CFO Outlook in the New Normal

I attended an excellent webinar today hosted by CFO Magazine titled: CFO Webinar: Finance Strategies to Navigate the Pandemic – CFOs Respond to Crisis.

Key Takeaway:“CFOs are fighting their own war for the survival of their companies, as CFO optimism drops to a 12-year low."

In John Lennon’s last album in 1980 he released the song “Beautiful Boy” which showcased his deep love for his son Sean.The song’s lyrics included the prophetic quote “Life is what happens when you are busy making other plans.”As we struggle to bring into focus the long-term impacts of a post-COVID-19 world, Lennon’s quote is a poignant reminder of the uncertainties that lie ahead for CFOs that are on the front lines of making the hard calls.

Here are the five key Sustainability Risk Advisor takeaways from this webinar and shaped by interviews with several prominent CFOs.

The bad news:

• The tip of the iceberg: Employee layoffs will continue and will accelerate over the next three months. The worst of times are not over.
• Pay cuts on the horizon: Many companies are planning for employee pay cuts and cutting 401-K contributions in 2020.
• The next bubble: Most companies will shrink their office space footprint as more companies work from home post-crisis. This will in turn lead to a commercial real estate bubble in 2020.

The silver lining:

• Reputation is paramount: Many companies are setting aside budget for corporate reputation management. Savvy companies will focus this on targeted internal and customer communications versus expensive, slick and vacuous commercials.
• Optimism for the recovery: Over 80% of CFOs anticipate a V-shaped recovery with a full rebound in 2020 or a U shaped recovery that will extend into 2021.

The bottom line:

Warren Buffett said famously; 'It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently. " It's time, I believe, for CFOs to think and act differently in the New Normal. It won't be easy, but companies that invest in their employees at this time of crisis will benefit over the long-term. Now is the time for patience and heeding what Jeff Bezos said about protecting a company's brand. "Your brand is what other people say when you're not in the room", said Bezos. Shareholders and customers are watching closely. Companies that cut too aggressively will be held to account.