The CFO'S Perspective

Expense reduction services and cost reduction consultants have been extremely busy over the last year as organizations scrambled to overcome pandemic-related barriers and an overall downturn in the economy. Many companies that had been thriving before the pandemic saw their future success threatened and quickly froze their spending on everything from marketing to R&D. Others took a more measured approach, tightening spending across the board instead of cutting any areas altogether. And while their intentions were good, many businesses missed the mark when it came to executing cost containment strategies.

The reason too many cost reduction approaches fail is because they are predicated on the wrong assumptions. The assumption is that reducing costs will improve cash flow to allow struggling or compromised companies the breathing room needed to stay in business.

Admittedly, I am a sucker for entrepreneurs. I love working with people who are passionate about starting their own venture to bring their new and innovative products and services to market. It is the primary reason I started my own business and worked as an outsourced CFO for over 30 years.

In this passion, I served as a board member for the Northwest Entrepreneurship Association and was involved with several angel groups. I believe the spirit of entrepreneurship and the willingness to take risks are the primary drivers of our U.S. economy.

Back office operations are not always glamorous, but they are some of the most important daily functions for a company. Back office areas like IT, accounting, finance, HR, compliance, legal, and administrative activities work behind the scenes, making up the backbone of a company’s brand promise. Despite being non-customer-facing, the back office portion of an organization is every bit as important as the front office (which is made up of departments like sales, marketing, and customer support).

As such, investing in improving your company’s back office can result in both internal and external wins. Internally back office improvements can increase employee retention and enhance the workplace culture, while externally these improvements can boost profitability and revenue.

But with so many areas falling under the back office umbrella, uniting them under a single set of improvement initiatives is a difficult premise.

Knowing when to hire employees and how much to pay them can make or break a hiring strategy. However, this is not the entire picture. Benefits are just as important to your strategic hiring plan. In light of the growing number of people leaving their jobs in recent months, which has been dubbed The Great Resignation, understanding this concept has never been more important than it is these days.

Like a lot of small business owners, I never expected to own a business. I didn’t think that I had an entrepreneurial bone in my body. I had always been a corporate guy. It's not latent in my DNA either. My dad spent his 40+ year career with General Motors. His dad tried his hand at owning and running a commercial painting business, but alas, after years of struggling, it failed.

COVID 19 has made a significant impact on everyone. Those who are close to retirement and those who feel uneasy about their employers' plans to return to the office cannot stop talking about it. They are trying to answer the looming question – "What do I want to do with my life, especially if this pandemic may curtail it?"

COVID-19 has been a significant disrupter to the traditional “work until you're 65, then retire” path. Now that the world is opening, we are expecting a flood of job changes, working fractionally, changing careers, and retiring because everyone has come face to face with the realization that life is short. With this realization, many are planning to make dramatic changes in their lives.

Filling this workforce gap will be challenging. Statistics show that 28.6 million Baby Boomers (born 1946 to 1964) are now out of the workforce in 2020. According to a Pew Research report, that's 3.2 million more than those who said they were retired during the same period in 2019. That may seem average but consider that there is a deficit of about 5 million fewer Generation X (born 1965 to 1980) professionals that could be ready to step into the Baby Boomers' vacant roles.  I have a friend who is 55, who quit his more than full-time, high-paying, executive job in 2020. He invested in a business overseas and plans to move there with his spouse and work part-time.

With a large segment of the workforce still working from home, what does this mean for the future of commercial real estate? According to recent data, office vacancy rates are over 16% right now (up from 9% in late 2019) and subleased space is coming back on the market. This has led many analysts to wonder whether companies still need the offices they had before and what will happen to all the vacant office space if companies do not return.

What does the future hold? Will the office building survive COVID-19, or is office space now obsolete?

The success of an organization rests largely on the trust it creates with employees, customers, and the general public. According to a recent Gallup poll, “68% of adults globally and 60% of U.S. adults believe corruption is widespread among businesses in their country.”

It’s a bit disheartening to learn that over half of Americans might think poorly of your business, even if you’re one of the “good guys.” But how can you tell if your business really has integrity or if you just think it does? 

Just like with everything else, you figure out how to measure it. Getting a read on the integrity of your business might be challenging, but it’s not impossible. Here’s how you can measure the integrity of your business and why you should invest in the practice.