By Tim Wakeford, VP Financials Product Strategy at Workday
Organisations throughout the world are finding themselves in a uniquely challenging situation. Every financial plan set out for this cycle is no longer applicable, and the majority of businesses need to completely reset their strategies. The rapidly changing circumstances surrounding the COVID-19 outbreak and its ensuing economical impact has also made planning difficult, as businesses try to anticipate the unpredictable. The big question that all CFOs are now asking themselves is how they can plan and be prepared for the unexpected.
Seeing how our own clients are changing to strengthen their organisations during the COVID-19 outbreak, it becomes apparent that the answer lies in two key elements: agility and transparency. Most companies are having to learn about and adopt both of these elements as they go, as they were forced to perform a huge operational shift in a matter of days. On top of these shifts, policies surrounding nation-wide lockdowns are having significant mental and social wellbeing ramifications on the workforce, which only increases the pressure on businesses. Transparency and clear communication alongside organisational agility are fundamental to face this storm with a solid integrated front.
Organisational agility for better decision making
The world is changing incredibly fast. Stock markets have been see-sawing constantly ever since lockdowns started being imposed in different countries, which is reflected in the ups and downs of the London Stock Exchange in the last few months, as shown by the Institute for Fiscal Studies. Businesses which learn to ride this wave of constant change with agile decision making will be able to do it in any other circumstance. Being agile helps organisations anticipate what’s coming, and act quickly when faced with change of any magnitude, responding with more effectiveness and speed to the demands of customers, market shifts, and competition.
A recent organisational agility study we conducted at Workday showed that the quicker businesses are to adapt, respond and control new situations, the better they perform. The top-performing companies were 10 times more likely to react to market shifts, an essential skill when a large chunk of revenue comes from digital streams. A change in a service or product simply cannot wait 12 months for a new financial year planning to be implemented — and in the current scenario, businesses need to be thinking day by day, rather than month by month. In fact, the companies who were the fastest to react to the crisis were praised not just internally, but externally. For example, companies like HP and Johnson & Johnson are thinking outside the box and implementing processes to offer products that are completely new to them, like health face masks and ventilators.
Agile planning and execution
In the current environment, there is a need for a new approach for planning processes. One that allows financial teams to actively plan and re-plan continuously as internal and external events evolve. This means rapidly assessing the impact of each new change to the business, executing on decisions made, and analysing the results. To be agile in decision making, leaders must have a predictive approach, by modelling and identifying potential scenarios to come. Having the proper tools in place is fundamental to achieving this, and this is the perfect time to reassess the technologies and processes an organisation currently has.
Recent research from Adaptive Insights revealed that three out of four finance executives considered that their planning processes weren’t prepared for economic and geopolitical disruption of any kind. In the face of a pandemic, these organisations are in for a huge challenge, and the need for scenario modelling, continuous planning and rolling forecasts grows. With the right systems, processes, and resources they will not only have a full picture of what may hit next, but also the proper tools to execute on decisions.
CFOs must ask themselves how long the company is taking to act on new plans. This is not the time to be running behind trends and economic shifts. It is, however, an opportunity to review technology portfolios and make sure the company is making the most out of these investments. Businesses who are able to do this successfully will ride the wave of uncertainty and bounce back from it stronger.
Transparency to stand strong during uncertainty
Agile planning processes are, however, not enough if they are not accompanied by transparency towards employees, partners and customers — at a time when they are vulnerable. Organisations must be open-minded and admit that the pandemic is touching every aspect of business across the board. Communicating about this effectively requires business leaders to build an honest, non-siloed, response to all audiences. After all, without transparency, trust from internal and external stakeholders can be shattered.
Leaders must be open and honest around the measures the company is taking, and how it will address the challenges ahead. This is integral to boosting morale. Transparency can also help to engage all the parties involved in reaching a common goal. Simply having the reassurance that the leadership is focused on what will be best for everyone can pay off when the world around them is clouded in uncertainty. Once a crisis is over, people and businesses remember the organisations that were true to their promises and supported them during tougher times. This trust will be fundamental for both employee and customer retention as recovery begins.
The world is still in flux, and the impacts of the COVID-19 outbreak will undoubtedly change many industries for the foreseeable future. However, companies should see this as an opportunity to prepare themselves for not only the current crisis but any new storms of uncertainty that come in the future. Leaders that are successful in deploying agile planning and execution and transparency now will not only thrive during the pandemic but recover faster than their competitors.