Press release: The CFO turn-around toolkit


AdvTech Resourcing CFO Zubair Samrod unpacks the role of the CFO in a company’s turnaround.

When you think of the term “Chief Financial Officer (CFO)”, an Excel spreadsheet and calculator are likely the first elements that come to mind.

Indeed, a CFO is responsible for interpreting the numbers – but there’s more to it than crunching numbers and consolidating figures.

CFOs must understand the industry, people, trends, and forecasts before making sense of the numbers, especially in the context of a turn-around.

But what exactly is a turn-around? And where does the CFO fit in?

Re-structuring how we face challenges
Turn-around is the objective when an organisation, in an unfavourable financial position,enters financial recovery. For example, the Covid-19 pandemic presented challenges that leaders hadn’t previously been exposed to or, initially felt equipped to handle, causing financial distress.

This black swan event made many of us realise that you can study a method for years, but when the mandate changes, you have to mitigate risks that were never previously relevant, to support the success of the turn-around strategy.

Reasons for a turn-around include:

  • A shift in market demand
  • New competitors
  • Economic shifts
  • Unsuccessful commercial decisions
  • Ineffective management

This process involves revisiting the company’s strategies, margins, target market and cost bases to reverse the damage.

It takes a village to achieve a turn-around
A turn-around typically has many moving parts and is a collaboration between CFO and senior management. It is essential for that senior management to play as large a role as the CFOby tracking and understanding the numbers at an operational level.

But what happens when there’s a gap between the CFO and senior management?

1. Conflicting views

There must be holistic buy-in for a turn-around to work. The process gets complicated when a strategy makes commercial sense to the CFO, but the team sees it differently. Pushback can cause conflict, which negatively impact the outcome.

2. Directional discord

There’s no point in a turn-around process when synergies are absent, and people head in different directions. The key to implementing change is to move as a collective, communicate effectively, and make data-driven decisions.

3. Contextual difficulties

Situations don’t always allow for radical structural changes at a specific time, which is why timing, staging, and testing are critical for any successful turn-around.

4. Communication barriers

CFOs may struggle to communicate in layman’s terms, while senior managers may struggle with financial terms. This is why both CFOs and senior managers must try to ‘speak both’ to ensure that all parties are on the same page.

The CFO turn-around toolkit
There’s no one-size-fits-all approach to a turn-around, and CFOs and senior managers must work together to remove the noise and re-unite the company. In the interim, there are a few skills that underpin a CFO’s success in a turn-around.

1. Tap into your experience

If you’re a CFO, chances are you have a solid background in Finance. So, leverage off that experience and industry knowledge to develop the right strategies for the business. Once your team recognises your confidence and credibility, they’re more likely to consider your approaches.

2. Be flexible in your thinking

Now is not the time to stay in your comfort zone. After all, comfort zones place companies in tricky situations in the first place. While driving down costs and increasing margins are important, you must also focus on getting the business into the right position for the next 3-5 years, which may require short-term sacrifices.

3. Unite all the solid thinkers

Call on those who form part of the solution to help you in the turn-around process. This includes the CEO and senior managers who have the authority to make decisions, guide employees, and cut ties with unnecessary resources that compromise profits. When interacting with senior teams, it’s also important to balance the harsh realities with a solution focussed approached.

4. Think on your feet

Merely having data isn’t sufficient. A turn-around also requires research and analysis to make data-driven decisions while responding to new challenges.

5. Numbers and people

Numbers only have meaning because of people so, if the company is sliding, look behind the numbers to identify areas with potential, stay positive and don’t automatically default to the R-word (retrenchment).

As a finance professional there are multiple opportunities to make an impact and, once you have implemented a successful turn-around strategy, you will experience unparalleled personal and professional satisfaction.