Focusing On Key Catalyst Of All-Round Performance

Building and nurturing a high-performance culture is critical to the success of any organization. The role of the CFO has evolved significantly over the years into being a key catalyst of performance across several areas in an organization. In today’s context, I see 4 key areas where the CFO can bring in enormous value

•    Setting     the     right     Performance    Indicators     (KPIs)     and     reviewing    business    performance    Bill Hewlett, Co-Founder of HewlettPackard once rightly said, "You cannot manage what you cannot measure”. The relevance of this statement is perhaps greater today than ever. Setting the right KPIs and measuring their progress against targets are critical to achieve results. It is also the CFO’s responsibility to align  these KPIs to the company’s long term strategic goals. These KPIs serve to build the organizational DNA and help build enduring
values such as strong customer focus, corporate governance and excellence in product delivery. A strong and objective review mechanism also goes a great way in fostering the right organizational culture which is extremely important for attracting and retaining the best talent and resources. The CFO office is best equipped to drive the business review process, since it has visibility to information across the business and serves as the analytical backbone of an
organization.

•    Managing     risks     in     a     complex environment     In a period where we witness high variability in external market conditions, risk management often becomes a key differentiator. In this regard, managing supplier and customer risks are two areas of increasing importance. Efficient contracting with suppliers is essential to bring in better quality, reduce supply risks,
protect Intellectual property and most importantly preserve working capital. Similarly, it is also important to remain prudent and conservative in assessing the company’s ability to meet customer expectations.

"Setting the right KPIs and measuring their progress against targets are critical to achieve
results"

•    Allocation     of     liquidity     to     generatemaximum    operational    leverage In cyclical businesses, there are periods where capital is expensive and the business is going through a high capital intensive phase. In such periods, dynamic liquidity allocation becomes a critical
challenge. The CFO has to manage both the tactical-short term and strategic-long term requirements by carefully assessing the business impact of each decision on the operations and on long term development projects. This is possible only if the right control processes and information systems are in place to facilitate quick and effective decision making. The quality of decision making has enormous impact on the company’s future and  those companies who gain better leverage, often out maneuver peers and tend to emerge cash positive faster.

•    Building    stakeholder    confidence The CFO often serves as the face of the company to external stakeholders including shareholders, capital markets, lenders and other agencies. The CFO is best equipped to gauge their expectations and help the executive team translate
lead signals from these stakeholders into the company’s strategy. The CFO plays a strategic role in aligning and building stakeholder confidence, which is often a crucial factor in ensuring long term success for any company.