The role of the CFO in cost reduction
Many CFOs are helping their companies achieve significant and sustainable cost reductions – are you leading your business through the downturn?
The perception of the CFO’s role has recently changed from helping the business to understand the financial implications of operational decisions to helping business to understand the operational decisions required to improve its financial position.
This paper will examine how CFO, as a functional leader, and indeed the finance function as a whole, can provide the compass from which companies will navigate to a more profitable future.
Undoubtedly, CFOs should take a leading role in re-positioning the business’s finances.
Five lines of attack are key:
- Earn the mandate to lead by demonstrating competence: Leading from a position of strength requires having, or building, a reputation for the finance function as a great service and at low cost – in the current environment, the focus is on information.
- Develop a plan: Assess the value as well as the cost to the business of all operational and support activity. Manage the realisation of any programme returns or benefits achieved.
- Address the short term fixes decisively: Review quickly those costs inherent in the business that can be rapidly addressed without compromising value.
- Tackle complexity: Long term sustainable cost reduction is achieved by eliminating unnecessary complexity that adds cost but no value.
- Communicate: Ensure that actions taken are understood, supported and sustainable.