WE ARE PROUD TO ALIGN WITH ORACLE NETSUITE AS A NATIONAL SPONSOR OF THE CFO LEADERSHIP COUNCIL. ART WITTMANN, EDITOR, BRAINYARD AT ORACLE NETSUITE PROVIDES A SUMMARY OF FINDINGS FROM THEIR RECENT 2021 SURVEY

As you sit in a strategy meetings, you know that opinions about how to drive company growth will be as varied as the people in the room. Sometimes participants act in ways you expect, but the pandemic and efforts to recover from it have affected opinions in ways you might not expect.

In fact, in our recent NetSuite Brainyard survey of 500 managers in companies with under $250 million in revenue, we found that our expectations regarding priorities and inclinations were often wrong. As businesses face both historic growth opportunities and historic unpredictability, views differ on how to put finances back on a firm footing while supporting growth.

Understanding the differences of opinion uncovered in our data should help you weigh the options facing your own organization and get everyone working toward the same goals.

Six Quarters of Spending Expectation Data

To illustrate the point, let’s examine a question we’ve included in our surveys since before the pandemic began. Each quarter, we ask what spending changes will occur over the immediate next 12 months. The trending results from four surveys below, starting in December of 2019 and running through September of 2020, show the steep cuts made through the first six months of the pandemic and the spending rebound that followed last fall.

Data: Multiple quarterly NetSuite Brainyard Surveys collected from December 2019 – September 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

There are no surprises there. The trendlines echo the deep dip we saw in GDP and employment. And even though that September 2020 data, which estimates 2021 spending, was taken just prior to last winter’s COVID surge, it may look a little optimistic to you.

That is, unless you’re a finance leader. In that case, those numbers might look a lot like your preferred strategy — one that likely got mixed reviews from business colleagues. That’s because the last data points were taken from a survey intended primarily for CFOs, with a smaller set of response data from others on how they felt about the job their CFOs were doing.

Segregating those two audiences shows the priority chasm we’re talking about. CFOs were almost universally ready to spend more compared with non-finance leaders. In fact, finance chiefs were generally ready in September of 2020 to get back to pre-pandemic spending levels, or close to, while their peers were still looking to cut spending or hold it flat.

Given that finance leaders are usually seen as more conservative spenders, the finding gave us pause then. As it turned out, however, top finance officers correctly foresaw the return to growth that others missed. As a result, their spending guidance was likely the right path to follow then.

Role Reversal

We’re using different scales and a different data collection method this year, but as you can see, the discrepancy continues now, nine months later. Non-finance leaders — defined as those with manager, director, VP or CxO titles outside of finance — are still more conservative, though not as markedly so. Because we had more than 90 CxO leaders respond to this year’s poll, we’ve added them to the chart, and generally found that they are closer to finance leaders in their spending opinions.

Data: July 2021 NetSuite Brainyard survey of 500 business executives and managers

Adding in C-suite respondents is helpful here, because it confirms a speculation we made last year: That the finance team and executives are seeing the same data and drawing similar conclusions on spending priorities. Where there is a significant difference between finance teams and executives, the execs typically are splitting the difference between the gung-ho finance team and more conservative non-finance managers.

We don’t think there’s any single reason managers outside of finance are so much less interested in increasing spending. Some likely contributing factors:

  • Less familiarity with previous cuts and current cash flows.
  • More firsthand experience with the woes of an uneven recovery, like staffing issues, supply chain problems and peevish customers.
  • Less familiarity with regional and national growth data as well as other factors affecting near- and long-term forecasts.
  • More frustration with COVID work restrictions and concerns over mask and vaccine requirements.

And, depending on the managers’ roles, they may not know the details of all incoming business and areas where previous cuts have made fulfillment difficult.

Whatever the causes, smart execs and finance leaders will do the extra work to find out how their managers are feeling about spending, and much more. Our data indicates that as hard as leaders tried to clearly communicate priorities throughout the pandemic, those efforts have not always gotten everyone on the same page.

Of course, getting everyone on the same page is never fully achievable. But certainly it’s a good idea to share improvement plans and budgets with managers, as appropriate. Specifically, the major disconnects here — around capital spending, sales, customer support and production —lead us to believe that a good many managers either don’t believe the economic forecasts or don’t think those growth numbers will materialize for their current employers.

There may also be an opportunity to educate teams on why product/customer support spending is critical now. Growth means new customers, and new customers mean increased support throughout the buying journey.

Three More Notable Disconnects

Although the difference in spending priorities is the most pronounced disagreement between finance and non-finance leaders, we did find three other areas where the two groups don’t align.

> Concern about outside factors affecting the business. These factors range from COVID-19 to new taxes and regulations to insufficient digital technology to inflation. Finance leaders were about 15% more concerned about most factors than their non-finance colleagues. The only area where non-finance leaders showed more concern was over unpredictable supply chains, where non-finance leaders were about 8% more concerned on our scale.

> How to plan more effectively. Second, both groups agree that the top priority for finance should be improved financial planning and analysis, followed by providing better support for strategic planning processes. The disagreement comes around factors that would help get there. Specifically, about one-third of finance managers rated automation of accounts receivable, accounts payable and accounting as top priorities for improvement in finance, but only a quarter of their non-finance partners agreed.

> Finally there are the thorny issues around vaccine mandates and verifications. Fifty-six percent of finance leaders would require vaccinations to return to the office, but only 28% of their non-finance colleagues agree. Similarly, 65% of finance leaders say workers need to show proof of vaccination; just 39% of non-finance leaders agree. Note that we fielded this survey before the Biden administration issued its mandates.

Measure Your Team’s Sentiments on Strategy

Getting universal agreement on the strategies and tactics we’ve discussed here is overly ambitious, but wide gulfs in opinion mean that leaders are out of sync on priorities — and the means to accomplish them.

How’s your organization doing? Don’t assume you know. As the saying goes, you can’t manage what you don’t measure.

 

 

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We’d love to hear from you. Post a comment about your experiences or provide feedback below to continue the discussion about how creative leadership in the current climate.  Or contact Kristin Todd, Vice President of Marketing, kristin@cfolc.com.