Peer leadership can be critical to a finance leader's success. Here's advice from CFOs.
Peer leadership can be critical to your success as a CFO. The knowledge that peers in the same position at other organizations — even in different industries — can provide to help you be effective can be invaluable. In terms of workforce management, you can then promulgate this knowledge and insight to your direct reports and help them be better in their leadership roles.
Advice From Fellow CFOs
Business Insider shares advice from CFOs of several Fortune 500 businesses including Home Depot, Chevron and Ford. Here are some of their top tips:
- Know the basics of your industry and team to understand the bigger picture
- Focus on the facts to make decisions — meaning that understanding the real drivers and what's actually happening is important because much noise and emotions can sometimes surround financial decisions
- Build a strong balance sheet that can be leveraged in an industry downturn
- Focus on generating sufficient cash from operations
Many CFOs also champion the need for strong human relationships. This includes leveraging a strong collaborative team and altering the message to meet the audience, whether the audience consists of employees or investors and analysts. It also means connecting with and achieving a high level of comfort with the individuals on the operations side who are actually running the business.
According to Forbes, it's important to establish trust within the organization. When filling a leadership role, being effective requires respect. The product of that respect is trust. This respect and trust aid in developing the necessary strong connections with other departments within your business. This also ties in with building a strong, collaborating team. Furthermore, The Wall Street Journal reports that to be an effective CFO, strategic thinking is key. This strategic mindset is usually filtered through earnings and the financial plan.
Advice for New CFOs
According to The Wall Street Journal, it's important for a new CFO to jump in and ask questions, then fully listen to the answers. For most CFOs, the human resources department is core to their responsibilities. Jump in and immerse yourself in the organization and absorb the corporate culture. This can help you see what the drivers are and what your organization considers important. It can also aid in understanding your organization's business model, especially if your an external hire. Gaining an understanding of the organizational culture and the business model can also help you fully leverage the HR function.
It's critical to identify and build relationships both within the finance department and within the operational and HR arms of the organization. Take the time to determine who is important and why. Obtain help whenever needed. Your direct reports and peers in other parts of the organization can be resources. Requesting their assistance can help establish those critical relationships that will aid in other ways in the future and provides a means to extend the same respect and trust that you want to develop.
Mistakes to Avoid
No one is perfect, and no financial leader is expected to be. However, not taking time to build relationships and understand the roles that various individuals play can lead to isolation and marginalization, not only for you as a CFO but also for your team members. Failure to understand the business model and organizational drivers can lead to very poor strategic and even operational decisions.
A strong focus on accountability can ensure that you and your direct reports own up to any mistakes. However, it's also important to cultivate favorable risk-taking conditions and an entrepreneurial mindset in the financial group. Without a certain level of openness and acceptance, blame and finger-pointing can occur and the team might hesitate to do anything new for fear of reprisal. Mistakes provide an opportunity for everyone to learn.
The role of the CFO is continually evolving. Today, CFOs are expected to manage more than the organization's finances. They're expected to be strategic, have strong operational acumen and allocate and deploy financial and human resources. Using peer leadership can help you confidently navigate this challenging landscape.