I have worked nose-to-nose with 9 different CFOs over the course of my career, most of them during my days in Fortune 500-land. I have both partnered with and fought with all of them. They have all been right there with me as we started businesses (Carmax) and sold businesses (Musicland), as we made acquisitions (Baby Superstore) and announced layoffs (IPG), as we cranked it up (Toys R Us) and dialed it back (Toys R Us).
We’ve had calm, professional clashes – most of the time – grounded principally in the opposing forces of spending money and saving money.
I won a few and lost a few of those confrontations – notwithstanding I always thought I was right. And though it’s been 10+ years since my last CFO, I’d like to believe that my respect for CFOs grew over the years from defensive reflex to respectful empathy.
I give this background in a period – really the last six months – when the ubiquitous “needs of the business” more often shoot upwards from the bottom line.
It’s CFO time.
As many, many of you have shared with me lately, you suddenly “have no money.” Your metaphorical debit card has been declined and even snipped. Your Finance Cop has become an unsympathetic judge and jury who’s gavel drops with the word “no.”
But fealty and obedience does not excuse you from raising your hand and calmly, professionally pointing out the risks in CFO time: the risks to the customer, the risks to the brand, the risks to the future when the cycle has once again turned.
Here’s my Playbook of leading in times like these, presented with unwavering respect for my CFO friends, in the form of 5 risks that you can give voice:
Risk #1: An exclusive focus on short-term goals. In times of financial distress, CFOs may become overly focused on immediate financial needs, such as cutting costs or increasing cash flow, at the expense of long-term strategic planning. While short-term goals are important, it’s essential to keep the company’s long-term vision in mind. Remind early and often what that vision is.
Risk #2: Overlooking cash in-flow. CFOs must ensure that the company has enough liquidity to meet its financial obligations. However, some CFOs may focus too much on reducing expenses vs generating revenue. Sales are blamed for being “unguaranteed.” But cost-cutting is seldom tied to its impact on sales, and that’s a risk worth mentioning.
Risk #3: Shorting communication with stakeholders. Sure there’s plenty of communications with shareholders, but what about communications with internal stakeholders, partners and – dare I say it? – customers? CFOs are conservative communicators by nature. But somewhere between opaqueness and oversharing is the dominion of all enterprise leaders. Give help where it is needed.
Risk #4: Underestimating the impact of external factors. I can already hear the cries of “Not fair!” I mean, overestimating the impact of external factors is CFO DNA! But even the most skilled CFOs may not be able to predict or control external factors that can positively impact performance. This is where research identifying opportunities can help balance the worst-case scenario with rapidly emerging trends (think e-commerce early Covid.) Lay hands on said research and insights and share.
Risk #5 : Failing to prioritize employee morale: your CFO will likely never be mistaken for your Chief Culture Officer. But in case you missed the memo, it’s the People, Stupid. Most professionals both recognize and accept the realities of capitalism. The morale-suck comes more from the very narrow explanations offered behind financially driven actions, like layoffs. The bullshit peddled in a communications vacuum doesn’t help, either. Can’t say I addressed this risk well in my early career – I just “let the numbers speak.” I now see that Leadership helps along a company-wide dialogue that is both bi-directional and brutally honest. Take your part.
I still love you, Jon & Bob & Mike C & Tara & all the rest of you Crunchers! While your job is extraordinarily complex, it should not be lonely. After all, we share the crises and downturns and gut-punches equally. Do not mistake taking orders – as we all do during CFO time – from taking a powder.