How Finance Can Master Change In Times Of Crisis

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A crisis of unprecedented magnitudes is upon us, and many companies are looking for ways to survive it. This typically means launching a range of new initiatives to find cash and improve margins. Finance should play a key role in both identifying the right initiatives and securing successful execution. 

This week we learn how senior finance leaders and their companies have tackled change initiatives during this crisis. All the leaders were deeply involved in the process. Generalizing, they typically approached the crisis as follows: 

1. First, they reviewed existing initiatives to see if these were still relevant
2. Then they ran scenario analysis on the initiatives to see if they were enough
3. If not enough, they found new initiatives to bolster cash and margins
4. Once decisions were made, they became catalysts for execution
5. If they were doing fine, they started to help customers and suppliers where possible

It sounds simple, but hard work was put in to make this happen. Still, this is a good recipe for Finance to master change through the crisis. Now it is time to hear from the leaders how they managed this. 

There is no shortage of potential initiatives 

The more desperate the situation gets; the more radical companies get with coming up with improvement initiatives. Still, there is rarely a shortage of initiatives to take but rather it is about choosing which ones to go for. 

Anders has previously published two articles with 15 tips for finance professionals to get through the crisis and 30 suggestions for initiatives a company could take to improve the situation. The question is: Are companies taking an initiative-bonanza approach or are they keeping their calm? 

It seems like it varies greatly from industry to industry. Here is what a senior leader in the machinery industry said. 

“Unfortunately, we had to let go of hundreds of employees and are now looking at end-to-end margin recovery initiatives” 

Flip that around and you are in the tech industry where a senior leader we spoke to said this. 

“It has been quite minimal in our company and we do not expect to go into a big cost savings mode” 

Even a company is struck hard; it does not necessarily mean that many new initiatives will be started as a senior leader in the building materials industry told us. 

“We didn’t start too many new initiatives but rather we are working our existing ones through various scenarios” 

One initiative that has likely kept all companies busy though is whether to participate in government aid packages and how to cater to each country having their own special packages. This has kept more than just FP&A busy as the senior leader from the building materials industry expressed it. 

“It is not just FP&A that has been busy with forecasting and scenario modelling. Tax and Accounting have been under heavy pressure too to understand our position in relation to the government aid packages” 

The crisis also takes companies beyond their own situation. Even if they are doing well themselves, they must show concern for both suppliers and customers. This is what a senior leader in the tech industry spent most of his time on. 

“Our initiatives have mostly been geared towards customers and suppliers to ensure they make it well through the crisis too” 

Another thing to pay attention to is who is keeping an overview and running all these initiatives. Has Finance been up for the task or seen others under the CEO run with it? Let us check in with each of our three senior leaders. 

• Machinery industry: “Sales is driving the value realization but with strong support from their finance business partner. The CFO and CSO have joint responsibility for the plan.”
• Building materials industry: “Finance both keeps the overview and runs the value realization.”
• Tech industry: “Finance has a big say in this with the CFO setting the agenda, yet Operations is in charge of the execution”. 

In all cases, Finance plays a significant role whether as the leader or the business partner. This is encouraging to see that at least in these companies, Finance has stepped up to the plate and managed the change in a tough crisis. 

How heavy is your company running on the change load? 

Many companies are under pressure and that puts Finance under pressure too. However, if Finance has a firm grip on the steering wheel the change load will not get as heavy as some might have predicted. We are curious to learn more about how the change load is looking in your company though. Have you started many initiatives and who is running with these? How is Finance overall being involved?

Finance has a unique opportunity to be the function that is guiding the company safely through the crisis and managing the change load. There has never been a better time to step up than now!

We would love to hear your story too either by telling it in the comments or speaking to us in an interview. Please reach out to Anders directly at [email protected] or send him a message on LinkedIn if you’d like to discuss the topic of how Finance can get ahead of the crisis.

Next week we take on the last of our four hypotheses being planning for 2021. Will companies finally get rid of the budget or will they follow the same procedure as last year. We think the answer may surprise you so stay tuned for more insight into how Finance can get ahead of the crisis next week!

This was the tenth article in my series about "Crisis Management for Finance Professionals" and you can read previous articles below.

15 Tips For Finance Professionals When In The Middle Of A Crisis

My 6 Finance Career Lessons From Times Of Crisis

30 Ways Finance Can Restore Shareholder Value Post A Crisis

How To Survive The Crisis Without Layoffs While Cutting Spend

Lost Your Job Due To Coronavirus? Here's How To Find A New One!

A Global Temperature Check Of Finance And Accounting

How Finance Gets Ahead Of The Crisis

How Finance Runs Crisis Performance Management

How Finance Can Create Human Capacity To Survive The Crisis And Beyond

For more tips to help you through the crisis you can find more inspirational articles below.

How A LinkedIn Ad Turned Into To 10 Million Dollars

4 Reasons Why No One Implements Best Practices

Why Risk Management Is Supposed To Be Boring

3 Reasons Your Budget Is Already Outdated

How Finance Can Help When Business Is Bad

Who Holds The Key To Successful Cost Savings?

Don't Explain Yesterday, Predict Tomorrow!

Finance Needs A 20/20 View On The Business

Finance People - Adopt A Growth Mindset Or Die!

How Finance Masters Their Working Capital

How Business Partners Keep A Plan On Track

Model Me This. Model Me That. FP&A Can Model You Anything!

If you want to become a better business partner you should consider taking our online course "Business Partnering Explained - Value Creation Unlocked" to get a better handle on the role. It's accredited for 5.5 CPD hours.

Anders Liu-Lindberg is the co-founder, COO (Chief Operating Officer), and CMO (Chief Marketing Officer) at the Business Partnering Institute and owner of the largest group dedicated to Finance Business Partnering on LinkedIn with more than 8,500 members. I have ten years of experience as a business partner at the global transport and logistics company Maersk. I am the co-author of the book “Create Value as a Finance Business Partner” and a long-time Finance Blogger on LinkedIn with 40.000+ followers.