While added stress of managing the impact of the current pandemic has hit all leaders and functions hard, the hardest hit may be chief financial officers and the departments they are leading through these highly dynamic times. With a majority of companies predicting a loss of revenue and profits, finance functions are being asked to pull all the levers they can to minimize the financial damage caused by the crisis.
I’ve had the opportunity to speak with a number of CFOs over the past several weeks and have heard their stories of how they are managing the impact of the COVID-19 crisis at their companies. What I have witnessed, quite frankly, has been an incredible display of competence and compassion in the most difficult of environments. Yet, one challenge that I’ve seen neglected is managing the stress that this crisis is putting on these finance leaders and their teams.
There’s no doubt that the pace at which these leaders are running is impossible to sustain. On top of that, many of the strategies CFOs are recommending integrate restructuring plans that have real human impact. Needless to say, stress is at an all-time high.
A chief financial officer is one of a handful of executives who guide the organization from the enterprise level. Even in the most average of business environments, it is a sizable, demanding, and highly complex responsibility. In volatile times such as these, that responsibility becomes enormously heavy.
From a leadership standpoint, the CFO not only has to manage and lead themselves through this crisis, but also their teams, and more broadly, their companies. What can finance leaders do to cultivate a sustainable environment and promote a healthy psychological and emotional perspective on the current crisis?
The following four activities may well lie outside their comfort zones, but by embracing them, CFOs will drive positive outcomes in their organizations:
- Practice self-awareness. Understand that the crisis is going to have a personal impact on you. Working 16-hour days and making decisions that potentially result in your co-workers losing their jobs is going to take a personal toll.
- Be open and curious. Commit yourself to learning and thinking differently about things; don’t have the crisis force you to do so. Great organizations will innovate through these times rather than simply work harder. These organizations will then be poised to pivot quickly as things shift in the future.
- Actively listen. Especially to your team. Being receptive to their ideas and understanding their challenges creates connection at a time when you need it the most. Standing firm in your own position versus being open to another’s is counterproductive. Keeping an open mind and encouraging diversity of thought is imperative.
- Focus on the future. Your organization is going to come out on the other side of this crisis. How, depends on the actions you take today, because what you do and say now will be remembered for years to come. Given this far-reaching impact, talent needs should always be part of the decision-making criteria on any restructuring or downsizing event.
On the personal side, finance leaders may not feel comfortable demonstrating such vulnerability. In fact, their default strategy is often the exact opposite — just let the cortisol flow and tough it out. This begs the question, how effective, and for how long, can a leader who is increasingly “amped up” and overleveraged be?
CFOs must be cognizant that their people are looking to them for signals on how to react and respond during this crisis. If as a leader, you are closed to new ideas, your direct reports will model that same behavior. As leaders of leaders, CFOs’ direct reports can cascade unfavorable, pervasive behaviors ubiquitously into the organization. The aftermath of ineffective leadership at this level can echo and reverberate through every area of the business and have a negative impact on morale, encouraging an environment where innovation and collaboration are stifled when needed most.
On the other hand, leaders who can recognize the emotional aspects of what’s going on inside themselves and others will be better poised to nurture empathy, create calm and balance, and enhance critical connection among team members throughout the organization, thereby accelerating productivity and effectiveness. As companies face increasingly challenging barriers, an atmosphere such as this promotes constant, transparent communication, which is required to make stalwart, forward-thinking decisions.
CFOs are routinely tasked with making data-driven decisions. But, in order to be effective in the current environment, good CFOs and their teams will need to exercise their qualitative analytical skills as well as their quantitative. Quantitative data, such as a fall in revenue, may indicate the need for a reduction in the workforce. Those types of decisions need to be made and, frankly, are fairly simple.
What’s more difficult is to predict the implications of that revenue drop over the longer term. Will that revenue come back or is it gone forever? What can we learn from recent changes in our customers’ buying patterns and behaviors that will impact our business model and cost structure moving forward? These are more involved questions that require a finance leader to create a more collaborative and inquisitive decision-making process.
At an enterprise level, a leader’s ability to practice self-awareness, remain open and curious, listen, and focus on the future amid these extraordinary obstacles will serve to strengthen the foundation they’ve built. This gives them the leverage they need to pull their organization and teams out of their immediate and natural fight or flight responses and stand them solidly in a position to create the stability and routine needed to unlock their capacity for long-term perseverance. However, this only happens when the leader owns the transition on a personal level.
John Touey is a principal at executive search firm Salveson Stetson Group with 20 years of experience providing executive search, human resources, and management consulting services to organizations in the healthcare, financial services, utilities, manufacturing, and pharmaceutical industries. Follow him @JohnTouey