Whether it’s formulating future proofing strategies, ensuring continued regulatory compliance, spearheading strategic financial initiatives, or wondering if there is room in modern business for originality, the concerns of a Chief Financial Officer in recent times are incredibly nuanced and varied – it would keep anyone up at night – if not for days.
One other common apprehension amongst CFOs is cost control, so let’s focus on that for a moment. As you know, taking adequate steps to ensure that your costs are in order - by managing expenses and the rising costs of doing business - can be the wafer-thin difference between success and failure.
The thing is, when questions like “have we considered all our cost management options?” are broached - most times it isn’t singularly about controlling costs. No, it’s usually a leading indicator of a much more larger problem - typically, gross financial inefficiency within the organization.
As fate would have it, that’s when the urgent mid-night email comes in from the CEO asking to see him first thing in the morning. Yep, that might prompt beads of sweat in the cool of night.
But should an inquiry or invitation of this nature be distressing at all? Should it be insomnia inducing? Well, here is a comprehensive checklist to run through to help you arrive at an answer:
- Are the performance targets clear?
Revisiting the performance barometers spelt out for the company is usually a great place to start. This is where you begin to flip through your mental diary, recollecting past events/encounters with senior staff members to ensure that the overall organizational goals have been clearly communicated. Ambiguity or misinterpretation of such company plans is a nemesis to growth.
- How streamlined are the current company policies?
As one whose role encompasses more than just the conventional “finance-only” function – matters in human resources, procurement, planning and strategy are now of capital importance to you – one key denominator that you have to grapple with is the efficiency of company procedures, and specifically, reducing any kind of organizational complexity as it pertains to the business as a whole..
The question then becomes: does current policy pass the test of relevance and value as it relates to everyday company activity? Remember, yesterday’s luxuries can be today’s burdens.
- How often have you revisited the company’s opportunity costs?
As a strategic partner to the CEO and a leading member of senior management, evaluating the relative costs (which involves the comparison between the chosen course of action and the course of action that was rejected) is of grave importance.
In most businesses, once a strategic course of action has been agreed upon there’s no looking back – till the next annual review or unless something catastrophic happens. But in these increasingly competitive times, hallmarked by volatility, the cost of the alternative action – the action not taken or the opportunity cost – needs to be re-evaluated regularly so as to extract efficiencies to stay aggressive on all business fronts.
- Have you armed your team with the latest information?
As a CFO your schedule is psychotic; you’re catching more balls from different directions at a rapid rate. As such, staying abreast of the up-to-the-minute information about your department, company and industry at large is a real challenge - albeit, a necessity considering your role: which is to provide the CEO and other senior members with insights and analysis to make erudite business decisions.
With that said, have you considered a quick informal chat with your HR Director (as opposed to booking a formal meeting)? Have you subscribed and listened to industry related audio-podcasts on your way to work? Have you considered any/every unconventional technique to help you find the time to stay on top of things, so you can develop that much-needed third arm for your corporate juggling act?
- How often have you challenged the status quo?
The more successful a business becomes, the more antibodies it develops towards risk. The “why fix it if it isn’t broken” approach makes it appealing to rest on one’s laurels. Although, considering your responsibility as a change specialist, and being the neck that turns the head of the company towards the future, it is essential you challenge the status quo.
So look back at the decisions you’ve made (since the start of the financial year for example) and ask yourself, how many times you questioned the order of things to entice improvements, assemble advancements and inspire transformation?
Honestly and comprehensively answering these questions would empower you to tackle any conversation about cost control, provide a framework to make vital business adjustments (if the need be), and above all, give you the peace of mind to go back to bed after reading that urgent note from the CEO.
Written by Pip Spibey-Dodd @Locomote