- CFOs are bullish and building back — and that entails some serious spending, per our quarterly survey of business leaders.
- CFOs’ expectations around spending in 2021, notably for the sales and marketing departments, differ substantially from those of nonfinance execs.
- Top finance leaders are overworked (still). This season’s main culprit? Not the one you might expect.
Who’s the most aggressive spender in our company? Common answers: the head of sales or production, possibly the founder or CEO. The uncommon but possibly correct answer: the CFO (perhaps that’s you), at least at the moment. That’s the surprise finding of our Fall 2020 State of the CFO Role Survey.
Survey respondents were about two-thirds CFOs and one-third other leaders. We asked the CFOs about their job, challenges and day-to-day focus. We asked non-CFO respondents about their CFO’s job scope, success in the role and competence. We asked everyone about their spending plans for 2021, as well as their outlook for finishing 2020.
We’ve asked the same question on spending each quarter for a year now, and in each of the previous surveys, CFOs were either more aggressive about cutting (spring and summer this year) or more conservative about spending increases (this past winter) than other leaders. We speculate on why in our report linked below.
The swing from spending watchdog to spending champion on the part of CFOs is breathtaking, but is it wise?
In our conversations with CFOs in March, some prioritized moving quickly to cut — with the intention of extending cash runways as far as possible. Staffing and marketing were usually the first costs cut. Back in March, that wasn’t necessarily the best move. In industries that weren’t completely shut down, it was often smarter to wait and see if the competition was going to cut as deeply as possible. If they did, it left fertile ground for stealing market share. For industries in which low interest rates play a favorable role (for consumers, these were home and auto purchases and remodeling), performance was better than the economy as a whole. In some cases, businesses that waited to make cuts improved performance year over year in some geographies. Those that cut deep and fast were left scrambling to participate or simply lost out.
Those prescient enough to see ecommerce as a way to engage their customers they couldn’t see face to face, and were willing to spend on technology to improve the experience, found themselves on the crest of a wave of new sales, often bypassing distribution and selling directly to their end customer . Per our surveys earlier in the year, it wasn’t finance leaders who pushed a wait-and-see attitude, or who were eyeing technology as a way to continue business as usual. It was non-finance leaders who wanted a slower, more surgical approach to managing spending.
That persists now. The chart below shows how differently CFOs are looking at 2021 spending versus other leaders.
Now to be sure, saying you’ll spend more in 2021 and doing it are two different things. A plan doesn’t require opening the checkbook; it just requires a rosy outlook. We suspect CFOs are priming the pump so their leadership colleagues will be ready to spend when they find themselves on the upside of their own economic recovery curve. In any case, CFOs and their partners have some work to do in getting on the same page in terms of spending.
Managing Pandemics Is Hard Work
Speaking of work, CFOs have a lot of it. They are working long hours — 54% say they’re working 50 hours or more per week — and juggling too many responsibilities. What’s got them so frazzled, and what assures us that the spending plans above are far from solidified? CFOs’ preoccupation with financial planning and analysis. It’s taking up large chunks of their time and is their primary focus — even more so than cash flow management, at least at the moment.
Those long hours are something of a perennial finding. CFO.com ran an “overworked” story in 2004 and another in 2006 . We also found it last year, when CFOs told us their main concern with their job was juggling too many responsibilities. We’re sure that if you look hard enough, you’ll find stories that say the same each year (like this 2015 HBR story which stoked fear for your life ) — if not about the CFO specifically, then about the overworked population as a whole.
To CEOs, the CFO role in particular may seem like a good place to redirect some responsibilities and thus avoid hiring. It’s been our observation that more often than not, CEOs concentrate on making great products and rely on the CFO to make a great company. According to the other leaders who responded to our survey, only 10% of CFOs were solely focused on finance, while 66% had either broad or focused responsibilities outside of finance.
The pandemic, with its requirement to work remotely and its push toward online sales, may finally move finance leaders toward automating some of their finance functions. That should get them a few hours back in the day. Just as important, it should also help them get better data on the operations of their business and let them use that data more effectively. Finance and non-finance leaders have said both are a top priority in each of our past four surveys.