You don’t need an economist to say that the present situation is extremely challenging. We haven’t yet begun to understand the extent of impact it can make on the economies in general and people in particular. This statement has got so generalized that it has almost become a cliché.
When one looks at the finance function, one immediately comes across a variety of challenges that a typical CFO is facing in the present situation. Right from making day to day transactions with the bank to closing the accounts without attending office to managing the grim scenario of committed liabilities not being backed by commensurate inflows, annual operating plans going out of the window and roving questions from investors, bankers and rating agencies. Host of typical CFO nightmares immediately come to mind.
Coupled with some tough decisions that every organization is taking, be it massive cost reduction, payroll cut or rollback of the ambitious growth strategies, it is not making the life of the CFO any easier.
It is said that each calamity is a great teacher. I would consider our generation of Finance Chiefs lucky as we really got to experience a true black swan event, which otherwise, we simply keep reading about, without really relating to it.
So, are there any bright spots in this otherwise grim scenario? In my view, there are quite a few. While analyzing these, I am essentially going to focus on the softer aspects rather than typically finance or management skill sets alone.
1. Finance function is often accused of being in an ivory tower without real appreciation of business scenarios. The present crisis will force the finance people and CFOs to understand and align with the fast-emerging business scenarios. This, in my view, is a huge value addition to the overall mindset of the finance people.
2. It will dramatically enhance the ability to deal with a lot of grey areas. World was never a black and white place in the first instance but the present crisis, if at all, has only expanded the grey area that always existed. Uncertainty and ambiguity are all-pervading. CFOs have to understand it, appreciate it, accept it and address it. They can never have all assumptions neatly laid down in front of them. It can be a very humbling experience and I am sure this will cause the CFOs to emerge from this crisis as a better individual & professional than when they entered into this. Decision-making ability will surely improve for those who actually practice this.
3. Balancing act – There are a lot of pieces of jigsaw puzzle that the CFO is trying to make sense out of. Handling somewhat conflicting expectations from management, investors, bankers, suppliers and colleagues and peers, isn’t all that easy. Each one is right in his/her own way. Under the circumstances, what is most important is to keep the sense of “what is necessary to be done” intact. It is very easy to sway in any one way. Some arguments are compelling and some are organizational compulsions. But a successful CFO, who will emerge strong from this, will be the one who keeps the sense of “ What is necessary” at the top of his mind and focus on that. This is nothing but a balancing act, of choosing the necessary thing over the popular thing.
4. Empathy is essentially to put ourselves in other’s shoes to understand what he or she is going through. In the cut and dried world of accounting, finance & compliances, it is not always very easy to do so. It is very easy to feel the god or the victim, while either is not always true. The crisis is bringing out this aspect quite vividly. We all are fighting an invisible enemy and whatever actions we are taking or facing is a reaction to the situation created by this common invisible enemy. This alone will make us understand that all actions that we are taking or those which others are taking and which impact us are not necessarily directed against us. This would help us develop a lot of empathy for the world around us.
5. Finally, we all have heard that Change is the only permanent thing in life. However, we have always factored an incremental change at a manageable pace. Something we can handle, take in our stride and move ahead. Covid-19 is changing this completely, profoundly and almost irreversibly. CFOs, more than ever in past, have to be the change agents for the company’s journey to ride out of this crisis. A skill, we think we have but which has never been really put to any meaningful test. The way companies will look at their businesses may change permanently, having profound financial repercussions. CFOs have to understand that, raising their thought process and implementing the actions to maintain credibility of their organization intact despite such massive all-pervading changes. It will be a lot of stress but those who are able and willing to go through it will emerge as the thought leaders of tomorrow. It is clearly a challenge and also a massive opportunity.
Although I have written this in the context of finance, it has applicability in all walks of life and to that extent a challenge that human race is facing right now. God has given our generation of finance people an opportunity to ride out the worst possible global event and let us take this opportunity with both hands and emerge with flying colors.