Businesses that want not only to succeed but to keep on growing need to understand the world in which they are working (their clients, their customers, and their competitors) and how they need to change to remain relevant.
If they can’t (or won’t) change, then they are unlikely to grow and could find themselves unable to compete in an increasingly global market.
Senior managers drive change, and this includes the CFO as a key member of any C-suite.
Historically, the role of CFO tended to focus on financial reporting and compliance. They led on audits and the presentation of company accounts. They didn’t necessarily get involved in strategy or blue sky thinking.
The role of the CFO, however, has changed.
So, while they still need technical accounting skills to manage a company’s finances, they also need to have a say in strategic decision making and must possess the leadership skills to help drive the company forward.
Emotional intelligence and the ability to make decisions, solve problems and communicate with internal and external stakeholders are now essential requirements of a modern CFO.
Unfortunately, while many CFOs possess these skills and are keen to use them, they are not always able to do so.
Instead, they find themselves embroiled in the day-to-day minutiae of running a finance department, crunching numbers and processing transactions rather than getting the time and space to think of the bigger picture.
This can be avoided by the CFO taking a step back and looking at how they can assume a deservedly pivotal role within their organisation which will see them working alongside the CEO and the board, in addition to other internal and external stakeholders, to drive forward change at a strategic level.
A significant step to achieve this is for CFOs to gain an understanding of their leadership style and how they can use this to their and the business’s advantage.
CFO Leadership Styles
In 2015, software company Epicor carried out a study into the leadership styles of over 1,500 CFOs across the world. They found that there were six distinct categories:
This leadership style tends to be more cautious than some others, and the CFOs who use it tend to be more methodical.
They take a team-based approach, consulting with their staff on crucial decisions before deciding what they want to do.
Collaboration is essential to CFOs in this category, although this can lead to delays in decision making.
This leadership style tends to see the highest level of growth when it’s found in CFOs, and approximately 20% of those surveyed were found to have it.
Revolutionaries are more likely to take risks than any other leadership style and push for changes to the culture or structure of an organisation.
They set goals that challenge their teams but take a less formal and process-driven approach to how these goals can be achieved, which can lead to creative solutions for difficult problems.
Approximately 20% of CFOs were found to be carers.
Almost a complete opposite of revolutionaries, carers don’t like taking risks because they could lead to mistakes.
They would rather not make or will delay making a decision rather than making the wrong one.
When they do make decisions, these tend to be data-driven, and the accuracy of this data is a major issue for them.
A smaller percentage (16%) of CFOs identified as conductors, who tend to make decisions based upon a gut feeling as opposed to hard facts; they are not data-driven.
Like revolutionaries, conductors don’t always work within the set rules and processes and tend to set goals that challenge their teams.
9% of the CFOs surveyed are traditionalists, a leadership style that doesn’t break the rules but instead follows them strictly, working within systems rather than changing or challenging them.
Traditionalists rarely see the need for change and companies with CFOs who have this leadership style tend to exhibit the lowest growth levels.
Very much like conductors, CFOs who have a visionary leadership style tend to make decisions based upon instinct rather than hard data, using their experience to help guide them.
A big concern for visionaries is not having enough time or enough resources to carry out their plans or not getting the buy-in at a senior level.
Most visionaries don’t worry too much about working within set processes and procedures but do want to include their teams in decision making.
The Key Components of CFO Leadership
As we’ve seen, some leadership styles are more likely to push for – and achieve – growth than others.
If your style isn’t one you see reflected in those of visionaries or revolutionaries, this isn’t necessarily a problem because you can still take on elements of these leadership styles in order to drive change within the organisation you work for.
To do this, you will need to embrace three key components of CFO leadership.
1. C-Suite Ability
The C-Suite includes not only the CEO and CFO, but also the Chief Operating Officer (COO) and, increasingly, the Chief Information Officer (CIO).
In many organisations, other C-suite roles will include growth, marketing and cybersecurity. Working with and within this team successfully is vital for any CFO to succeed as a leader.
This means developing the tools to express yourself in a way that others understand (taking a step back from financial jargon, for example), allowing you to influence decisions at a strategic level and help solve problems that may be inhibiting growth.
2. Strategic Thinking
Thinking strategically means stepping beyond the role of CFO and looking at the bigger picture. What does your firm want to achieve, and how can you help?
You will need to work with other teams to come up with solutions that give you the advantage over competitors.
This means developing an understanding of how departments other than finance work so you know what you can and can’t ask of them and what their sticking points might be when it comes to making changes.
3. Relationship Management
Getting people on board with new ideas is key to making changes that can lead to business growth.
This means gaining buy-in at all levels, including senior managers and board members.
The ability to develop these relationships is, therefore, a vital component of a successful CFO leadership style.
By looking at and understanding your CFO leadership style and how this can be adapted, you can have a significant impact on the short and long-term growth of your business.
You can influence its direction and develop creative solutions to the problems that you and your team have identified.
This means working not only with your team but with others across the organisation and with colleagues at all levels as well as board members, taking a proactive and positive approach to nurturing relationships that work.
It also means taking a less structured approach where appropriate, using your skills and experience to help guide decisions rather than relying on hard and fast rules that may have worked well in the past but which may be less relevant for the future direction and success of the business.