The CFO'S Perspective

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. 

When the government stimulus incentives were in play, many business owners felt protected. These safety nets provided a way for many cash-strapped organizations to navigate uncertain waters. But now that those programs have ended, what will the future hold?

Will your business be resilient enough to bounce back better and stronger than before?

Financial sustainability is key for both short-term and long-term success. REDF explains, “Sustainability is maintaining a reliable recurring revenue stream to cover expenses and achieving financial results that are consistent with the expectations of the organization.” Available capital, comfortable profit margins, steady revenue, thriving customer relationships, and scalable production are all key components of a company’s financial sustainability.

Is your business ready to sustain itself?

When a key employee leaves, hiring a replacement is of paramount importance. But when it is going to take considerable time to find the right person to fill the vacant role or a hired replacement cannot start right away, an interim hire is used to bridge the gap.

So, who do you turn to when you need help with interim employment?

Hiring managers may ask, “Does it matter who we bring in to help us hire an interim position, anyways?” and “Do we need to spend much money to hire someone that we only plan on keeping around for a short time?” The ubiquity of staffing companies makes them an attractive choice for inexpensive hires in individual contributor roles. But what about interim executive leadership roles?

A role like the CFO position needs to be filled with an experienced professional who is ready to lead the organization. As CFO Magazine explains,

“Leadership voids are particularly perilous when it comes to the CFO position. CFOs are the ultimate utility players in an organization — they’re captains of detail orientation. They need to seamlessly interact with all parts of the company to gather and disseminate information. At the same time, they need to be a strategic thought partner with the CEO. Having this seat empty can cause the best of companies to stall. Interim CFOs keep a company in a safe pair of hands. They provide stability by offering critical financial reporting and business intelligence and moving key projects forward. Interim CFOs enable proactive companies to keep the momentum going. They also, maybe most importantly, allow them to take their time to find the right next full-time finance chief (vs. rushing to hire whoever is available at a moment’s notice).”

The importance of the CFO role begs the question, do professional services firms provide an advantage for these types of hires? What sets them apart from staffing agencies? And do these advantages justify their premium pricing?

A business owner should always have a succession plan, yet at the same time be ready when a member of their executive team is ready to implement their own exit strategy, i.e., retirement. The Great Recession caused many people to need to work longer until retiring because of the loss of income and value of retirement assets. But now, a decade has passed, which has given some the time to replenish their retirement savings. As a result of the COVID19 pandemic many people are re-evaluating what is important to them, and in many instances, it means retiring a few years sooner than originally planned.

Downsizing is never a light topic to broach, but for businesses that are financially compromised or experiencing a reduction in demand, it is important to fully understand before any strategic planning can begin.

Downsizing is often tied to a reduction in headcount. Headcount is more than just a number, which is why downsizing should be approached with the utmost care and consideration. Knowing why a company should downsize, what kind of risk is associated with doing so, and how to avoid common mistakes is key to increasing the likelihood that your reduction efforts will be successful.

Use this guide to get a better understanding of the implications of downsizing and help inform your strategic planning as it relates to both maintaining your business and preparing it for sale.

As more people begin to get vaccinated, we are eager to return to what life was like in the "before times" to plan vacations, in-person meetings, even concerts and ballgames. When it comes to the workplace, there is no turning back the clock to how we used to do things. Wise leaders will capitalize on the innovations developed during the transition to continue remote operations by retaining the process improvements to be sustainable, regardless of what comes next.