Last year, our Co-President and CFO Robynne Sisco authored an article on how finance leaders can prepare for uncertainty. Given these challenging times and the high level of uncertainty about the full impact of COVID-19, we thought it would be helpful to share her advice again, with a few updates for the current environment.
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. 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 2018, 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. In 2019, 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.
In the current environment, planning has taken on new urgency. Being able to quickly model different scenarios gives management teams the ability to have informed discussions about trade-offs, and make the best decision.
Finance teams also need the systems, processes, and resources to quickly execute on decisions. How long does it take you to make changes once a decision is made? Are there process changes you can make to be more agile and move more quickly? I strongly encourage companies to ensure you’re getting the most out of your technology investments to help navigate uncertainty.
Transparency can be easy during good times, but it’s during uncertain periods that companies are truly tested.
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.