CFOs have a highly focused perspective on the business world. They should…they’re no longer just focused merely on corporate finance, and haven’t been for quite some time!
I recently had the pleasure of attending a meeting of fifteen finance executives from various industries, both public and private companies. This particular group of finance executives was brought together for a peer-to-peer discussion about issues of interest to them and to their companies. They shared their ideas on a series of important and timely matters, financial and operational, including the economy, employee hiring, financial executive careers, healthcare reform, and more.
Each CFO spoke openly and confidently about what he or she saw as being of critical importance. Some interesting discussions ensued. A brief synopsis of some of those discussions follows:
- Availability of Resources: Given layoffs and job cuts over the last two years, resources are slim, and those that exist are fully committed. Many companies find their employees doing a lot more with a lot less. Of course, productivity has soared. But, it is not expected to last, as the labor market continues to fatigue. With aggressive hiring not yet in full swing, companies operating with fewer internal employees are wondering how they’ll be able to sustain productivity levels and jump start growth without the availability of additional resources, especially as the economic recovery begins to gain traction.
- Ability to Motivate the Workforce: In light of the lack of availability of resources and the overdrive-like work pace requested of remaining employees by their employers, CFOs are struggling to continually and effectively motivate employees. Given the incorrect stereotype that CFOs are merely numbers driven, I found this comment to be very interesting. Financial executives recognize the importance, and the special challenges, of motivating their employees as a means of sustaining productivity and profitability. Currently, many CFOs are experiencing challenges in accomplishing this important task on a regular basis, given other current economic obstacles.
- Ability to Secure Specialized Employees: One CFO stated that his company was hiring at a record high rate (A shining star in the vast darkness!), and that he was concerned about his company’s ability to continually secure the very specialized high caliber technical employees they sought. I’m not certain that this is reflective of the greater economy, but found it interesting. As more companies seek to increase hiring, will they experience challenges in finding the best qualified people?
- Converting from Private to Public Ownership: Another financial executive, whose firm had recently been acquired by a publicly-held company with global exposure, commented on the cultural and very real operating challenges associated with having been a privately-held company for over 125 years. Again, this may not necessarily be occurring at a lot of other companies in the current environment, but it and some of the other matters addressed at this meeting speak to the unique experiences at many companies.
- Financing: Multiple comments were made about the challenges experienced by companies seeking to secure financing on suitable terms to support current operations and growth.
- Timing Growth Plans Against Economic Realities: One CFO expressed concern over spending cash too quickly to support what may be overly optimistic growth expectations on the part of the company’s Board of Directors. Additional insight into this topic and guidance as to how companies can effectively plan growth may be found in an article, entitled “Ready, Set, Grow?” which appeared in the May 2010 edition of CFO Magazine.
- Foreign Currency and Treasury Management: Given the globalization of many companies, and in light of recent economic struggles of some European countries, some CFOs are finding it challenging to effectively and profitably manage foreign currency and treasury matters. The April 2010 edition of CFO Magazine contains a great article, entitled “Painful Conversions”, about how EXL, a business process outsourcing company, learned the hard way, about how to protect itself after getting hit with a $9 million foreign exchange loss.
- Managing a Company Sale and Bad Press: One CFO addressed the particular ups and downs of having managed the sale of a large company, while simultaneously managing negative press resulting from challenges associated with a high-profile project with which the company was associated. The key point was that the company was not involved in any of the negative events, but because of its involvement with that particular project, the necessity to manage the associated negative public relations weighed heavily on the company’s sale to investors.
- Fear of Inflation: Almost all attendees expressed concern about the negative consequences associated with possible inflation occurring in the next twelve months.
- Growing Their Way Out Of the Economy: A financial executive commented on what he believed would be a fruitless attempt by certain large multi-national telecom equipment manufacturers to grow their way out of the bad economy, and the difficulty those companies are experiencing in making such an attempt.
- Healthcare Reform: This group of CFOs wee adamant about their dissatisfaction with healthcare reform legislation, commenting about the high costs and unnecessary burdens placed on employers.
- State and Federal Taxes: The majority of the finance executives at this meeting were uncertain over possible legislation that would negatively impact their companies and individuals regarding state and federal taxes.
- IPO Planning: Some CFOs expressed challenges in planning an IPO, given current market uncertainties.
- Project Workers: One CFO commented on having realized the occurrence of a major change in employment trends, with project workers being plentiful and surprisingly available at what he phrased as very inexpensive rates.
While the above may come to no surprise to some, it does clearly suggest that CFOs are actively watching current and future trends. Finance executives, very often their companies’ senior strategists, are at the forefront of planning and executing their companies’ success.
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Real Estate Strategies Corporation is a respected corporate advisory and transaction services firm that provides thought-leadership, decision-making, planning, project management, and transaction execution services to financial and senior executives at management team-led public, private, and portfolio companies, and not-for-profit organizations. Under the leadership of its award-winning CEO, Andrew B. Zezas, RealStrat’s clients engage the firm when acquiring, disposing, renegotiating, or enhancing occupied leased or owned real estate in New Jersey, Pennsylvania, New York, Connecticut, and throughout North America. By creating and executing Business DRIVEN Real Estate Solutions and identifying hidden Opportunities, RealStrat drives greater operational and financial performance in support of its clients’ stakeholder objectives, M&A requirements, and exit strategies.
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