Senior managers seldom get involved in transaction pricing but can easily choose to do so. A few years ago, a COO of a mid-size industrial manufacturer stayed close to all aspects of a critical price action launched by his company. He created the burning platform for team alignment and process improvement that brought unexpectedly high returns. However, the gains were washed away the following year when his successor proclaimed process controls were unnecessary. Inarguably, customers and competitors determine market prices but it is robust internal processes that are critical for survival (remember Countrywide Financial and Société Générale). Senior managers should take an inventory of known pricing problems and start by fixing their “internal controllables”. This can often be done with in-house resources without additional cost and risk. The benefits, both intended and unintended, will stabilize the company and are likely to start reversing the ill-effects of recession.

Pricing professionals have the opportunity to be more visible within their companies. The credibility of the pricing function literal rests at the inflexion point with the choice of next step leading up or down. Pricing managers (me included) often lament at conferences about the lack of support from executives and other functions within their organizations. Given the current price pressure and earnings focus, everyone is willing to defer to functional experts who can guide sensible pricing actions. Without dispute, pricers can claim the right to synthesize pre- and post-analysis of planned actions, track results, support other internal teams and get the best support in return.

Senior managers and pricing teams (marketing, finance, sales, IT – all combined) need to agree on a roadmap for improving pricing processes and stick to it. In an unforgiving economy, managers can avoid missteps and delays, by evaluating failure modes to mitigate risk. For example, an industrial company mandated changes in discounting process without explaining or testing procedures with their sales people. To the company’s detriment, front line personnel were dissatisfied and used every loophole to beat the process. Therefore, a detailed action roadmap with clear roles, goals, and feedback is a must.

These uneasy times will eventually pass, hopefully this year, but there is much to fix. Smart companies will emerge stronger than ever riding on sound business practices. Senior managers have the choice of setting the tone for greater due diligence and process focus. Pricing professionals have the choice to champion processes for improving the quality of revenues. If 2008 showed that financial success is never final, 2009 could prove that it is a matter of making the right choices.