CFO Insights: Balancing act – Managing stakeholder groups in capital-allocation decisions

Published on: Aug 19, 2019

In the midst of the capital-allocation process, it’s often a struggle for CFOs to find common ground between all of the projects competing for funding and the stakeholders with their conflicting objectives.

As part of their decision-making, CFOs typically look for a balance between directing funds into strategic and longer-term investments and making shorter-term bets to generate cash flow. Similarly, they also need to navigate their way through stakeholders’ differing aims and goals. The route, however, is often dotted with trade-offs and compromises, as groups of stakeholders concentrate on strategy or mission or return.

Still, in the end, these factions are expected to converge on an agreed-upon formula. Of course, it’s crucial that any plan, once filtered through several levels of stakeholders, does not emerge too diluted to serve its intended purposes: maximizing returns, while also fortifying company strategy and resiliency.

In this issue of CFO Insights, we’ll discuss how finance executives can leverage the views of different stakeholders to help sharpen their approach to allocating capital—and emerge from the exercise with not only a stronger balance sheet, but also a much-improved capital allocation process.

This publication was released by our US firm.

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