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Workplace Engagement InsightsLatest Employee Engagement NewsWorkplace EngagementAre CFOs Losing Perspective in Favour of Short Term Thinking?

Are CFOs Losing Perspective in Favour of Short Term Thinking?

WestJet-employee-engagement

Are you focused on your company’s sustainability? Do you create initiatives focused on the long term?

Every executive will say “yes” to these questions.

Now – what if that long term initiative interfered with short term income and monthly targets? Would you tolerate short term pain or cancel the initiative?

I had the pleasure of attending an ICD (Institute of Corporate Directors) event in December and listened to a great panel of speakers debate the value of Short Term Activist investors. One of the speakers was Mark Wiseman who heads up Canada Pension Plan (CPP). Mark related a statistic to the audience that I think is worth sharing with all CFOs:

In a survey of CFOs, when asked about moving forward with a project that would result in an earnings miss for their quarterly earnings reports versus cancellation of the project and making the earnings expectations, 55% of CFO’s indicated that they would cancel the spending to hit the targets!

We’re Losing Sight of Sustainability

It is management’s duty to maintain and promote the long term sustainability of the company – and therefore, safeguard the interests of the real shareholders/owners.

Unfortunately, it seems those of us who have been raising the alarm about the negative influence of Wall Street, Bay Street, and others (analysts and advisors both) are right to be concerned. We are losing sight of the big picture in favour of chasing short term targets and immediate returns.

Many of us have watched for years as investment horizons for shareholders get shorter and shorter. Apparently, the average hold for a mutual fund is now about 7 months! 

CFOs and perspectiveA Call to End Short Termism!

If we want to get some of the volatility out of the markets, I strongly believe we need to put an end to short termism. 

It is time for CFOs, CEOs, and Boards of companies to take a stand and insist that the markets view their company through a long term lens. 

Although short term thinkers may not want your stock (and yes, that may hurt … in the short term), when the buy and hold investors join your ranks you can expect to see your stock perform much better over the long term.

One important factor in your company’s long term outlook is your people. You need an intentional employee engagement program that measures, takes corrective action, and measures again. When you build a solid base of highly engaged employees, business results will follow.

So ask yourself: do you want small, short term gains and market volatility? Or are you interested in long term success, stability, and sustainable revenue growth?

I know my answer.

>> Workplace Engagement Insights can help you think long term about your ability to deliver sustainable results. Bring an employee engagement survey into your analytics for the company and enjoy the benefits of a high performance work culture.

Start engaging your employees right now! Download my FREE cheatsheet: Improving Employee Engagement in Just 10 Minutes.

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Written by Dwight Lacey

Dwight Lacey

Dwight is the President at Workplace Engagement Insights. He leads Workplace Engagement Insights with a clear understanding of the latest employee engagement research, survey best practices, and leadership styles that create successful businesses.

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