The CFO'S Perspective

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.

Regardless of what precipitates a recession, economic ebbs and flows are to be expected over time. Recessions can be caused by a period of contraction that inevitably comes after economic expansion or a sudden and unexpected economic shock.

While the coronavirus recession is fresh on our minds, it is not the first nor will it be the last recession that today’s businesses face. Knowing how to weather a recession is an essential management skill regardless of how long it lasts. However, facing a prolonged recession poses unique challenges that can test even the most adept leaders.

Our team of experienced CFOs shares their top tips on getting through a recession and coming out stronger on the other side:

Hiring for any executive leadership position can be a complicated process, but a CFO brings its own unique set of challenges. Organizations that downplay the importance of a thorough job description or attempt to rush through the steps can end up needlessly prolonging the search process or settling for a candidate that does not fit their needs.

Hiring a CFO hinges on writing an effective job description for the position that outlines not only the required qualifications for the role but also the expectations for someone acting within the role. And while this is a foundational piece of the search, it is only the first step in the process. Once the role of a CFO is defined, the active process of hiring a CFO begins. Each subsequent step must then be undertaken with an understanding of how it will build on previous steps and make additional progress toward finding the best candidate for the role. From identifying key decision-makers and setting a hiring timeframe to talking to a recruiting firm and evaluating your hire, each step is integral to the overall process.

So, how is today’s CFO hired exactly? Our executive search team answers your most common questions to explain the process.

When you want to hire a Chief Financial Officer (CFO) you can hire someone on a fractional basis or into a full-time position. But before trying to understand your options for hiring a CFO, you first need to get to the very nature of the role:

• A CFO is the position at the top-end of the spectrum of financial leadership that is outward-facing and forward-looking.

Once you frame the role in this way, you can start deciding how much time you need someone focusing on that area of your business.

A fractional CFO is basically a part-time or limited engagement CFO. Depending on the company’s needs, a CFO can either perform ongoing high-level financial analysis and oversight on a less than full-time basis, or financial management during a specific challenge or across a predetermined time. However, a fractional CFO may not provide enough support for an organization with more extensive financial needs.

So, when is a fractional CFO a better fit?

Hiring a Chief Financial Officer (CFO) is a daunting activity for many organizations. Understanding when to bring someone on board, what kinds of options are available to fill the CFO role, how to look for the best candidate, and what to expect after making a hiring decision are complicated topics that weigh heavy on many CEOs.

This comprehensive guide to hiring a CFO aims to answer the most common questions we hear when working with new recruiting and executive search clients to find a fractional, interim, or full-time CFO.

A recession or downturn in the market is one of the most demanding scenarios for senior leadership to weather because there are so many possible responses to consider. Each decision leadership makes during this critical time can have a significant effect on the company’s ability to come out on the other side at all, let alone seize available opportunities to grow in the process. So, how can you strategically invest in your business during a downturn to increase the likelihood that it will be able to emerge stronger?

It is critical to act swiftly instead of ignoring the warning signs that a downturn is coming, worsening, or may last longer than anticipated. However, that does not mean giving into kneejerk reactions. A Harvard Business Review article summarizes it best by saying,

“Inaction is the riskiest response to the uncertainties of an economic crisis. But rash or scattershot action can be nearly as damaging. Rising anxiety (how much worse are things likely to get? how long is this going to last?) and the growing pressure to do something often produces a variety of uncoordinated moves that target the wrong problem or overshoot the right one.”

Have honest conversations with your leadership team to solicit feedback on how to proceed while leaning on the data. Focus on efforts on strategically managing expenses, acquiring assets to achieve your goals, prioritizing customer relationships, and developing new markets while focusing on your core competencies.

Companies that understand how finance and HR overlap and foster a relationship between the two are better poised for long-term growth than their less informed counterparts. The reason behind this is simple – knowing when and how to leverage your CFO to assist with hiring and employee retention can improve profit margins, encouraging sustainable long-term growth. Additionally, encouraging collaboration between these two vital areas of the business improves workplace culture across the entire organization.

Business process outsourcing (BPO) allows CEOs to focus on the job of running the entire business instead of getting bogged down with the management of individual departments and teams.

Effective outsourcing allows both large and small companies alike to lean on senior skillsets outside of the company to provide accurate information, offer impartial feedback, and inform strategic decision making.

In fact, according to a recent Intuit study, 65% of business owners surveyed said they would be “better positioned for long-term growth if they could take a step back and look at the bigger picture.” These business owners also reported that they were involved in areas of the company such as sales, marketing, customer service, human resources, and accounting, instead of outsourcing them. It is no coincidence that these activities were taking away from their ability to focus on their core business functions. When they were asked what they should be spending their time on instead, their top answers included developing business strategy, making an impact on customers directly, and innovating product/service offerings.

Business process outsourcing allows business owners and CEOs to utilize highly experienced professionals without needing to hire internally, both managing costs and improving business agility. Furthermore, outsourcing allows business leaders to reduce stress, lessening the likelihood of executive burnout.