running your MPRs:

1. Frequency

2. Timing

3. Attendees

4. Setting

5. Pre-meeting routines

6. Meeting materials

7. Tone

8. Rigor

9. Follow-up routines

1. Frequency: Monthly cycle

Why monthly?

It’s the shortest period where you have a robust view of total financial performance. Not just inputs or metrics, but the full picture.

That’s not to downplay the importance of daily, weekly, and even real-time KPI tracking. Quite the opposite. It’s essential. But those are for monitoring components of performance and tweaking inputs. Not for seeing the whole system.

Monthly is also a natural rhythm for resetting tactical actions. Enough time for things to actually change. Not so much that you lose grip.

I once worked in a business that ran everything on a weekly review cycle. It was a fast-paced industry, so there was some logic. It felt fast and responsive, and in some ways, it was. But there was no time for depth. The exec action list just kept growing, but with superficial things. Meanwhile, the root causes of issues passed us by. The more we met, the less we got done.

A business chasing speed ended up stuck in loops. We couldn’t see the forest for the trees.

It’s hard to explain scientifically. Just like why two hours is perfect for a movie, not 30 minutes, not six hours. Or why a pop song just feels right at four minutes. Monthly just works.

2. Timing: Week 2 or Week 3 of each month

It’s no good holding the April performance review on May 31. April is ancient history by then. Perfect timing would be 3-5 days after the management accounts are published. Best practice would see this meeting happen two weeks after the end of the reporting period. Week 3 is more common.

This is why it’s so important to have a fast management accounts close. The faster the close, the tighter the feedback loop.

3. Selecting attendees

Ensuring the right people are in the room for these reviews is critical. I’ve seen versions with too few people - i.e. just the most senior execs - meaning the meeting is heavy on ‘strategy’ and light on operational detail. Sometimes this is a good thing, often it isn’t.

Likewise, it’s not a spectator sport. Too many people in the room at once shift the dynamic for the worse.

The Amazon ‘two pizza rule’ is a good guide.

There are several key characters needed in the meeting:

• Chair: Normally, the CEO. The person who controls the meeting, and the one the room is answerable to. Also plays 'tough but honest' broker to get to the right answer.

• Agitator: This is often the CFO. Asking difficult questions and posing challenges. Making sure the meeting never gets too cozy.

• Performance Owner: This is the leader of the part of the business being reviewed, i.e., Business Unit or Functional President. They are the ones whose head is on the block for performance.

• Truthmeister: This person is the arbiter of truth in the room. The person with the facts. This is often the CFO of the Business Unit, the Head of FP&A, or similar.

• Contributors: This could be the senior team of the ‘Performance Owner’, i.e., BU exec or functional leadership team. This can blow up the two pizza rule, so one option is to have people attend for their function/part of the agenda. But sometimes it can also do no harm for the BU exec team to see their boss under a bit of pressure. Think carefully about the dynamic.

• Secretary: Someone needs to capture the actions and keep the trains running on time. It could be any one of the above, but it must be clear who.

In my last CFO role, the CEO and I would alternate who was Chair and who was agitator. Good cop, bad cop. We had a close relationship, so we didn't even need to discuss this. We could even reverse roles mid-meeting if necessary. We had it so dialed in, we could do it via eye contact.

Attendance should be mandatory for those who need to be there. Schedule them months ahead, so any calendar clashes get resolved. Advance scheduling means no excuses.

I’ve seen people go to extraordinary lengths to avoid MPRs… always when performance is bad: “Hey, I was thinking we should postpone this month’s review, as we are flat out working on getting sales back to plan.” Nice try, my friend, no can do.

4. Setting: Always in person if you can (minimum quarterly)

I remember those early COVID-era MPRs on MS Teams. At first, we loved the efficiency. No travel, no hotels, no wasted time between meetings. It felt like a silver bullet. But over time, something faded. The meetings lost their edge. We were going through the motions … like a loveless marriage.

It was subtle at first. But after 10 or 12 virtual MPRs in a row, I could feel the vibes shifting. I felt less connected to the businesses, their performance, and the exec teams. We started getting blindsided. Things we might have sensed earlier if we’d been in the room were being overlooked.

So we moved MPRs back to in-person as soon as we could. It was the right call.

Full disclosure: I’m a fan of hybrid work. This isn’t a return-to-office crusade. But for this meeting, it matters. If geography makes monthly in-person hard to justify, then go for quarterly in-person with a virtual touch point in the other two months.

Like I said earlier, the alignment with the CEO and the cohesion across the exec team don’t just happen in the meeting. It happens around it. At the coffee machine, on the walk over, and at dinner afterwards.

5. Pre-Meeting Routines: Sparking Healthy Tension

You don’t want that monthly review to start cold. The tone should be set before the meeting starts. There are a few ways of doing this, but I like to use the monthly management accounts as a platform.

Once the previous month’s results are published, you should send a clear message to the attendees of the MPR.

This could come from either the CFO or the CEO. It could be anything from:

a) exasperation at continued poor performance

b) exhilaration at a great month, and questions or concerns about how we keep it going

c) anything between

You can be pleased, but never ever be satisfied.

Done well, this will have the team thinking and with an open mind ahead of the review. It’s also a good way of setting the agenda for any ‘must-discuss’ topics that may not make the standing agenda.

6. Get the right materials for the meeting

It is important that these conversations are structured. The structure comes from the discipline in the room and the meeting materials (which act as the agenda).

Some thoughts on the content of those materials:

• A mix of structured format and free form. Financials should have a mandated template. But it’s also helpful to allow BU/functional management some space to tell the story in their own words.

• Financial information should cover all three financial statements, but laser in on the Income Statement and Free Cash Flow performance. Focusing on the ‘hero variances.’ In my reviews, this is often revenue, EBIT, and MFCF performance (month and year to date).

• Good quality bridges are vital. Actual to planned performance, and prior year. The goal here is to make sure the true drivers of variances are understood. The root cause of a performance issue is rarely evident from the financial statements alone.

• A good risks and opportunities schedule will help you keep one eye on a forecast, without getting bogged down (more on this next week).

• Non-financial performance. Using the KPI principles set out here. 

• Governance, legal, and compliance issues. This is important for getting visibility on anything that brings risk to the business or its directors.

It’s important that the pack is well-prepared (responsibility of the BU CFO). There should be zero tolerance for a sloppy pack.

Many CEOs/CFOs like to read these packs ahead of time. This isn’t important for me, but I understand why it suits some. I prefer to have the meeting sooner, and lose the ‘pre-read window.’ This is a preference thing though.

7. Tone: Get the Right Balance of Challenge and Support

We’ve covered some of the science… but this is the art of managing these meetings.

Sometimes it's about joining hands as a team to find the solution. Sometimes it needs some confrontation to clear the air and surface the issues.

If these end up stale corporate affairs with everyone staring at screens or slides, talking monotonously... they are a waste of time. It’s why the role of ‘agitator’ is so important. The meetings should never feel comfortable or boring.

Theatrics can go a long way, too, if used carefully.

Whatever happens in the meeting, everyone should leave the room feeling energized.

8. Rigor: Finding root cause issues and solutions

To get the most traction in an MPR, you need to move beyond surface issues and to root cause issues quickly. The surface of the financials won’t give you the answer, either.

Take this example:

Imagine you have a business that is beating its revenue target by 20%. But margin is 500 bps lower than budget. You have a margin problem, right? Maybe.

But what if I told you that the extra sales came from a deep discount, which accelerated sales from the next month? And that happened because the business was on track to miss sales by 10%. Is that a margin problem, or just a straight sales/demand problem? The corrective action would be very different depending on the answer.

And the variables don’t stop there…

Not every variance is internal. Sometimes your sales drop because your customers’ end market collapses.

Good MPRs dissect this clearly:

• Which variances are macro vs controllable?

• If macro-driven, what’s our adaptive response?

• Are competitors affected the same way?

Don’t allow external forces to become an excuse. But don’t ignore them either. The goal is to reframe your response, not just explain it away.

I’ve found that most accounting and finance pros are not as good at understanding financial root cause as they think. We’ll talk more about this in two weeks.

It's one thing to zoom in on the performance issue. But it's another to zoom out again to give it proper context.

I gave an example of how to work through ‘complex problem solving’ in an early post. 

9. Follow up routines: Good discipline

You should find that if the issue is well defined, the action steps required become clearer. The action should be well defined, have a single owner, and have a delivery date. And all actions should be cleared by the next meeting.

Avoid big ‘strategic’ ideas, or long-dated actions, if you can, in these meetings. This meeting is about execution and financial performance. Strategy is important, but this is the wrong forum, unless it's time for a major reset.

Strategic pontification in an MPR is a great way for an underperforming business to procrastinate.

After the meeting, the ‘secretary’ should circulate the actions. This is a good opportunity for the CEO to respond to that email and reinforce a few key messages.

Net-net

An MPR is the most powerful weapon in the CEO-CFO arsenal for driving performance. But good MPRs don’t just emerge, they are designed. Your CEO might want to own that design, but as CFO, you need to be intimately involved. And more likely than not, you’ll be the one owning the detail.

Next week, we’ll move on to the finale of the ‘sacred 5’ FP&A processes: forecasting.

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