In 2019, businesses can plan on one certainty: uncertainty.
The global landscape is changing faster than ever, impacted by escalating trade conflicts, political unrest, ongoing policy and regulatory changes, and shifting economic forecasts.
With so many unknowns on the horizon, it can be very challenging for organizations to plan ahead. As I think about the coming year, one of the biggest questions for many CFOs is: How do we best prepare our companies for the unexpected?
I believe two things are critical: agility and transparency.
In January of last year, I wrote about the importance of being agile against the backdrop of so much change. But at that time, many changes were known, such as impending tax laws and accounting standards. This year, we don’t have the luxury of knowing what’s going to happen on many fronts. Agility has become a necessity.
For finance teams, being agile means having the ability to plan—and re-plan continuously as events change. For example, if you are a computer hardware company and the price of imported components goes up, finance needs to be able to quickly assess the impact to the business, execute on decisions made by the business, analyze the results, and then repeat.
Many finance organizations struggle to plan in this way for a few reasons. First, many don’t have easy access to or trust in their data. Teams are working with data that is spread across multiple disparate systems, so most of their time is spent on gathering and reconciling data. As factors outside their organizations continue to change more quickly, that time will cost them.
Finance teams also need the systems, processes, and resources to quickly execute on decisions. Now is a good time to evaluate if your systems are helping or hindering you. How long does it take you to make changes once a decision is made?
I strongly encourage companies to invest in technologies now that will help them navigate uncertainty and drive performance as things change. Our customer CFOs have told us that moving to a cloud-based finance system helps them execute on tasks more quickly—such as closing the books faster and serving their internal customers with fewer errors.
For finance teams, being agile means having the ability to plan and re-plan continuously as events change.
The other critical part of weathering any storm ahead is transparency. Transparency can be easy during good times, but it’s during uncertain periods that companies are truly tested. Unexpected change or a business headwind is unsettling for employees and external stakeholders like customers, partners, and investors. However, it’s during these challenging times when transparency matters most and can go a long way in building and solidifying trust.
Take, for example, the potential impact that slower economic times or stock market volatility can have on employee compensation and morale. Being as transparent as possible about what’s happening and how the company will address any changes will demonstrate honesty and help build trust that leadership is focused on what is ultimately best for the business in the long run.
Approaching uncertainty with transparency can help build stronger relationships with employees, which can pay off the next time leadership needs to navigate challenging waters. And it can go a long way with retention. People will often stay put when there is uncertainty in the job market, but once things improve, their loyalty will depend on how they were treated during challenging times.
In this year of many unknowns, companies can take steps now to ready themselves for the potential effects of change. Improving agility and focusing on transparency are two ways organizations can remain strong—no matter what lies ahead.