What To Do About Underperformance

A stressful fact of business: There are times and situations during which every organization underperforms in some way. In order to reduce this stress, it is important that leadership teams can identify (whenever possible) when this underperformance occurs and why it is occurring. To simply ignore the signs of underperformance (or worse still, not recognize them) is to risk a systemic failure that damages a company for the long term. 

In my previous blog, I talked about these top 10 signs of underperformance. In this blog, I will give some suggestions on how to address underperformance generally and in some specific situations.

The 6-Step Process

Generally, if you are seeing the signs of underperformance in any areas of your business, you should consider these steps:

1. Point out your perception of underperformance and ask your financial leader to discuss it. Do they agree with your perception? If they disagree, what are they seeing and how can they explain it? The bottom line: Key members of the leadership team need to arrive at an agreement in relation to the underperformance before moving onto the next step.

2. Why is the leadership team think the underperformance is occurring? What is the root cause? What are their suggestions to improve it? Underperformance is often a result of an action, decision, or process that might not be readily apparent, so this is an important step in addressing the situation.

3. Listen to their everyone’s input. Be understanding and open-minded but also be clear that performance must improve.

4. Ask the area lead how you, as CFO, can help them solve their problem.

5. Set clear goals, measures for improvement, and timelines. One suggestion is to agree that in 3 months’ time these 3 specific things that will happen, producing this result. For example: Bank reconciliations will be sent to you for review by the 15^th of the following month (you are not getting them now) and the following list of key deadlines will not be missed (they are being missed now).

6. At any time, feel free to call TCOBI for advice, to perform a diagnostic analysis, or to help you with a transition plan to a new finance leader.

Self-Reflection

At some time in this process, you might ask if you are at fault as part of the underperformance. Maybe you are not as strong a strategic thinker as you need to be. Maybe you don’t understand accounting terms as well as you should. I will freely admit that I have underperformed many times in the past. Most everyone has. 

Here are some useful tools I have used in improve my own performance, some of which will likely help you make any adjustments or changes you need to make:

10. Start to see preparation as an ongoing process instead of as an “event” in your calendar or on your to-do list. It might be the case that preparation for regularly scheduled meetings was presented at the last minute and the team finds itself scrambling to deliver it. One suggestion: Use “work-back” schedules. Prepare a schedule listing:

• Date of the event.
• Date the material needs to be distributed before the meeting.
• Date your boss gets the material to review to allow for their review time.
• Date you need to start to get the material to your boss on time. 

9. If deadlines are being missed, build a master schedule of all deadlines you have to meet and use work-back schedules to meet them.

8. Focus on nurturing cooperation. Perhaps your finance leader is not cooperative with you or with other leaders in the organization. Point this out. They might not be aware that they appear uncooperative.

7. Emphasize the need to avoid surprises. Is it the case that you are being surprised by your financial results. If so, implement financial forecasts so monthly financial results are forecast ahead of time and cash shortages are forecast months ahead of when they are going to occur. Use cash management templates to never run out of cash. Reserve cash to pay your next payroll. Do not pay suppliers until you have the cash in hand to pay them. Collect your receivables aggressively. Only count the receivable collection when you see the cash in the bank. 

6. If errors are continually made implement double checking within the finance staff.  Encourage double checks in worksheets. When an error occurs, identify why it happened, and what person or process should have caught it. Once the “pain point” has been identified, make the change so it does not happen again.

5. Emphasize the need for organization. Your finance leader does not appear organized or able to prioritize between multiple requests and get the important ones done accurately on time. Have them take time management courses or start to us an application like ToDoIst. If they are having problems delegating tasks, suggest they read Stephen Covey’s classic 7 Habits of Highly Effective People.

4. If members of the financial team can’t or won’t answer questions, talk to them about this tendency. Share and receive perception, but always be clear that barriers to organizational communication is a serious problem and needs to be addressed in moving forward.

3. If you find that bank reconciliations are not done on a monthly basis, be clear that reconciliations are important and need to be done accurately and on time. Delegate the task to a specific individual, ensure that it is scheduled, and that you have a process by which you review the work every month.    

2. Monthly reporting is not being completed in a timely manner. If this is the case, set clear deadlines and use work-back schedules.  Do not accept excuses. Accounts payable can be “closed” anytime you want to – they do not need to be kept open for 3 to 4 weeks. If expenses are not submitted in time, use accruals to estimate the larger ones.

1. Trust is lost. This is the worst-case scenario and usually the last straw of a dysfunctional organization. When trust is lost it is very difficult, if not impossible, to regain.  If you are at this point, please call TCOBI for advice.

I hope this helps you and your financial leader.  TCOBI is always available for advice, to perform a diagnostic analysis or to help you with a transition plan to a new finance leader.  We have a number of tools in our toolkit to help you and your finance department reach high performance.

Stay tuned for our next blog on cash management.