Beyond the balance sheet: CFOs embracing leadership
To be invaluable to a company aiming to grow, become an agile CFO, one who knows when to be a traditional risk-mitigator, and when to be a team captain and champion.
I will admit I haven’t read them all, but it’s a solid bet that few experts had a global pandemic on their 2020 predictions list last year. This is not a criticism. No one could have predicted the financial and social impact of COVID-19 – and that’s the point. It’s important to have vision, foresight and a business plan, but what kind of plan can withstand a global pandemic? How can anyone plan for this kind of shock?
The answer is simple; no plan can, and you can’t. COVID-19 demonstrated that business planning is not just about a single plan, but about how you can pivot those plans quickly. It’s about the planning process, and I believe the process needs to be agile.
CFOs are traditionally viewed as the ones who hold the purse strings within an organization, the ones who say “no” more often than “yes.” Adjusting to COVID-19 conditions, with significant financial uncertainty, was right up the fairway for the stereotypical CFO.
But agile CFOs and organizations are already thinking about what’s next. Many have already pivoted their plans once again, this time to prioritize re-acceleration and looking at their business through a new lens to help shape, guide and lead their company back to profitability and growth.
The agile CFO is shaking off the stereotype and thinking more like a CEO, so that they can truly support their CEO. Leading and supporting their organizations to cast-off their funk and to re-energize. Being a champion and a team captain is not a skill set that is usually first on the CFO job description, and some will need to quickly evolve into this new role. Finance leaders are not always comfortable in this role, but it is especially necessary to the transformation of an organization.
Moving into a champion role may be initially difficult for a traditional CFO. After all, balance sheets are binary; black and red, while true leadership includes many shades of gray. To be most effective, finance leaders need to be agile and know when it’s best to put on their traditional or champion hat.
Roadblocks to address
These are some of the common roadblocks finance leaders will need to address along their path to agile:
Conservatism: Conservatism serves CFOs well, but too much can be extremely limiting to a business. Heightened conservatism can limit innovation or rock a company’s market share on its heels. CFOs need to get comfortable with risk once in a while and strike the right balance.
Data: Some CFOs are already used to connecting data from disparate areas to build insight, understand risk better and know when to let go. However, a recent benchmark report says that half of those in the finance suite are wasting time and resources looking at data from disconnected sources to generate insights. Only seven percent of the same respondents are using AI to help with this process.
Risk: Managing risks are a part of every CFO’s toolbox. Taking on the champion role requires CFOs to become more comfortable with calculated risks in their decision-making.
Communication: Business leaders and champions are not quiet. However, transparency is not something that comes naturally to the finance department.
More than 60 percent of finance professionals say that KPIs are not broadly shared with the rest of their organization. This is diametrically opposed to the way employees need and want leaders to communicate with them.
Skills
This list may look daunting but it provides clarity and a precise roadmap of the skills many finance leaders need to level up.
Agility over conservatism: CFOs need to push against becoming too binary in their management style and instead become agile. Focusing on historic financial numbers can provide a blanket of confidence and comfort. Putting on a different hat is, and can be, very challenging for a finance leader.
The best way for a CFO to build a more agile management style is to seek out training programs that specifically focus on growing confidence and change management. CFOs need to also get out of their offices and leverage their peer networks to stay on top of industry trends.
Having perspective that goes beyond dollars and cents will help inform CFOs that their leadership is sound.
Processes actualize data: Finance leaders are not wrong when they feel they waste a lot of time wrangling and parsing of data. It can be a laborious process and make it impossible to deliver clear insightful, action-oriented analysis in a timely fashion.
Insights provided can be diminished in their effectiveness when the business loses confidence in the data due to errors.
A Finance leader needs to properly invest in development of a process and technology to make fresh and accurate data available to their teams on a timely basis.
Agile planning mitigates risk: Being agile is key. Keeping an eye on the horizon, keeping informed and open to what is happening across their business, looking at non-financial data including leading indicators like sales funnel data enables leaders to anticipate change and when a pivot might be required.
Running a full planning cycle on a more frequent basis will enable an organization to be ready to effectively respond when called upon to change.
Finance leaders that foster an environment of open communication and transparency in their management style will find that their core team will become more loyal, motivated, and aligned with overall business goals. With the team on board and informed, the level of risk goes down and CFOs will be able to plan more effectively.
Democratization increases transparency: I don’t mean business is a democracy. But, keeping KPIs behind a veiled wall doesn’t serve an organization well. Performance-oriented teams require objectives, and they respond well to and value transparency.
While it may feel uncomfortable for a CFO to open the books to the broader organization, democratizing KPIs and performance aligns teams on what needs to be achieved and what milestones have been met.
An agile CFO, one who knows when to be a traditional risk-mitigator, and when to be a team captain and a champion, is invaluable to a company that aims to grow out of an uncertain time. The role of the CFO is shifting and those who want to remain in the game need to be agile to find and be ready for what comes next.
Many finance leaders will need to stretch out of their comfort zone to become a team captain. While this may prove difficult at first, CFOs who push through will be rewarded in their career and be leaders in future-forward, growth-centered organizations.
