What does a European CFO need to know in the New Normal?
There was life before COVID-19 and there is life after. What’s certain, is that today’s business leaders need to be more versatile, empathic and insightful than before. In many ways, our 8 Executive Trends for 2020 carry more weight and relevance right now.
Patterns and projections have intensified and today, there are more questions than answers in many boardrooms. A company’s capacity to survive and thrive depends on smart leadership. As shock and awe give way to acceptance and determination to move forward, the role of the CFO is more crucial and challenging than ever.
Fasten your seatbelts, finance directors
The role of the CFO has been evolving for several years – from cash flow and balance to a hands-on role in business strategy. and revenue and resource management.
COVID-19 has accelerated this transformation: Finance drives business, and companies’ knee-jerk reaction to the pandemic was to expect less revenue. Nobody could have predicted what just happened, especially in Europe where companies have enjoyed a few golden years since the end of the last economic crisis. This good run afforded CFOs the luxury of living in the moment while looking forward with optimism. Now, it has become essential to closely examine revenues over the past months and years and manage the cost base with an eagle eye.
Expertise, analysis and intuition
For European companies that trade regionally and globally, cost-base management has become a bit like a game of Tetris. CFOs must now navigate and negotiate European and national COVID-19 salary subsidy programmes, as governments endeavor to minimize the impact on companies and their economies.
Pre-COVID, the finance director developed a range of short-, mid-, and long-term scenarios. Now, he or she must also provide a best and worst-case scenario, and appropriate optimization and mitigation strategies. This requires expertise, analysis and a dash of intuition to provide the board with solid business development advice across a range of different – and ever-changing – markets.
Thriving in the New Era
The key to success for CFOs is to master proactive communication that goes beyond analytical and statistical evidence. In the next normal, financial directors will need to drive productivity and deliver scenarios and strategies to all departments through a range of channels. With many sales teams working from home, CFOs must develop smarter, more flexible strategies to help sell products.
European finance directors will need to reach out to business partners in each country to gain cultural insights into employee and stakeholder needs. And above all, they need work hard and stay positive to instill a sense of security among board members, employees and clients… without making too many promises. In this situation of heightened alert, there is a silver lining. The Latin word “Crisis” means “Light through adversity” and even amid this unpredictable situation, the CFO has an opportunity to shine.
If you are interested in reading about more Finance trends from my colleagues around the world, take a look at our Executive Trends in Finance eBook.
I hope you’ve enjoyed this article. If you’d like to discuss the Role of the Transformational CFO further, I’m just an email away.
Dennis Hoffmeister
Senior Partner