Why (and how) CFOs should become better leaders in 2024
It’s no secret that CFOs have a lot on their plate. Building financial models, cash flow forecasting, board meetings, budget planning, becoming a strategic partner to the CEO… The list is endless.
But heading up a team is also a priority for any finance leader. The global talent shortage has made finding (and keeping) the right employees a struggle, and the pressures of digital transformation require a forward-thinking and motivated team – which means it’s time for CFOs to step things up.
As we’re about to welcome a new CFO to the team here at Pleo (not long now, Søren!), it seems like a perfect opportunity to share our tips for finance leaders looking to improve their management skills.
Why CFOs should work on their leadership skills
We’re all aware of the finance talent shortage. An industry evolving at pace requires employees to do the same. There’s greater demand for digital skills in particular, which some employees haven’t yet acquired, leading to unfilled vacancies. Similarly, what workers want from a career is changing, with many demanding flexible hours, remote working and higher salaries. To tackle this, CFOs need to invest in their existing staff and create a desirable workplace – part of this involves being better leaders and teachers.
Those digital skills we mentioned are essential for companies to ride the wave of digital transformation. These days, finance teams need to be competent in data analytics, artificial intelligence and cloud computing (to name a few) if they want to stay competitive. CFOs can play a huge part in helping their teams upskill in these areas.
Not to mention the many layoffs of the last few years which have shaken employee confidence. CFOs are perfectly placed to provide context on the strategy and plans for the year ahead so that everyone knows how they can contribute to the business’ success.
5 ways CFOs can become better leaders
Involve your team in other areas of the business
Part of being a great leader is giving your team the tools and skills they need to grow. As Pleo’s Business Transformation Senior Director, Marta Obrador, puts it, “leadership requires the perfect balance of driving a strong strategy and bringing people along.”
One way to help your people become as well rounded and knowledgeable as possible is to get them up to speed with other areas of the business, like operations and IT, for example. Having an idea of what’s going on around the company can help to give employees the bigger picture and allow them to see how their individual contribution is having an impact.
Use your judgement to decide which departments might be most useful for your team to be kept up to date with. Maybe marketing is responsible for driving a lot of new business this quarter, or your CEO has pivoted the strategy which affects finance more than usual. You could set up regular catch-ups for your team and theirs, or ask for them to share key slides from recent presentations to give your team a flavour of what they’re working on. For new joiners to your team, you could even set up a ‘buddy’ system to get them more acquainted with other people around the business in a less formal way.
Develop your soft skills
It’s true that “harder” skills like analysis and rational thinking are key to being a successful finance leader. But leading a finance function isn’t just about numbers, it’s also about people. And softer skills, like empathy and emotional intelligence, are often overlooked.
A study by EY found that while 50% of finance leaders believed that they understood the needs and views of their team, only 36% of finance teams believed their leaders understood the team’s needs and views. This demonstrates a gap in what CFOs think is true and what is actually true, suggesting there’s room for improvement when it comes to self-awareness.
A great way for CFOs to work on their soft skills is to practise clear and open communication. Avoid using jargon and complex terms your team might not understand, and remember that being honest and authentic will encourage your team to trust you. If an employee comes to you with a problem, try to put yourself in their shoes and imagine how they’re feeling. You might find this leads you to offer different solutions or advice. And don’t forget about the power of active listening – your team will thank you for taking the time to listen to their ideas or concerns.
Encourage your team to be adaptable
As the saying goes, the only constant is change. And this is more true than ever in the finance industry. So making sure your team can adapt to new directions and regulations – and be comfortable with the unknown – is essential as a CFO.
Staying up to date with industry trends and going to events and conferences can help your team to keep their finger on the pulse. While no one has a crystal ball, monitoring trends will stand them in better stead to predict what might be around the corner. Encourage your colleagues to tap into their networks and LinkedIn connections to discuss changes and future predictions to open their eyes to different perspectives, too.
To develop your team’s adaptability skills, you could inspire them to improve their problem solving skills by pitching a hypothetical problem and asking them to consider a range of solutions. You can encourage employees to embrace change by taking more risks and learning from the results – this should help them become more resilient. It’s important to remind your team to focus only on the things within their control and to try to see change as an opportunity, not a hindrance.
And if you’re a CEO joining a new team and planning to make changes, “spend at least six months gaining the trust of the organisation and create the long term strategy with them, not for them,” says Marta.
Create a space of psychological safety
At work, psychological safety refers to an environment where people feel comfortable speaking up, expressing their feelings and making mistakes without fear of rejection or humiliation. As a CFO managing a team, you’re responsible for making sure your employees feel happy and safe. In fact, research has found that teams with high degrees of psychological safety reported higher levels of performance, so it’s in your best interests to create this kind of environment.
To help foster this, CFOs should practise open-dialogue skills. This encourages leaders to explore disagreements and talk through tensions within their team in a calm and thoughtful manner, where everyone gets a voice. This ties in nicely with ‘consultative leadership’, which is where leaders actively consult their team members, ask for their input and consider their views.
As a team lead, it’s important not to punish experimentation and calculated risk taking. Recognise success amongst your employees but also encourage learning from failure, as this will help your team to grow together. And remember that debate doesn’t have to lead to conflict. There is such a thing as ‘healthy conflict’, so set the boundaries early on for colleagues to debate with each other in a constructive, respectful way.
Invite upwards feedback
The benefit of asking your team for constructive feedback is twofold. Firstly, it helps you become a better leader as you’ll have suggestions for improvement that you can immediately start to action. Maybe your team wishes they had more one-on-one time with you, or they have too much work on their plates. While some feedback might be a bigger pill to swallow, knowledge is power. Plus, giving feedback is a valuable skill for employees to learn early on, and getting it right takes practice. And the best feedback is specific, timely and given regularly.
To facilitate regular feedback, why not send a survey to your team once a month asking what’s going well and what could be improved? You could make the survey responses anonymous to start with, to get your employees acquainted with the ritual of giving feedback. Or allow 15 minutes in your individual catch-ups to cover feedback, both from you to them and vice versa. With only 31% of finance workers feeling as though leaders listen to them, there’s never been a better time to prove to your team that their voices will be heard.
Now you have an idea of how to improve your leadership skills, hopefully you can put this into practice and watch your team flourish. For more tips and tricks for making 2024 your best business year yet, keep an eye on our blog!
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