With mid-year fast approaching, many firms will be assessing revenue and cost performance against budgets drafted last year. Beyond using midyear reviews to simply monitor for overspending, CFOs can maximize the business impact of these reviews by operating three levers: communicating performance, making appropriate course corrections in the mid-year plan update, and maintaining productive pressure on the senior leadership team.

Recent research reveals other persistent obstacles to successful long-term budget planning, including a lack of high-quality data to inform budgetary decisions, poor integration of capital projects and initiatives into planning processes, and ineffective communication of the plan.

How does your company use mid-year budget reviews to position the firm for success in the current year and beyond? What challenges to long-term planning is your organization most focused on overcoming?

Beyond their traditional focus on strategic planning and corporate performance, Board agendas have grown to include a wide range of issues including risk, compliance, globalization and technology. To avoid being caught flat-footed, CFOs need to be prepared to respond to a broad range of potential Board inquiries.

Experts cite a number of topics as high-interest to Boards in 2013, including new conflict compliance and reporting requirements facing companies, data security policies and approaches, social media options and risks, and the continued evolutions of companies’ global operations.

What questions do you expect CFOs to receive from Boards in 2013-2014?

Given the evolving demands on senior managers today- for instance the increasing importance of global growth to company success, and an operating environment marked by volatility, uncertainty and complexity- many firms are rethinking their leadership pipelines to optimize around a different profile of leader.

Recent research has revealed that many traditional assumptions about developing global leaders are false. For instance, prior international experience, language and cultural fluency, and organizational tenure and age are not correlated with success as a global manager. Instead, companies are optimizing their leadership pipelines around identifying and developing candidates with agility, influencing skills, and strong internal networks.

How is your company adapting its leadership pipeline to identify and develop successful global managers in today’s business environment?

In a January 2013 survey, CEOs rated access to talent as the #2 threat to their company’s growth prospects. With moderate to severe shortages projected across a multitude of job functions and levels, and corporations’ growing reliancy on increasing labor productivity to drive top- and bottom- line performance, the threat is both real and immediate.

Surprisingly, senior teams and Boards are not prioritizing talent strategy among their responsibilities (beyond senior-level succession and compensation planning), leaving this critical risk unaddressed at the highest levels of the firm. Leading firms are developing ways to hardwire talent into any executive or Board-level strategic planning discussion, and formalize goal-setting and progress assessment. Beyond that, progressive companies are focusing bets on talent issues likely to yield the highest benefit to the firm, such as global leadership development, HIPO retention and development, and high-throughput recruiting channels.

How does your Board and leadership team include talent in strategic planning conversations? What talent/HR initiatives are receiving the highest priority in 2013?

The quarterly Duke University/CFO Magazine global business outlook survey of more than 900 CFOs concluded in December, and the early findings revealed continued concern among finance chiefs. CFO optimism has fallen nearly 10% since the Spring, and reflect a number of internal and external factors. The highest-rated external concern is continued weak consumer demand, while the top internal concern is the ability to maintain profit margins. Other common worries include the “fiscal cliff”, health care costs, attracting and retaining skilled workers, and low employee morale.

CFOs’ express a very low .1% increase in U.S. hiring in 2013, which would result in an increasing unemployment rate year over year. Capital spending plans have also declined from previous surveys, with CFOs projecting an increase of 2.5% in 2013. Most of the CFOs surveyed replied that payments toward employee benefits and training decreased during the recession, and are not expected to increase to pre-recession levels in 2013. 40% of firms paying employee bonuses expect smaller bonus amounts than in 2012, with 73% of companies paying lower contributions toward retirement benefits.

Given the uncertain economic environment, where are you prioritizing investment in 2013? How are you mitigating talent risk in light of continued low investment in recruiting/retention, training, and benefits?

With only a month remaining before the “fiscal cliff” imposes a mix of tax increases and federal spending cuts that economists say could push the U.S. economy back into recession, political leaders are working to reach a compromise before year-end. However, corporate executives are already planning for the possible impact of the fiscal cliff on their firms, as well as for an altered business environment even if the cliff is averted.

Many corporate treasurers have adopted a “wait and see” posture, without significant changes to their liquidity positions or adjustments to cash flow forecasts. However, other firms have moved to shift cash into short-term treasuries, or accelerate dividend payouts into 2012, in an effort to head off expected tax changes.

How has the uncertainty surrounding the looming fiscal cliff affected strategic planning at your company? What steps have you taken to prepare for the likeliest scenarios for the 2013 business environment?

No sooner than they scaled the corporate hierarchy and achieved membership in the “C-suite”, CIOs are now facing a variety of trends that threaten to dramatically affect their roles, as well as that of corporate IT, within the modern firm. These include a number of enabling and disrupting trends, such as cloud-based IT models, outsourcing, the “consumerization” of IT, “Big Data” and business intelligence, social media, and many others.

In conjunction, CFOs are now increasingly involved in the management and oversight of corporate IT. The majority of IT heads now report to the CFO, yet many companies struggle to achieve effective CFO-CIO partnerships. One study revealed persistent misalignments along such fundamental areas as the most important priorities for the IT organization. Additionally, IT executives are being asked to evolve from technology specialists to business partners, another difficult transformation to achieve.

What technology trends are driving greater partnership between finance and IT at your organization? How have you helped your IT organization successfully navigate this transformation in its role?

With companies increasing looking to emerging markets to drive future growth aspirations, executives face a variety of critical management challenges in leading global expansion efforts. Companies must develop new ways of managing strategies, people, costs and risks that are appropriate to their global growth plans in order to compete effectively with locally-based competitors and established international firms.

In addition, recent research suggests that when selecting markets for expansion companies should consider three factors for assessing markets, including the strength of available resources, the company’s ability to retrieve critical knowledge in the new setting, and the role of location to the firm’s competitive advantage. By examining these factors early in the process and using a staged expansion approach, firms have been able to achieve success in new markets.

What other strategies and tactics has your company used to successfully enter and grow in new markets? What pitfalls continue to hinder your growth efforts?

Leases Prepare For a Balance Sheet Arrival
Plans to change lease accounting continue to move forward under the direction of global standard setters – the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB).

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With continued uncertainty hampering many companies’ strategic planning efforts, the one constant is the increased role of technology in corporate strategy. No longer is IT a mere enabler to a firm’s business model, supporting greater productivity or providing additional customer contact channels. Today executives are increasingly looking to emerging technologies to transform the business model itself, securing competitive advantage for the firm.

There are numerous technologies emerging with “game-changing” potential for business model transformation, including social technologies, enterprise mobility, the cloud, “big data”, expansive new technology architectures, and “gamification.” Each of these technologies is fast-evolving and carries both opportunity and risk for the corporate enterprise.

Which emerging technologies do you feel hold the most promise for companies, and how should firms ensure the degree of business model innovation necessary to fully take advantage of this opportunity, while managing associated risks?