Do you envision the typical senior finance leader as a bespectacled bureaucrat with their head down, mired in regulations and financial reports? If so, you may have missed a significant and surprising makeover that has been underway across the senior leadership of corporate finance over the past decade, paving the way for a more daring and inspiring approach.
Several years ago, CEB’s (now Gartner’s) finance practice noted a significant shift from a primarily governance-based focus—traditional compliance and reporting activities —to a more guidance-driven one. This trend was echoed by respected voices at McKinsey, Accenture, the CFO Leadership Council, Harvard Business Review, and many others in articles and research throughout the past several years.
As the stereotype of a stodgy, traditional Chief Financial Officer fades, CFOs are emerging as Chief “Performance” Officers (CPO) who are more proactive, engaged, and work with agency. No longer is finance just counting beans (and closely supervising how you count beans). CPOs are now responsible for setting and aligning strategic direction, identifying new sources of growth and innovation, and helping to balance the “short-termism” endemic in corporate culture with a long-term, strategic vision.
Recent McKinsey research noted that almost two-thirds of CFOs spend more time on critical guidance-focused activities such as strategic leadership, organizational transformation, and performance improvement. Perhaps even more intriguing is recent data from an Accenture survey that shows eight out of ten CFOs:
• See identifying new sources of value as a top responsibility;
• Believe it’s their job to drive business-wide transformation; and
• Feel this the most exciting time during the span of their career to be a finance leader
All of this exciting change, however, comes with a few obstacles. This same research has identified a competency gap between the cadre of senior finance leaders (finance functional heads and CFOs who have accumulated a wealth of mostly “on-the-job” experience) and the next generation of emerging finance leadership (those key leaders and business partners who make up the critical middle layer key to performance delivery). The pace of transformation has moved so quickly that learning and development (L&D) efforts have not kept up. Most finance L&D offerings are still designed around creating the type of governance-centric leadership of the past, suggesting additional opportunities for an extreme makeover.
So, what does a fresh approach to a finance L&D program look like, and what critical components are needed to continue to drive this transformation? It might surprise you to discover what is not on the top of the list: highly technical process and analytical number-crunching skills. These skills are essential, but most finance leaders and organizations already possess and have taught them successfully for years.
Instead the competencies and capabilities driving the evolution from CFO to CPO include:
COLLABORATING TO UNCOVER MORE DIVERSE PERSPECTIVES AND NEW SOURCES OF INSIGHT
Looking across and outside the organization or industry for insight into new growth
Utilizing finance’s unique perspective to foster curiosity and drive innovation
Teaching the organization how to better utilize data to improve decision-making
CREATING A CLOSE RELATIONSHIP BETWEEN STRATEGY AND FINANCE
Establishing realistic goals that balance risk with opportunity
Maintaining the alignment of budgets and planning against current strategic priorities
Creating transparency to uncover biases and improve analysis and decision-making
INFLUENCING THE DIRECTION AND CULTURE OF THE BROADER ENTERPRISE
Balancing short-term performance with a more strategic, long-term view
Utilizing persuasion to embrace change as an opportunity for continuous improvement
Creating a culture of risk-intelligence instead of risk-mitigation
How finance develops these competencies is a critical piece as well. While many of the skills finance leaders need are valuable to all types of leaders, context is important. Finance leaders need to discover and apply these skills against the unique challenges and opportunities their position and function demands.
They do that best by learning and sharing alongside other finance leaders. In-person learning tailored specifically to explore the unique and nuanced requirements of finance leaders, and to practice, apply, network, and share, should be the core of the approach. Abundant research in the L&D space, and my own experience with Leadership & Co. continues to demonstrate that there is no substitute for live, face-to-face learning.
The impact of in-person learning can also be magnified by blending it with other modes of development, including:
Key internal executives supplementing expert faculty
Mobile applications based on neuroscience principles
Virtual events for remote or dispersed teams
Learning teams organized to continue application and share lessons-learned
Integrated coaching with managers and other key leaders and mentors
These are all fantastic examples of a learning multiplier that can expand the impact of finance leader development efforts and are consistent with proven principles of adult learning.
By considering these critical questions and putting in place programs to address them, you can better ensure that your finance organization is equipped to impact enterprise performance in a truly transformational way.
- Where are we on the continuum of compliance- vs. performance-focus?
- What is the competency gap between senior finance leadership and the critical middle, that next generation of finance leaders?
- Do we have specific finance L&D programs in place to drive the transformation?
There’s never been a more exciting time to be a leader in finance. Let’s ensure that finance leaders have the competencies to enjoy and thrive in the new frontier.