Experience has taught chief financial officers that successful changes are neither simple nor unavoidable. At least 75% of CFOs polled as part of a new study by the EY organization and Oxford’s Said Business School claim to have gone through at least one transformation that failed in the last five years. However, a lot of CFOs still don't realize how important employee buy-in is to the success of transformational programs.
Based on that research, which also revealed that nearly half of CFOs surveyed believe their organization lacks the capabilities to transform successfully, we analyze the CFO perspective on transformation in this edition of the CFO Imperative Series, which offers critical responses and actions to help finance leaders reframe the future of their organizations.
Some of the key drivers of transformation success include
Inspire: Create a vision that speaks to all and defines a compelling "why"
The significance and symbolism a vision can have in igniting renewing igniting a sense of purpose may go unacknowledged by leaders. Because of this, organizations frequently waste the time and resources they invest in jointly developing a vision. A failed change affected over half of the financial workforce, who claim they didn't comprehend the leadership vision.
CFOs frequently underestimate the influence a sense of purpose has on motivating staff. They occasionally require assistance in confronting their own biases and perceptions of what drives others. Without a personal connection, people frequently draw unfavorable judgments about purpose, which makes them unable to participate in — and occasionally actively reject — the program's goals.
The human aspect of transformation must always be prioritized by CFOs. It is essential for leaders to have a comprehensive grasp of what will occur and how it will affect both people and groups. Instead of thinking about individual journeys or personal milestones, CFOs frequently focus on program milestones and organizational goals. To assist employees, take ownership of their responsibilities, and reduce the anxiety that might result from a sense of control loss, CFOs must engage in a story that addresses individual journeys.
Key actions for CFOs include the following such as creating a vision that people can connect with, will go above and beyond for, and that addresses the central question of "why?", to actively engage teams in open, two-way talks about the transformation vision and how it impacts them, step outside of your natural comfort zones. Being emotionally relatable and sharing personal experiences that others may identify with are two essential qualities that will promote belief in the goal, throughout the transformational journey, keep the vision in mind, and test it frequently.
Lead: create a genuine and empathic leadership style to foster agreement on the financial vision
Leaders must be tenacious, brave, and empathetic, especially when it comes to the expectations and priorities of the workforce. While having a clear purpose is essential to maintaining momentum, CFOs must also show empathy and make clear connections between the transformation vision and the advantages for the business and the workforce as a whole.
Senior executives who have spent their entire careers mastering a technical field and who have been taught to exude confidence and certainty when outlining plans and results to stakeholders may find this challenging. Teams need to be informed about how a transformation will affect them, which calls for a fundamentally different playbook.
According to our research, those in charge of the financial function should consider their leadership abilities. The leadership did not meet the needs of the workforce, according to two-thirds of the finance workforce. Similarly, employees in the finance function were less optimistic about their leaders' capacity to exhibit effective and inclusive leadership than finance leaders themselves. Only 33% of finance employees agreed that their leaders made timely and difficult decisions under pressure, compared to 47% of finance leaders.
Key actions for CFOs include showcasing inclusive leadership and the capacity to persuade and bring together a variety of stakeholders and keeping an eye out for distractions, preparing for skepticism, and leading people through emotional turmoil with skill.
Empower: transfer decision-making authority & consciously works to create a climate that is safe for experimenting
Transformational journeys are not always linear and can be derailed by external factors. According to the leaders of successful transformations we interviewed, shifting directions or going in a different direction occasionally wasn't necessarily a bad thing. Leaders should explain the changes themselves as early and transparently as reasonably possible in order to minimize the impact of those changes. This will help people adjust to the changes.
Finance services often carry out precise technical work and adhere to scheduled monthly, quarterly, and annual cadences. This promotes a culture of predictability. Some of the abilities and behaviors that spur creativity may be suppressed as a result. According to a recent study, employees in the finance department were more likely to think that a failed experiment will harm their careers than employees in other functions (70% versus 62%, respectively). The readiness of leaders to support innovation and fresh ideas differed in a similar way (33% of finance executives versus 41% of all leaders).
In order for their organizations to be able to adapt to change and learn, CFOs must foster creativity and innovation as transformation becomes a constant. They must establish a secure climate in which people feel free to try new things, fail quickly, and learn without risking their careers. However, it's crucial to establish realistic expectations that experimentation and innovation aren't open-ended, as well as explicit limits on their scope.
Key actions of CFOs include defining roles and duties clearly and providing the financial leadership team the authority to make decisions at lower levels, making it clear when and where teams have the authority to make choices, seizing and taking advantage of possibilities that a "no surprises" approach may overlook, cultivating a culture of safe experimentation and develop a "fail fast" mindset. Defining "failing fast" so that teams are aware of the room for agility while still achieving overall performance goals, stopping striving for perfection while addressing problems, and giving teams enough freedom to complete their work even if they don't get everything just right the first time.
Build: swiftly demonstrate how technology will aid in achieving the financial vision
Making the transition a reality requires combining technology with the appropriate skills. Therefore, it is not unexpected that the finance leadership's transformation efforts frequently place cutting-edge technology at the forefront. Actually, 38% of CFOs cited the desire for technology and digital innovation as a major driving force behind the start of transformations. Nevertheless, only 2/5 of senior finance leaders, including CFOs, ranked technology as one of the top 3 obstacles to implementing changes successfully.
Surprisingly, many transformations still implement technological improvements with the mindset that employees should only attend training before adapting and adopting. Often, the end user is not given enough thought during the design phase, and there is little thought given to how to interact with them in a way that enables them to comprehend the changes and offer useful feedback on future product improvements.
By approaching the technological design from the outside in, the project team can avoid extravagant groupthink that results in excessively complicated needs. Instead of a paradigm where all conceivable data is collected and then an overly complex system is created to use it, engaging the users earlier can lead to simplified procedures where important data gets recorded to drive improved customer, supplier, and employee experiences.
A product-based approach to technology design that allows consumers to test and provide feedback at different stages during development would be advantageous for financial leaders, giving the workforce a say in the design that will increase employee engagement. The personnel will have had the opportunity to explore, learn, and master the technology along the road, which can help increase the implementation of the technology's final success.
Key actions for CFOs include considering the end user when developing technological solutions, finding out how the technology will enhance corporate results and staff and customer happiness, focusing on progress rather than perfection, utilizing technology to accelerate the transition, and demonstrating the early worth of the new technology-enabled ways, determining the essential knowledge and abilities, developing the appropriate digital attitude and skill set through a combination of hiring, upskilling or reskilling, collaborating, and outsourcing to realize the potential benefit of technology, Assisting to mold the configuration and producing better results, providing teams the chance to familiarise themselves with the technology and experiment with it during the design and development phases.
CFOs are fortunate to have a comprehensive understanding of the company. They are in a good position to set the standard for creating leading practices for each of the six transformational levers. To increase the likelihood of success, CFOs of today must intentionally invest in the empowerment of their workforce and the degree of involvement they have with the transformational goals. This entails developing a vision they can get behind and leading with a "we" rather than "me" mentality. They put their employees first by giving them the proper amount of emotional support to maintain engagement and by upskilling individuals and teams so they may come up with new ways to work and incubate fresh ideas. Using digital tools and technologies that eliminate much of the repetitive drudgery that would impede finance teams from safeguarding and generating value for the business, they lastly create confidence in their potential to succeed.