Executives struggle most with big-money decisions

By: Neil Amato
October 8th 2012

If a decision involves money, especially lots of it, then executives tend to struggle with that decision.

Sounds simple, and perhaps it’s a reflection of somewhat leaner economic times, but a majority of North American chief financial officers surveyed by Deloitte say decision-makers struggle most with making the right calls on organic growth and business strategy as opposed to, for instance, making a hire for an executive role.

Decisions on organic growth – for such items as funding for research and development, geographic expansion, and product and service expansion – and strategy were especially vexing to the executive team; 60% of CFOs cited difficulties with them.

Decisions on cost reduction and efficiency efforts were the next most difficult, cited by about 45% of CFOs.

And that uncertainty, apparently, is giving financial directors a collective headache. They list “strategic ambiguity” as one of their top job stresses, according to the quarterly Deloitte CFO Signals, which surveyed 85 CFOs, including 62 from the US, 15 from Canada and eight from Mexico.

Major change initiatives remained the top job stress for CFOs, but strategic ambiguity grew as a stressor, cited by 33% of CFOs in the third quarter, up from 19% in each of the previous two quarters.

Barriers to making the call

Additionally, financial directors face a broad range of decision-making barriers, including the biases of members of the executive team. Nine different barriers received votes from at least 20% of CFOs.
Differing views of strategies and goals is the top barrier, at 36%, and biases is next at 35%. Insufficient understanding of options and expected outcomes, another potential strategy hang-up, was the third most-cited barrier at 29%.
The other barriers listed by 20% or more of CFOs (who could choose more than one): unclear or inappropriate assignment of decision-making authority (26%); lack of clarity/agreement around the problem to be solved (25%); conflicting decision-making styles of team members (23%); and insufficient input or perspective (21%).

Related CGMA Magazine content:

“Economic pessimism in the US meets signs of positive sentiment globally”: The third-quarter CGMA Global Economic Index shows that US chief executives, CFOs and controllers are far less positive about the economy at home and about their own businesses – declines that are offset by small gains in sentiment in the UK and other parts of the world.

Neil Amato (namato@aicpa.org) is a CGMA Magazine senior editor.

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