Human Systems – A CEO’s Focus

Contributed by Doug Tate

While most would agree the term “system” directs one’s initial focus on either the technological or process-oriented areas. I would recommend the primary focus over the next 30 – 90 days should be on the “human systems” in the business.  Every other “system” in the business relies heavily on the people running the business.  The level of uncertainty precipitating from this pandemic is arguably more significant and far-reaching than other events experienced over the last 40 years:  social, emotional, health, economic, and geo-political.  Compounding this is a cacophony of conflicting information emanating from the expansive media, broadly defined, that is available 24/7.

Given this level of uncertainty and conflict, both real and perceived, our “human systems” may be challenged to remain focused and/or connected.  Leadership needs to provide direction and structure for the “human systems” to successfully perform and manage the other systems effectively.  What may have worked or had been the norm prior to this pandemic may not remain so.  Leadership must also provide a platform that encourages consideration of new or additional planning assumptions and KPI’s in order to not let inertia lead to Einstein’s theory of insanity, “doing the same thing over and over again for a different result”.

LEADERSHIP FOCUS

Leadership may be faced with the company being both a “turn-around” and a “start-up” concurrently.  The combination of significant contraction coupled with possible rapid growth in many of their products and markets will challenge many management teams no matter how successful they had been in the past.  While “normal” change is a constant that well-managed companies incorporate into their processes, the amount of potential cathartic and crisis driven change will stress current paradigms.  The list of focus points below represents a start:

• Company Organization – communicate clearly and regularly; made decisions regarding current workforce quickly and cleanly; establish clear procedures and expectations.
• Customers – connect directly and regularly; synthesize customer experiences/expectations into planning input; stay connected.
• Suppliers – treat similarly to customers.
• Shareholders/Investors – communicate clearly and articulately; provide cogent updates to existing strategic and financial plans or guidance.
• Leadership Team – initiate urgent response and action; while not necessarily a regular component of standard disaster recovery, the urgency and scope is similar; initiate frequent updates from key process and procedural control owners to ensure responsive and effective corporate governance.

PLANNING & ANALYSIS

Under “normal” circumstances, the FP&A group performs routine forecast and plan revisions.  However, the business environment is no longer “normal”.  Standardized planning scenarios must be expanded with an increased frequency.  Strategic financial planning is much like playing chess, but the pandemic may have precipitated 3-D chess.  The challenging of current or legacy assumptions and formularies must be encouraged, if not directed.  The planning and analysis may not only uncover significant financial risk to current operations, but also new market opportunities.

The finance team can often be imprisoned by their own competency in their discipline.  This is the time for leadership to encourage, if not expect, the finance team to perform as a true business partner who can provide

• Indispensability
• Future-proofing of the organization and operation
• Thought leadership
• Change catalyst

While the Finance team may already display these characteristics overall, operational normalcy can often create inertia and a dull edge.  Leadership must expect a honed edge at this time.

That being said, most companies and their leadership teams may not be positioned to “parachute” into their own organizations to effect quick action.  Leadership should not hesitate to seek and deploy the counsel of outside experts to implement a response during this situation.  The clarity injected by an outside expert who can drop into the company, may not only ignite needed solutions, but also provide the stone to sharpen that edge.