…“when yes is not an option” said an associate of mine when he and I were members of the same CFO round table. While this phrase can have many implications, it explains that most decisions are easy, but in reality are difficult to execute.
One decision frequently faced by CFO’s is the request to spend when cash is tight and the ROI does not meet minimum parameters. This is especially the case when the request is coming from the CEO. The decision should be an easy no, but saying no to one’s passionate boss is difficult.
Another decision that is equally easy but difficult to execute is the need to eliminate jobs when a business is not meeting its growth targets. Targets which led to increasing investments in people which, due to failure to achieve goals, must be reversed.
Neither of the decisions is difficult to make however, executing on the appropriate decision may be difficult. Execution is made infinitely easier when the CEO and the CFO are credible and have trust in one another.
Implementing unpopular or politically difficult decisions requires courage. Successful execution requires:
• Strong policies and procedures – For example requiring proposed significant capital expenditures be subject to a standardized rigorous vetting process requiring minimum discounted payback periods and ROI. Further large expenditures should be subject to an approval process by senior executive team members. The policies and procedures should be documented and agreed to by the executive team before putting them in to practice.
• Rigorous planning – For events like a reduction in force, significant planning will reduce the possibility of mistakes and rough implementation. Planning should include adequate time to have the appropriate discussions with HR, advisors and attorneys.
• Consensus – The first step to a successful implementation is appropriate communication with the senior leadership team. While not all may agree with the decision, all must agree to abide with the decision.
• Communication – A plan for the timing and appropriate communication for all stakeholders must be prepared and implemented. All interested parties need to be informed which may include: all employees, the board of directors, shareholders, customers, vendors, and bankers.
Business owners and leaders must make unpopular decisions. The more quickly they are made, the more quickly they can be implemented. Strong methodologies for decision execution, especially unpopular decisions, will lead to more successful implementation and continued focus on the future.