4 Biggest Factors Driving Significant Changes to the Finance Function in the Last 2-3 Years

The last 2-3 years have seen the corporate landscape experience seismic shifts, and at the epicenter of this transformation has been the finance function. Often regarded as the backbone of an organization, the finance department, under the stewardship of the Chief Financial Officer, has had to navigate through uncharted waters, addressing challenges and adapting to changes at a pace previously unimaginable.


From global economic disruptions caused by a pandemic to the societal phenomenon of mass resignations and the rapid transition to remote work, the world of finance has had to recalibrate its strategies, tools, and very essence.


Here are four pivotal factors that have significantly reshaped the finance function in recent years, exploring their implications and offering insights into how modern CFOs are leading their teams through these transformative times. Whether you’re a CFO, a finance professional, or just want to understand the evolving dynamics of the business world, this exploration promises valuable takeaways.


1. The Post-Pandemic Financial Landscape

The COVID-19 pandemic unquestionably stands as one of the most significant disruptors of our generation. The post-pandemic landscape demanded CFOs be more proactive than ever, leading their organizations through a maze of financial challenges while laying down the foundation for post-COVID growth and stability.


The financial function’s implications were diverse, challenging the core of traditional financial management and necessitating rapid adaptations.

  1. Financial Resilience and Contingency Planning: Pre-pandemic, while CFOs recognized the importance of financial resilience, few could have foreseen the need for the level of liquidity and contingency planning required to weather a global economic shutdown. The pandemic highlighted vulnerabilities in many organizations’ financial safety nets, prompting a thorough re-evaluation of cash reserves, cost structures, and risk mitigation strategies.
  2. Supply Chain Disruptions: With global lockdowns and restricted mobility, supply chains witnessed massive disruptions. CFOs were at the frontline of these challenges, needing to ensure financial viability while negotiating with suppliers, recalibrating inventory management, and even rethinking entire business models in some sectors.
  3. Shifts in Consumer Behavior: The pandemic also instigated notable shifts in consumer behavior, with e-commerce, digital payments, and contactless services witnessing an accelerated adoption rate. CFOs had to pivot quickly, redirecting investments to support these new digital avenues, optimizing the finance function for online sales, and managing the financial implications of a drastically changed consumer landscape.
  4. Regulatory and Compliance Changes: Governments worldwide unleashed a plethora of financial measures to support businesses during these challenging times – from loans and grants to tax reliefs and deferments. CFOs had to stay agile, understanding the nuances of these changing regulations, ensuring compliance, and optimizing their financial strategies to leverage available support.
  5. Re-evaluation of Investments: With the future uncertain, many organizations paused or reconsidered significant capital expenditures. CFOs were tasked with the challenging job of deciding where to pull back and where to invest, all while ensuring the long-term sustainability of the organization.


2. The Great Resignation and its Financial Implications

The past few years witnessed massive resignations in an unprecedented “Great Resignation,” a movement that saw employees across industries voluntarily leaving their jobs in droves, driven by many factors, from burnout and pandemic-induced reflections on work-life balance to the search for better opportunities.


For the finance function and CFOs, the Great Resignation presented unique challenges and financial considerations.

  1. Talent Retention Costs: As employees began resigning, companies were compelled to re-evaluate their compensation packages. Many organizations offered salary hikes, bonuses, and other financial incentives to retain top talent, which had immediate budgetary implications.
  2. Recruitment and Training Expenses: Replacing lost talent is not just about hiring anew but also involves onboarding and training costs. In some sectors where specialized skills are crucial, the financial burden of bringing a new employee up to speed can be significant.
  3. Operational Disruptions: High turnover rates can lead to operational inefficiencies. Tasks might be left unfinished, projects could face delays, and the continuity of business operations might be jeopardized—all of which have financial consequences.
  4. Employee Wellness and Benefits: Recognizing the burnout and mental health challenges that contributed to the Great Resignation, companies began investing more in employee wellness programs. While this is a step in the right direction for employee well-being, it also means an additional line item in the budget.
  5. Strategic Workforce Planning: In collaboration with HR, the finance function had to rethink workforce strategies. This involved assessing the optimal workforce size, considering potential shifts to contract or gig workers, and analyzing the financial implications of a more fluid workforce.
  6. Remote Work and Office Overheads: With many resignations driven by the desire for flexible work arrangements, companies had to reassess their stance on remote work. For CFOs, this meant considering the financial benefits of reduced office overheads against the potential costs of setting up remote work infrastructure and tools.


3. The Remote Work Revolution and the Finance Function

The concept of remote work is not novel, but the pandemic undoubtedly propelled it from a sporadic perk to a widespread norm. Remote work became the default for many companies, especially in sectors where on-site presence wasn’t critical. As with any substantial shift, this transition has had multifaceted effects on the finance function, shaping how CFOs plan, strategize, and allocate resources.


  1. Cost Savings on Physical Infrastructure: One immediate advantage for many businesses was the reduction in expenses tied to physical spaces—leases, utilities, office supplies, and the ancillary costs associated with a physical workplace. CFOs had to recalibrate budgets, acknowledging the decreased need for office-related expenses.
  2. Investment in Digital Infrastructure: Conversely, there was a surge in expenses associated with setting up employees for remote work. This meant investments in software, secure VPNs, video conferencing tools, and ensuring every employee had the necessary hardware and internet connectivity.
  3. Cybersecurity Concerns: With a distributed workforce, the threat surface for cyber attacks grew exponentially. The finance function had to allocate funds towards bolstering cybersecurity measures, ensuring that data, susceptible financial data, remained uncompromised.
  4. Reimagining Financial Processes: Traditional financial processes that relied on face-to-face interactions or physical documentation had to be rethought. This involved digitizing specific processes, investing in cloud-based financial systems, and training staff on these new platforms.
  5. Re-evaluation of Employee Compensation: Geographic flexibility meant companies could hire from locations with varying living costs. This brought forth questions about compensatory adjustments—should an employee relocating to a region with a lower cost of living have an adjusted salary?
  6. Budgeting for Hybrid Work Models: As companies transitioned to hybrid work models, CFOs had to juggle the costs of both in-office and remote setups. This meant strategizing for flexible office spaces, coworking memberships, and managing the intricacies of a workforce that’s perpetually in flux between home and office.
  7. Impact on Business Travel and Expenses: The rise of remote work and digital communication tools led to a decline in business travel. CFOs saw a reduction in travel-related expenses, but also had to factor in the costs of new digital tools and platforms.
  8. Shift in Organizational Culture and Employee Benefits: The isolation of remote work led some companies to invest in virtual team-building activities, online wellness programs, and other perks to maintain employee morale and productivity. These changes, while beneficial for company culture, had financial implications that needed to be accounted for.


4. The New Role of CFOs in these Changing Times

The winds of change, fueled by the past few years’ events, have not just influenced the business landscape; they have redefined the essence of the CFO’s role. The CFO is no longer just the company’s financial steward but has transformed into a strategic partner, guiding businesses through uncharted waters.


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