As we find ourselves in a period of economic uncertainty, CFOs are tackling tough challenges and difficult decisions. While learnings from the past two years offer some clues, the scale and scope of the current challenges call for a fresh look at the factors that will yield results on business goals.
We’ve moved beyond the lessons in streamlining supplies, optimizing vendor pricing, and pivoting to create new revenue streams. What has always been critical, but is even more important now, is a focus on the leaders guiding your organization and the teams within it.
Preparing leaders to lead through these challenging times is a key strategy for achieving stability and growth. Research conducted by my organization (ExecOnline), however, revealed only 5% of leaders surveyed have the right combination of strategic prioritization and talent engagement skills needed to effectively lead right now.
Leadership development is a proven approach to reducing the stress of feeling unprepared and building the capabilities needed to navigate turbulence. But not all organizations recognize the value of ongoing learning and development. In the face of economic uncertainty, the traditional view of leadership development as an expense is shortsighted.
Leadership development is a proven approach to reducing the stress of feeling unprepared and building the capabilities needed to navigate turbulence.
The more complete view accurately portrays learning and development as an investment. The results of this investment yield a more coordinated, high-functioning, effective, and efficient environment that will support, strengthen, and add value to the organization now and well into the future. There’s also a deeper factor here. Providing leaders with the learning they need to be successful has been proven to increase retention and engagement. For CFOs, this investment can make a critical difference in the ability to drive organizational success.
Laying the Foundation for Success
Employee turnover costs U.S. businesses $1T annually. Companies must simultaneously address labor shortages, increased retention efforts, and a competitive recruitment landscape on top of the current economic challenges. The onus is on the C-suite to prioritize the professional growth of all current and potential leaders, not just senior management. Our data indicates when leaders believe their organization invests in learning and development, discretionary effort is 16% higher and intent to stay is 51% higher. The end result is a significant impact on productivity and reductions in turnover and onboarding costs.
There are obvious benefits to having future-ready leaders with business transformation agility, empathy for employee wellbeing, and an inclusivity mindset to move your business forward. But as the saying goes, change waits for no one. For CFOs, it’s important to consider how ongoing leadership development can reinforce organizational stability, even in a difficult economy. Among the many benefits:
- Improve C-suite effectiveness. An effective C-suite in today’s business environment requires leadership capabilities often referred to as soft skills, though that term undermines their importance. Effective communication and empathetic and inclusive leadership are critically important tools in helping to keep workers engaged and productive. Without them, costly worker replacements will gain momentum.
- Strengthen and align workforce leaders. The need for learning isn’t just being felt at the C-suite, it extends throughout the organization. Providing support to all leaders, including those who are deep within the organization, can help strengthen and align the workforce and unite the organization toward common goals.
- Create a stronger bench. Development opportunities are integral to how an organization effectively nurtures rising leaders. Building advanced competency throughout the organization enables you to react more efficiently to events that might otherwise derail stability. And by strengthening the bench on a continuous basis through ongoing learning and development experiences, organizations create a workforce of agile, future-ready leaders.
The CFO as a Catalyst for Change
Understanding why it’s important to invest in leadership development is a good start. Understanding how CFOs can be visionary drivers of an organization’s success as well as fiscally responsible can be a great next step. Beyond this is an innovative approach — the idea of finance leaders as talent champions.
Finance and talent are deeply intertwined. Finance objectives are highly dependent on talent success. From this perspective, finance leaders are inherently talent champions, and there’s a compelling reason to combine efforts.
Here are a few suggestions:
- Use data and more holistic analysis to aid better decision-making. What are the costs for contracting or recruiting externally versus upskilling internal high performers? Apply your visionary eye to this analysis. What are those costs over the long-term, given the value of in-house knowledge and retaining those who possess both the expertise and the experience with your organization’s way of working?
- Partner directly with your chief human resource officer or applicable learning and development leader. Examine the current learning and development process and outcomes. Where can the process be more efficient and cost-effective without sacrificing accessibility or equity of opportunity? What is its current impact on succession pipelines? Is it scalable to serve all levels of your organization, and accessible beyond the walls of the corporate headquarters? Are there real-world outcomes to measure against initial investment costs?
- Improve transparency. All too often employees are left wondering what’s happening during an economic downturn, and the CFO is viewed as a closed book. It’s critical to inspire confidence and focus by communicating your organization’s priorities and goals and reinforcing the idea of the C-suite as a unified team operating in everyone's best interests, provided you’re clear about what those interests are and what it will take to achieve them.
By enabling better leaders you’re fostering a better environment, even in times of uncertainty. When people feel valued they feel invested and more productive, and when they have confidence they feel safe enough to be innovative. It’s a win-win-win: for them, for you, and for the future of your organization.
Michael Pickrum is CFO and chief operating officer of online leadership development company ExecOnline.