By Laura Wiler, Vice President, Finance and Business Operations at Sage Intacct
The CFO role is changing. Today, the global economy has shape shifted financial leaders into a new role that requires more than just number crunching. While they continue to drive organisation restructuring, acquisitions and divestments, CFOs now have to steer the ship in order to survive the pandemic.
Financial decision makers need to have the ability to make challenging decisions under pressure, supported by numbers and data. A tough mentality is required to do this successfully. In fact, many applicants are chosen for the role based on this ability. According to a report by PWC, 82% of CFOs are focused on cost cutting for the foreseeable future to mitigate the impact of COVID-19.
However, now is the time for CFO’s to champion people skills too. Empathy, support and hope for employees and customers must remain at the forefront of their decisions. When times are difficult, the CFO has to use their unrivalled insight to do what’s right. It’s not about creating an organisation that can survive the next quarter, but one that can survive the next decade and beyond.
Becoming an organisations voice of conscience
The pandemic has sent shockwaves across the global economy, upending many businesses. One of the CFO’s most important roles is to guide the organisation through that disruption, using empathy and their personal conscience to help the business make the right decisions.
Yet, consciousness is a key part of conscience. In order to make the right decision, a CFO has to be cognisant of the long-term repercussions of their actions across all areas of the business. Another aspect of being the organisation’s conscience is helping to digest rapidly changing assumptions about the business and understanding what that will mean.
It’s the CFO’s responsibility to look forward rather than back, to predict and plan for a wide range of business impacts. A CFO cannot simply be reactive; they need to drive the conversation, always considering what might happen should conditions worsen. While CEOs are under great pressure and busy dealing with countless other issues, the CFO needs to make sure they keep challenging those questions.
With full access to organisation data and financial management tools, CFOs are in an ideal position to gain a forward-looking, 360° view of their organisation. Coupled with this view, the CFO must also analyse and interpret the numbers to inform the decision-making process. However, according to research by Sage, 70% of CFOs still make decisions based on gut feeling. Scenario planning and analysis should now take on a whole new level of importance and be performed on a rolling basis. It’s crucial for knowing where the organisation is, and where it could be headed.
Implementing change in the right way
As markets across the world fall into recession, COVID-19 won’t be the end of the shocks and upheavals businesses face. As the context changes daily, CFOs need to be the ones who assess the situation with an empathetic, activist eye.
When an organisation enters into a challenging period, the CFO’s role is too often framed as the wielder of the axe, and their judgement condensed down to deciding where the axe will fall. Its time organisations took on a broader definition of what CFO success looks like. Crisis or no crisis, it should remain focused on helping the business invest successfully for maximum returns in the long term.
Making cuts might not be the best thing to do; instead, a CFO may see greater benefits from investing in building lasting relationships with employees and customers. For example, as large sections of the economy continue to work from home, CFOs have an important role to play in making sure remote working is driving value for the business. Many organisations have resisted spending any money on ergonomic improvements for home workers, or home office equipment in the past. This is a clear example where the CFO has a unique ability to break through the barriers and boost productivity.
Redundancies and budget cuts are sometimes necessary, but if they’re the first recourse then an organisation is in danger of falling into the trap of spiraling productivity and collapsing cash flow. Doing little things to help during a tough time can make a lasting difference in a relationship. CFOs are the ones with the power to advocate investment in customer service, employee productivity and satisfaction.
A beacon of positivity
Today’s businesses, small and large, have been impacted more than we could have ever imagined. The spotlight has turned to those driving the financial decisions to provide support, encouragement and hope to many. The world of business should continue to run with empathy and caution, while the evolving role of the CFO shines as the champion of customers and employees. The CFO has access to accurate data and insight that paints a picture of the future, allowing them to look forward through the disruption into a positive light.
