As CEO, you have your hands on every single part of your company. Operations, sales, marketing, finances, HR — all of these departments ultimately bubble up to you. This can be hard to manage, but you get to take all the strategic insight you gather from each of these teams and then guide your business on the best strategic path to ensure enterprise-wide business objectives align and roll down as appropriate to departmental goals, expectations, and ultimately performance.
If you’re like most CEOs, you take a look at the high-level numbers and trends. They either please you, or they don’t. If revenue is down, you might put more pressure on sales, or if product demand is skyrocketing, you might hire someone new in HR to help you with recruiting.
But, what if your numbers can give you even deeper insight than this? What if you can use what your CFO shares with you to improve organizational effectiveness, employee morale, customer service issues – and more? Here’s how to start viewing your financial reports in a nontraditional light, in order to get nontraditional results.
Think Beyond Typical Roles
All too often, we silo our roles. CFOs are supposed to handle financial planning, record-keeping, reporting, and management of risks… so we put them in a box, where they must only interact with numbers. The problem is that numbers don’t appear, or operate, within a vacuum. The trends in your company’s financial statements are not merely reflective of products sold and expenses cut. In fact, they’re regularly and deeply impacted by much greater context.
Here’s an example. Let’s say your CFO reports that your marketing department missed its budget by 20 percent. That’s pretty drastic and is hurting your margins. At this point, the marketing department would typically get the riot act read to them and be told to start adhering to their budget – or else. But this might not be an effective approach in fixing your margins.
Instead, a savvy CFO and CEO would put their heads together and try to get to the root of why this might’ve happened. Was a new client onboarded and actual resources needed to handle that account were underestimated, so more expensive contractors had to be brought in to help finish up their work and meet client commitments? Did your CMO set unattainable goals for your marketing team, requiring them to work more overtime (and costing you more money) in order to achieve them? It could be that the employees in your marketing department may not have been frivolous with their budget but were rather backed into a corner and forced to react.
If you only looked at the numbers, you’d think marketing was to blame. But greater context can open your eyes to the organization as a whole and to the real reasons behind financial trends, whether positive or negative. If your CFO can only crunch numbers, you’ll never get this level of strategic insight. But if you empower them to work alongside you as a partner, you can unearth problems within operations and other areas that need to be addressed.
CEOs are notorious for wanting to get ‘bite-sized’ information from their team. After all, you have a lot of balls to juggle, and you can’t waste time digging into the nitty-gritty detail of reports that are way too complex. This is precisely why you have worked hard to gather a great team around you, right?
True, however, you may need to dig a little deeper from time to time and give your team more of your time to get to the root of issues. Otherwise, you’ll be trying to fix the issue armed with often limited high-level details and symptoms. Similarly to how a doctor has to consider a person holistically in order to figure out what’s truly ailing them, you must go deep enough within your numbers to have enough information to make an accurate diagnosis.
This can be hard to do because it takes more time than simply reviewing a synopsis of a report and making a snap judgment (which many CEOs are very skilled at doing). But it’ll serve you better in the long run. If you just take your numbers at face value, you risk misinterpreting them and basing important decisions on potentially skewed (or incomplete) data.
Instead, put all the pieces together. It’s kind of like being a detective. Let’s say your Human Resource Director has come to you with the news that your employee retention stats are drastically declining. Within the last six months, you’ve lost 20 percent of your workforce. A further look reveals that 20 percent is concentrated in the sales department. You might immediately think it’s due to a lack of adequate compensation or something monetary-related. But if you dig a little deeper, you might notice that the largest decline happened in May. Go deeper still, working now with HR and Operations the entire picture starts to develop.
At this point, you might learn there have been some issues with the new sales incentive policy and inconsistent communication from Operations Managers to the Sales Associates on the terms of the policy. Perhaps the policy was implemented in April, and the exits from your other sales employees began happening just a few weeks after. It becomes easier to connect the dots when you rise above the numbers alone, and start putting together all the various pieces of information from each of your departments and work as a time rather than in silos.
Of course, sometimes your numbers will be clear and uncomplicated. But more often than not, they have a much more interesting and enlightening story to tell beneath the surface. Empower your CFO to work across the organization, and to present more in-depth reports to you so you can work together in analyzing financial trends. You may just find some surprising truths you’ve been missing by zeroing in on the numbers alone.
Contact us if you’d like to learn more about how to get strategic insight, and grow your business.