Saying 2020 was a challenging year would be an understatement. Few companies were prepared for the COVID-19 pandemic outbreak and its resounding effects on just about every industry. Many companies held their breath in the hopes of a reprieve within a couple of weeks.
As we all know, that didn’t happen.
To weather the storm, company leadership had to switch directions and even pivot drastically to help their businesses thrive (and, in many cases, survive). Chief Financial Officers (CFOs) took up the reins in ways they’d never had to. Goals were constantly adjusted and cash flow reviewed regularly, as finance teams worked harder and smarter to survive the pandemic.
According to a June 2020 PwC survey, 70% of CFOs indicated they were looking at massive revenue decreases in 2020, with at least one-fifth expecting revenue losses of 50% or more. One-third of CFOs expected it would take six months or longer for business to go back to normal.
In both cases, their predictions were either accurate or too optimistic. It’s been 14 months since the survey was published, and things still aren’t back to normal. CFOs have had to evolve to become enablers of the business and are more strategic than ever.
Here are five ways modern CFOs may have to reimagine their roles to achieve success in a post-pandemic, digital-first, remote-work era.
1. Be digital stewards of success
CFOs can no longer rely on traditional, pre-COVID-19 methods of looking at financial data, such as return on investment, return on capital, payback period, etc.
In fact, new research by Accenture (ACN) shows that around three-quarters (72%) of CFOs interviewed now have the final say on technology investments and direction. Utilizing advanced data analytics technology, CFOs have learned to become digital stewards for their companies, transforming how efficiently and accurately data is obtained and acted upon.
As a result, technology has become a high-priority investment—one that helps businesses increase their bottom line, improve operational efficiencies, and enhance collaboration.
To achieve lasting success in the 21st century, every CFO should keep in mind what better technology can do for their organization:
- Provides a 360-degree view of all finance data
- Improves compliance and policy enforcement and streamlines controls
- Offers unprecedented visibility and financial planning assistance
- Provides real-time audits, reports, and other automations
2. Strategize, collaborate, and facilitate
With the pandemic came the remote work renaissance, which required far more digitization and online collaboration. That’s why many CFOs became even more data-driven decision-makers. Being privy to all the information generated, collected, and curated by team management hubs, expense and invoice solutions, and other online work platforms allowed proactive CFOs to visualize the entire picture of a company’s performance and needs in real-time.
Higher levels of visibility mean it’s more important than ever to build team confidence through transparency. CFOs can now make proactive, predictive decisions and get buy-in at all levels through the unprecedented level of transparency and information sharing offered by modern spend and team management solutions.
Increased transparency can also be a lifeline during trying times, helping boost employee morale and loyalty. Modern CFOs increase company performance with lower employee turnover rates, greater engagement, and higher customer satisfaction. Gallup discovered that teams that score in the top 20% in terms of engagement show 40% less absenteeism and 59% less turnover.
CFOs have to work harder (and smarter) than ever to bring their companies together in times of uncertainty. With the aid of modern, automated solutions, they can.
3. Rethink budgeting strategies
CFOs now need to focus on increasing cash flow while reducing their costs and risk profile in order to move confidently through a new normal. The most successful CFOs need to focus on revamping—and in some cases, completely rethinking—organization-wide budgeting to truly drive company success.
In fact, a survey conducted by McKinsey revealed that 43% of CFO respondents believe streamlining their company’s overall budgeting process is the key to long-term success.
That’s why many forward-thinking companies and leaders have already begun making the switch from cost budgeting to more modular variable-cost budgeting. The modular strategy, usually completed in multiple phases, allows for more flexibility and fast repivoting.
CFOs who adopt this type of strategy will find that their companies are better-prepared to switch gears and adjust on the fly to new market trends or black swan events.
4. Help redefine company culture from the ground up
Deloitte found that 94% of executives and 88% of employees believe workplace culture is vital to company success. Unsurprisingly, Fortune 100 companies listed among the best places to work disclosed a higher than average annual return, with cumulative returns of up to 495%.
In other words, healthy company cultures where employees feel valued and respected tend to be more profitable in the long run. And CFOs are ultimately the ones who decide who to hire and who to fire.
Companies that entered 2020 with a strong and supportive culture found themselves better positioned to survive the pandemic. But it’s no surprise that regular employees were the ones who often bore the brunt of the changes COVID-19—especially at companies with unsupportive cultures.
Moreover, many employees had to deal with problems at home (like home-schooling, elder care, and unexpected other day-to-day challenges) while trying to save their careers at the same time. Many companies tightened their belts and furloughed or laid off employees due to cashflow, supply chain or funding issues.
As the world continues to recover from the pandemic, employees need strong financial leaders who can confidently make long-term decisions despite countless unanswered questions surrounding COVID variants and the future of remote and hybrid work.
5. Value diversity, equity, and inclusion (DEI)
The pandemic revealed just how vital it can be for company leadership to truly embrace diversity, equity, and inclusion (DEI) initiatives. Companies with strong DEI directives often find themselves in a stronger competitive position. Organizations should continue to be mindful of their roles in DEI efforts and the positive impacts of these programs on employees and company culture.
By fostering strong DEI initiatives, companies can empower employees of all backgrounds, innovate by bringing new voices and ways of thinking to the table, and even solve long-held organizational problems.
The new generation of Millennial and Gen-Z employees especially value DEI efforts as part of their company culture. It’s one of the best ways to attract a wider talent pool and allows companies to thrive in today’s increasingly social-impact conscious market. Likewise, investors prefer many of the same types of directives in companies they plan to invest in.
Accenture (ACN) reveals that although 68% of leaders feel their companies focus on DEI initiatives, only 36% of employees agreed. To make matters worse, only 55% of surveyed employees felt their leaders were attempting to maintain inclusive cultures. With the limited number of women (only 2.8%) in the C-suites of Fortune 500 companies, more work certainly needs to be done.
Position your company for exponential growth
Business leaders are gearing up for 2021 and beyond. They understand that this is the time to grow their businesses rather than just survive. CFOs, in particular, will find themselves involved in all aspects of business growth, from customer acquisition to mergers and acquisitions and everything in between.
Decision-makers and stakeholders expect as much.
Accenture (ACN) found that 77% of business leaders believe CFOs should show a proactive approach toward operations and work right alongside partners from other parts of the company.
A post-pandemic world calls for more innovation than ever before, and CFOs are now working cross-functionally to ensure their organizations remain competitive and successful.
Forward-thinking financial leaders will be on the front lines of growth and change and must embrace their roles as innovators to forge the best path forward.
After all, if we’ve learned anything, it’s that change is not just essential—it’s the new normal. Start making informed data-driven business decisions and increase your team's efficiency to improve financial health today!
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Our choice of Chrome River EXPENSE was made in part due to the very user-friendly interface, easy configurability, and the clear commitment to impactful customer service – all aspects in which Chrome River was the clear winner. While Chrome River is not as large as some of the other vendors we considered, we found that to be a benefit and our due diligence showed that it could support us as well as any large players in the space, along with a personalized level of customer care.
We are excited to be able to enforce much more stringent compliance to our expense guidelines and significantly enhance our expense reporting and analytics. By automating these processes, we will be able to free up AP time formerly spent on manual administrative tasks, and enhance the role by being much more strategic.