A CFO’s strategic decision-making would involve analytical data, insights, forecasting, and planning. However, mastering the art of decision-making in disruptions can be challenging.
“You can always get lost in the change,” said Raghava Rao, VP of Finance and CFO, Amazon India.
Keep an account of the changing variables, like interest rates, capital, P&L, sales, employee count, and your employee turnover. However, Rao shared that while change is constant, one should deal with what will not change.
“Decision framework: make sure that your people understand the framework with which you make decisions. Think long term but be mindful of what is happening in the short term,” he said.
He cited an example of Amazon, “we focus sufficiently on the customer, and are we able to serve the customer better than we were able to serve them earlier. If a set of these principles are embedded in the organization, and they are not going to change, that I think is the best way to deal with change,” he advised.
Another way to master decision-making in changing times is to focus on cash flows in the organization and connect them to how you're serving the customer. Rao feels one should be able to correlate and connect the two: on serving the customer well with non-financial and financial metrics on cash flow.
“Irrespective of whatever change is happening in the environment, just stay laser-focused on this, and you’ll do a better job,” Rao claimed.
How does the finance chief prioritise his time?
Donning multiple hats, the CFO should be well connected with the business. Rao shared that he spends a lot of time with business partners, participating in business reviews – “listening to the voice of the customer.”
“That's exactly how you know your business is doing well, in terms of keeping the customers at the centre by listening to customer anecdotes, data about customers, and so on,” he said.
Rao highlights leadership being a priority in time management for the CFO.
“Every CFO should stay connected to the pulse of the finance team as you're leading it. So what is the morale of the team? What conversations is the team been having? Do they feel good about their job? Are they feeling stretched enough? And what is their point of view? And do they have a point of view, which is different from the point of view, that may be the dominant logic in that company? Listening to this is an important part of the role,” he explained.
When it comes to governance, the CFO should look at numbers, performance, budget, health of the balance sheet, cash flows, compliance reports, and all of it, he concluded.
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