By KUSNANDAR & CO., Attorneys at Law – Jakarta, INDONESIA
Financial performance is not solely the product of
market conditions, customer demand, or external pressures. Time and again,
companies succeed or falter based on the strategic decisions made at the top.
Executive-level policies—from expansion plans and hiring strategies to
procurement rules and investment directives—can either drive long-term growth
or trigger costly setbacks.
A company’s leadership sets the tone for how risks are
taken, how resources are allocated, and how crises are handled. Poor financial
performance often has roots not in external disruptions, but in internal
misalignment, unrealistic targets, or overconfidence in unsound strategies. A
leader’s vision must be matched by operational feasibility, data-backed
planning, and financial prudence.
One of the most common examples of policy missteps
involves overexpansion without adequate capital support. Leaders may push
aggressive growth goals—opening new branches, entering unfamiliar markets, or
launching new products—without fully assessing the financial and operational
implications. This can result in excessive overhead costs, inventory pileups,
or unmet revenue projections, eventually bleeding the company dry.
Similarly, delayed or reactive decision-making can be
just as harmful. Postponing cost-cutting measures in the face of declining
revenues, or ignoring early signs of market shifts, often causes greater losses
in the long run. Strong leadership involves making timely, sometimes unpopular
decisions, to ensure sustainability over optics.
Financial discipline must start at the top. Policies
that encourage spending without accountability, or tolerate vague budgetary
practices, will inevitably lead to leakages. CEOs and CFOs should ensure that
every major spending decision aligns with a clear return on investment (ROI)
framework. More importantly, leadership should champion a culture of financial
transparency across all departments.
In some cases, losses occur because decision-making is
too centralized, with key financial calls made by individuals without proper
consultation or data analysis. Encouraging a collaborative leadership model,
where finance, operations, legal, and risk management teams are involved in
policy formation, can provide a more balanced view and reduce the margin for
error.
Furthermore, ethical leadership plays a vital role in
financial health. Corruption, favoritism in procurement, or even subtle
conflicts of interest at the top can significantly undermine financial
integrity. A leader who models compliance, fairness, and accountability sends a
powerful message to the entire organization—and this translates into better
governance and fewer financial risks.
At Kusnandar & Co., we have witnessed firsthand
how seemingly minor executive policies—like using informal vendor agreements or
deferring tax planning—can snowball into substantial losses. We advise clients
to embed legal and financial oversight into strategic decision-making from the
outset. Preventive governance is not a barrier to agility—it is the framework
within which sustainable growth occurs.
In conclusion, leadership policies are not just
administrative tools—they are financial drivers. The most resilient companies
are those where leadership understands that every policy has a price tag, and
that sound decisions today shape the financial outcomes of tomorrow. Vision
without discipline is a liability; great leadership balances both.
K&Co - September 22, 2025
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