How Finance Runs Crisis Performance Management

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When coronavirus started to become widespread with lockdowns across Europe and most countries in the world, companies went into a crisis mode. Those with heavy exposure to Asia had been in this mode since mid-January.  

What did this mean for Finance? It meant that we became busier than ever doing forecasting, scenario modeling, and coming up with cash flow initiatives. However, what does it mean for our performance management and what do senior leaders in Finance do in reality?  

Boiling down the key insights on how to run crisis performance management this is how it looks.

1. You must prepare before the crisis hits like building a high-quality reporting function otherwise it’s too late.
2. When the crisis hits you switch on your crisis performance management mode and re-tool your reporting to a daily or weekly cadence from before a weekly or monthly.
3. That allows you to be the business partner the senior management is asking for sharing insights on how to get through the crisis.
4. Once you have the crisis under control it’s time to re-engineer for the next normal, so your value proposition is still relevant and your commercial offering is realistic vs. what customers are able to pay and commit to.

Now we’ll share more insights from our survey and share some reflections from three senior finance leaders we talked to in the past week about how they’ve handled crisis performance management and you’ll notice how they handled each step in the four-step response model.

Now is the time to be a business partner! 

In our survey performance management is ranked in the middle of all priorities. In some way, it’s business as usual for performance management. That’s quite surprising yet as a senior finance leader from a tech company put it.

“We were tempted to start forecasting and reviewing all sorts of metrics daily as part of our crisis response. Eventually, we landed on only doing daily sales forecasts since this was the critical driver on which we were facing significant uncertainty” 

Rather than introducing many new dashboards and metrics that could be difficult to understand, most companies have rather increased the frequency of their standard reporting. One company in the health care industry, for instance, started doing weekly accounts receivables updates as opposed to the normal monthly rhythm. 

A good way of getting this established could be a “crisis reporting team” that can quickly convert the standard reporting and update the frequency. That’s what one company in the building materials industry did, however, according to a senior finance leader it didn’t come without challenges.

“One thing is to change from a monthly or weekly cadence to a daily cadence, but you also need to calculate relevant comparison periods. In addition, we had to make the daily metrics relevant and remove extraordinary volatility for instance by making it a 5-day rolling metric” 

They had already established a high-quality reporting setup years before the crisis though. Without this, they wouldn’t have played as big of a role in the crisis response as they did. This was backed up by another senior finance leader we spoke to in the utility industry.

“We’ve taken a leading role in using digital tools and pushing automation while building that into our BI platform too. We started about a year ago and launched just before the crisis. I’m so glad we had planned ahead”! 

Another aspect of crisis performance management is the commercial aspect. Business-as-usual, won’t be back any time soon and while in many industries that means running at index 50 in other industries such as tech it could be the exact opposite. That’s what a senior finance leader in a tech company told us.

“IT quickly becomes a critical infrastructure and we experienced a surge in both users and incoming customers. It was to a point where we had to prioritize which customers, we should put onto our platform first. Health care and education were a priority while many others were not.”  

“Finance could help analyze the data in terms of our capacity but also make proposals for which customers could cut temporarily cut down their capacity to make room for others as they weren’t using their full allocation anyway.” 

If Finance was ready, we could play a big role in running crisis performance management and finding ways to create value while experiencing huge fluctuations in demand. At least a senior finance leader in the building materials industry has felt the difference.

“Before the crisis, I might have spoken to the CEO once a month and to the Board of Directors even less frequently. Now it’s several times a week that I give them updates on our performance” 

That’s a true business partner that has built a high-quality reporting setup that allows bringing the insights to the table when needed. There was no stumbling through the door on this leader’s watch when opportunity came knocking to show how Finance can help run the company during a crisis!

What comes next for Finance? 

First comes the re-opening of offices at large although most won’t be able to run on full capacity. That should take some pressure from the most hard-pressed finance professionals. After that comes a next normal where companies may need to re-define their value proposition and get creative with customer deals as a senior finance leader in the tech industry expressed it.

“We must tailor-make commercial offerings that fit the economic environment and be more flexible towards our customers to create win-win situations. This will require that we manage an otherwise rigid contract framework, but we know what we need to do!” 

The road ahead is filled with opportunity for those who manage to grab it like the senior leaders we’ve spoken to as part of this article series. Skilled business partners will give their companies a competitive advantage getting through and getting ahead of the crisis. 

What have you and your company done in terms of crisis performance management and did you succeed being a business partner or did you fall short? We would love to hear your story either by telling it in the comments or speaking to us in an interview.  

Please reach out to Anders directly at anders@businesspartneringinstitute.org or send him a message on LinkedIn if you’d like to discuss the topic of crisis performance management and getting ahead of the crisis.  

Next week we’ll address how to create human capacity to survive the crisis and ensure your people remain fully engaged also on the other side. Until then, hang tight! We know it’s tough at the moment but at least we finally got the seat at the table so why not use it to create an impact?

This was the eight article in my series about "Crisis Management for Finance Professionals" and you can read previous articles below.

15 Tips For Finance Professionals When In The Middle Of A Crisis

My 6 Finance Career Lessons From Times Of Crisis

30 Ways Finance Can Restore Shareholder Value Post A Crisis

How To Survive The Crisis Without Layoffs While Cutting Spend

Lost Your Job Due To Coronavirus? Here's How To Find A New One!

A Global Temperature Check Of Finance And Accounting

How Finance Gets Ahead Of The Crisis

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How A LinkedIn Ad Turned Into To 10 Million Dollars

4 Reasons Why No One Implements Best Practices

Why Risk Management Is Supposed To Be Boring

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How Finance Can Help When Business Is Bad

Who Holds The Key To Successful Cost Savings?

Don't Explain Yesterday, Predict Tomorrow!

Finance Needs A 20/20 View On The Business

Finance People - Adopt A Growth Mindset Or Die!

How Finance Masters Their Working Capital

How Business Partners Keep A Plan On Track

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If you want to become a better business partner you should consider taking our online course "Business Partnering Explained - Value Creation Unlocked" to get a better handle on the role. It's accredited for 5.5 CPD hours.

Anders Liu-Lindberg is the co-founder, COO (Chief Operating Officer), and CMO (Chief Marketing Officer) at the Business Partnering Institute and owner of the largest group dedicated to Finance Business Partnering on LinkedIn with more 8,000 members. I have ten years of experience as a business partner at the global transport and logistics company Maersk. I am the co-author of the book “Create Value as a Finance Business Partner” and a long-time Finance Blogger on LinkedIn with 40.000+ followers.