Pe­ter D Nep­tune

The CL Fi­nan­cial Group's in­abil­i­ty to match its short-term cash needs with its long-term debt was a ma­jor fac­tor in the col­lapse of the re­gion­al fi­nan­cial in­sti­tu­tion, said Ram Ramesh, for­mer chief ex­ec­u­tive of­fi­cer at CMMB and now prin­ci­pal at KP­MG.

CMMB was a sub­sidiary of CL Fi­nan­cial be­fore it was ac­quired by State-owned the First Cit­i­zens Group in May 2009 as part of Gov­ern­ment's bailout of the CL Fi­nan­cial Group. Speak­ing on the top­ic, De­sign­ing an Ag­ile Or­gan­i­sa­tion for Frag­ile Times, at the Amer­i­can Cham­ber's month­ly meet­ing at Jaf­fa restau­rant in Wood­brook, on Tues­day, Ramesh said the down­turn in the econ­o­my posed spe­cial op­por­tu­ni­ties for the busi­ness com­mu­ni­ty. He said ex­ec­u­tives must still place spe­cial at­ten­tion to man­ag­ing their cash flows as re­cent de­vel­op­ments on the in­ter­na­tion­al, re­gion­al and lo­cal fi­nan­cial mar­kets have shown.

He said the cri­sis fac­ing the fi­nan­cial sec­tors in the Unit­ed States and T&T and the fall of a ma­jor in­sur­ance com­pa­ny in Ja­maica all stemmed from in­sti­tu­tions not plac­ing enough at­ten­tion to their cash flows. "We must see eco­nom­ic down­turn as an op­por­tu­ni­ty to chal­lenge the sta­tus quo be­cause you get low­er re­sis­tance to change, and ex­ec­u­tives will be able to do things and pur­sue poli­cies that will be more dif­fi­cult to push through when the econ­o­my is up.

See­ing op­por­tu­ni­ty in cri­sis

"You must not let a good cri­sis go to waste," Ramesh said. "In­stead, you should use the op­por­tu­ni­ty to deal with com­pla­cen­cy, re­align your cash flows, deal with debt, be tax smart, man­age busi­ness risk, cut waste and cre­ate a sense of ur­gency among your stake­hold­ers. In the end, the com­pa­ny that emerges will be more com­pet­i­tive, more ef­fi­cient and ef­fec­tive in the mar­ket­place. "As the eco­nom­ic cri­sis moves along, we are now ap­proach­ing a burn­ing plat­form, and it forces us to do the things that will make us more com­pet­i­tive, and it of­fers a chance to clear up many of the is­sues that have al­lowed our op­er­a­tions to put on 'fat," Ramesh said.

"Dur­ing a boom–and the coun­try has seen an un­prece­dent­ed pe­ri­od of growth over the past 10-15 years, many of us have added a lot of fat over that time. Now, dur­ing the down­turn, we can get a chance to deal with it." Ramesh said cost-cut­ting should not be an across the board cut, or even cuts that fo­cus on sec­tors of the busi­ness that may need trim­ming, but should be ap­proached with im­prov­ing the busi­ness process in mind. "In this way, you can look at cost-cut­ting as a tac­ti­cal move rather than a re­duc­tion ex­er­cise. Busi­ness­es need to ex­am­ine their process to see what can be re­moved and still main­tain the qual­i­ty and strate­gic po­si­tion of the com­pa­ny and its prod­ucts in the mar­ket."