The inability to change the corporate culture
even in the face of clear market threats.
The gales of creative destruction in global markets and market pressures for performance—growth, profitability, value creation and competitiveness—combined with investor calls for governance changes and changes in executive compensation based on performance create tremendous challenges for executive management. The CFO has to balance the market need for performance, the operational need for financial controls and control systems, the need for capital to grow the business and the need for change to comply with Sarbanes-Oxley and other regulatory changes. To create sustainable value enterprises must continuously freshen businesses with new approaches, business models, products, people, and ideas—to enhance and sustain performance—while communicating effectively with markets and investors the story and shaping market expectations.
The fact that most companies cannot meet or exceed the pace and scale of market changes over time— thereby destroying value—provides an incessant call to action. This requires an entirely different mindset from executive mangement—emphasizing creativity and destruction — consciously creating new innovations and abandoning others when they are no longer economically viable and a fresh approach is needed to revitalize a company, industry, market or product. Sarbanes-Oxley and regulatory and reporting compliance along with market requirements for reliable earnings, sales and performance data further complicate the day-to-day life of the CEO of a large organization.
The CFO is naturally concerned about both the effectiveness of their individual efforts and their ability to impact performance and the results on their career. It is important for CFOs to note the pressures placed on board members and executive management from markets dissatisfied with performance. Nearly half of the CEOs of the largest corporations have turned over in the last five years. Level Three thinks the winning strategy for the CFO is to embrace change and to shape changes in the financial structure and business processes to sustain high-levels of operational performance. It is equally important for the CFO to participate in the shaping of an effective corporate culture encompassing risk management in the broadest sense of an enterprise according to the new realities which must be confronted consciously.
The overall challenge facing the enterprise as involves establishing an on-going balance between executive management and the board so that the former runs the company while the latter contributes to its strategic and operational development and provides the oversight needed to satisfy shareholders. This delicate equilibrium has to be maintained in an ever changing world and highly competitive volatile global markets. The CFO should participate actively in collaborating with the senior management team to bring about and implement these changes within and across the enterprise. Achieving a culture and ethos of change requires the CFO to pursue a broader and deeper course of action which is an ideal preparation for future advancement. The CFO also carries the call to action to achieve and sustain operational excellence, to manage the risks companies run when embracing change and creativity, to incorporate the principles of corporate ethics into performance measurement, incentives, and human capital and business processes which are the embodiment of the high performance corporate culture.
Level Three is ready, willing and able to help CFOs and the senior management team bring about the needed changes in thinking, feeling and behavior—individually, in executive and middle management and across the front-line staff of the enterprise.
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