President John F. Kennedy the moment commented that the phrase “crisis,” as prepared in Chinese calligraphy, included two brush strokes — a single symbolizing danger, the other possibility. “In a crisis, be knowledgeable of the danger, but identify the possibility,” Kennedy encouraged.
His level is helpful suggestions for CFOs addressing the crisis of our periods — the pandemic’s staggering affect on shopper desire, hard cash circulation, liquidity, doing work cash, and operate by itself. Continuing social unrest, political acrimony, weather change, and a new presidential administration with a new economic agenda are complicating things.
For some CFOs, the problems were as well a lot of. Much more than eighty finance chiefs at S&P five hundred or Fortune five hundred businesses handed in their resignations in 2020, in accordance to a review by Korn-Ferry, “a impressive determine,” the consulting firm stated. Even though it is pure conjecture to conclude what prompted their exits definitively, undoubtedly the confluence of significant-force situations played a job, Korn-Ferry posited.
Maybe, in accordance to Korn-Ferry, these CFOs felt so overwhelmed by the crisis that they had achieved a limit of stamina. They were as well exhausted to put their noses to the grindstone the moment once again. In no way is this a criticism. A crisis improvements anything, particularly when you have been there in advance of, once again and once again.
Facts Tells the Tale
Nonetheless, a setback like the pandemic has a way of activating fundamental human ingenuity and resourcefulness. This was obvious in the singularly remote and digital forms of mass operate that kept massive businesses working, a operate paradigm that carries on.
It is also obvious in the operate of CFOs to generate income from adjacent marketplaces — the case with the hospitality sector leasing rooms to remote personnel on an hourly basis and the a lot of restaurants that pivoted to on-line menu orders and 3rd-party meal deliveries.
Now, CFOs are producing new circumstance planning physical exercises and pulling key general performance indicators out of silos like functions and HR and introducing them to fiscal dashboards. Both equally activities will assistance the CFO be additional organized the next time a black swan party makes a mess of business.
Since info is the currency for creating smarter bets in business, CFOs can be anticipated to invest additional cash in their organization’s digital transformation. Unquestionably, the corporation with the easiest and quickest access to precise fiscal info has a aggressive edge. This is the possibility at hand for midsize businesses.
Almost two in a few (63%) midsize businesses rely extensively on spreadsheets to close the guides, in accordance to a recent international survey by Capstone Insights of 1,five hundred midsize businesses (in between $100 million and $749 million in income). The use of spreadsheets resulted in incomplete or inaccurate info and version regulate difficulties, the respondents mentioned.
When boards of directors pressured CFOs for an precise photo of the threats and possibilities, a lot of CFOs could not confidently articulate it. The info informing desire, income, accounts receivable, hard cash circulation, and liquidity was as well very little, as well late, and possibly incorrect. Not able to posit a obvious course, even the toughest trouper could ponder an exit.
When You’re Finished, You’re Finished
For these struggle-scarred CFOs, veterans of previous disasters like nine/11 and the 2008 fiscal crisis, piloting a course by still one more mess can really feel like just as well significantly of a determination. Probably they mulled other CFO and board possibilities or just wished additional entertaining and stress-free way of living. Superior for them, I say.
But is the “remarkable volume” of CFO depart-getting a difficulty for their previous businesses? Simply put, no. New blood may possibly be just what is necessary to reassess the hazards introduced about by the crisis and discern out-of-the-box possibilities to remodel the duress into dollars.
A new CFO of any age provides a fresh new established of eyes to bear when examining threats and possibilities. The new CFO is not weighed down by the institutional interactions that stress the ability to make challenging but important choices — choices the prior CFO understood had to be built but lacked the organizational overall flexibility to make them.
I know this to be the case from our shopper base. Each time a CFO shift occurred, it catalyzed new methods of carrying out matters. I remember a single recently employed CFO who retained a new auditor, a choice the prior CFO was unwilling to make because of the company’s longstanding business partnership with the present a single.
A new CFO can be a powerful change agent when there are no sacred cows. New strategies, procedures, remedies, and persons are liberated to identify possibility amid the danger.
Mark Partin is the CFO of BlackLine.