Report Summary
The most important decisions revolved around short-term plans to raise cash--cost cutting, shedding staff and selling assets at the expense of long-term goals
CFOs pinpointed their most important decisions in open-ended responses that included "dealing with sudden customer bankruptcies", "stopping all capital investments", and "selling assets in Asia and Switzerland". Two-thirds of respondents agreed that important decisions in the midst of the crisis were necessarily focused on the short term at the expense of the long term. Asked to compare decision-making with other periods when the economy was growing, 68% said decisions in the recession were primarily focused on immediate or short-term outcomes, compared with 49% during better times.
A wise minority took advantage of the turmoil to make positive, long-term changes
One-third of respondents claimed to have made their most important decisions with the long-term in mind. Examples included "transforming the IT business", "introducing a planning tool for more efficiency and speed" and "streamlining the lead-to-order process". Half agreed with the statement, "The downturn gave us the ability to make difficult strategic decisions more easily."
High stakes led to collaboration, a coordinated response and bolder action
Two-thirds of respondents said a collaborative process with other senior leaders within their company was the most important factor in making good decisions. Forty-two percent agreed that "contrary views were aired and discussed openly without a culture of blame". Respondents said the crisis situation "helped to get buy in", and drove "bolder action" among management teams.
Under pressure, CFOs took more time to reflect
The majority of respondents agreed that there was more pressure to get decisions right during the downturn, compared with other periods when the economy was growing. Two-thirds agreed that the consequences of bad decisions were magnified. Rather than letting the pressure rush them into rash action, however, 60% of respondents said they took more time to analyse the options and examine the possible consequences.
Financial tools performed well but CFOs seek improvement
Respondents were in agreement that the tools of their trade such as financial planning, scenario planning and forecasting were more effective during the downturn. For the large majority of respondents, financial IT systems performed the same or better under the added strain. Yet when asked what they would most like to improve, many highlighted the need for better data and modelling.
Experience breeds confidence, rather than a specific plan
Fifty-eight percent of respondents had a senior decision-making role in a previous downturn, and 42% of those with such experience said it was "very useful". The reasons cited were psychological – "diminished tendency to panic", "to keep calm and not be pessimistic", and "the ability to cope with pressure and the nervousness of employees".
Do the review before the decision
Relatively few respondents see any use in a formal process to review decisions after they are taken. Experts say this is because of the dangers of hindsight and political blame games. But they agree that CFOs should persevere with the right kinds of decision reviews–which, paradoxically, take place before the decision is made. The "pre-mortem", for example, asks a group of executives collectively to imagine how a decision could go wrong in order to improve the chances of success.
