The current recessionary climate has thrust CFOs into the spotlight and made one thing abundantly clear: U.S. companies are in dire need of financial leadership. And, although for many financial professionals the idea of achieving financial leadership is a clear and realistic goal, few understand the skills necessary to become a true leader.
So what makes a true leader? And furthermore, how does a true leader become an effective financial leader? For most, financial leadership may sound desirable, but what does this mean? Depending on the current stage of your career, it can mean many different things -- all of which represent the essential ingredients of a proven financial leader.
Let's explore what financial leadership means in practical terms and analyze the key qualities and critical skills needed to be successful as a management accountant or financial professional at every stage of your career, from the perspective of the entry-level candidate, the young professional, the seasoned practitioner, and the senior manager.
Financial leadership is a continuum, not an endpoint. No matter where you are in your career, there will always be opportunity to grow and to enhance your skills. And while every management accountant will not be the leader, as you progress through each phase of your career, you will have an opportunity to be a leader. Expectations will rise and the demand on "hard" and "soft" skills will increase in complexity and scope.
But how do we define hard versus soft skills? Typically, hard skills comprise the technical facets of a job -- talents that need to be mastered before putting them to use, such as financial reporting, budgeting, and strategic planning. In each instance, these skills can be learned on the job or through formal training regimens. Soft skills, on the other hand, consist of more human interaction skills, ranging from communication to collaboration and negotiation -- attributes that are much harder to learn in the traditional sense.
Mastering these top-of-mind skill sets leads along the path to achieving financial leadership, helping to carve out a role as an effective CFO team member, and solidifying your position as a strategic business partner within an organization.
Let's consider what financial leadership looks like to professionals along the career continuum, from new graduates just entering the workforce to seasoned veterans of business.
As an entry-level employee, honing soft skills is essential to your development. Perfecting these skills will help you to gain experience and will serve as a valuable stepping-stone in preparation for higher-level jobs within any organization. For new employees, the three most important soft skills are likely to be: (1) emotional intelligence, (2) effective communication, and (3) time management.
Defined by Dictionary.com as "intelligence regarding the emotions, especially in the ability to monitor one's own or others' emotions," emotional intelligence is a fundamental quality of great leaders and arguably the most important soft skill you can learn.
Do you communicate clearly and effectively? Can you verbally articulate your thoughts and express your needs in a way that builds bridges with colleagues, clients, and vendors? On the flipside, are you a good listener? Effective communicators let speakers know that they've been heard and understood, which builds respect and confidence.
Time is a precious commodity, and most people feel that they don't have enough of it. In terms of time management, can you juggle a number of different projects at once and wisely prioritize tasks? Are you respectful of other people's time as well? Proper time management skills will help you to make better choices and enable you to use your time in more valuable ways.
While these skills may appear basic, they're often difficult to maintain day-in and day-out. People at this level need to be reminded more often than they need to be instructed, for example. With enough practice, these soft skills will become a daily habit and serve as a springboard to more technical skills that they'll learn down the road.
For young professionals, it's important to sharpen a cohesive set of hard and soft skills tailored to their evolving needs. Both are critical building blocks to becoming a well-rounded financial leader, and honing these skills should be the first step on the way up the corporate ladder. For newcomers, three critical skills to master are likely to be: (1) learning the business, (2) project management, and (3) business planning support.
Learning the business and understanding how your job relates to the overall goals of the organization will demonstrate to management your capability of understanding the big picture. Staying abreast of business news allows you to explore opportunities to communicate your ideas for improvement within the company.
Another talent deemed significant by CFOs is effective project management. Perfecting this valuable skill enables the individual -- as well as the entire CFO team -- to shine in a leadership role on cross-functional, and often departmental, organizational initiatives.
In order to thrive, companies must be adept at comprehensive business planning. This often involves synthesizing complex, multidepartmental issues and creating a plan that meets these objectives. In addition, to be successful, the plan needs to be effectively communicated to the entire organization, further demonstrating your competency and ability to handle difficult tasks.
For YPs, to bolster business process skills it's necessary to start by improving upon a combination of hard technical skills and soft human behavioral skills. Doing so adds to the leadership management experience checklist and better prepares them for the big steps ahead.
As your role within the organization continues to grow, the skills required of the seasoned practitioner grow more varied and complex. At this level, the hard and soft skills vital to leadership development become demanding and challenging -- but necessary -- for advancement. Demonstrating a high level of proficiency in these tough tasks will propel a seasoned practitioner (SP) toward the final stages of achieving financial leadership. During this phase of development, the most important aspects of growth are: (1) cross-functional influencing skills, (2) process management, and (3) enterprise risk management.
Of course, influencing skills occur at all stages of the continuum, but this is perhaps the stage where they add the most value in achieving organizational objectives. Management accountants no longer work in the "back office" crunching numbers. They are part of -- and often leaders of -- cross-functional process teams focused on strategic planning (all functional areas), including ERP/CRM implementation (IT/IS functional area), evaluating new marketing programs, customer lifetime value (marketing functional area), and more.
Process management is defined as the method of aligning all aspects of an organization with the wants and needs of clients. Demonstrating a proficiency in process management will help to promote your business's effectiveness and efficiency, a benefit that will improve both the individual and the organization with regard to overall competitiveness. Taking a supply chain view of the business in achieving objectives is part of process management.
Enterprise risk management is one of the most pressing and significant competencies for the management accounting profession today. Becoming fully adept at understanding globally accepted risk management principles will help to guide the organization in identifying and managing risks in order to limit "bad things from happening," as well as in acquiring the ability to proactively identify new opportunities.
Building a foundation of hard and soft skills, increasing their scope of influence, and gaining the trust of colleagues will prepare SPs to transition to the next level of financial leadership along our career continuum -- senior management.
With respect to formulating and implementing a company's strategy, it may be true, especially in larger organizations, that only the most senior-level financial professionals are actually involved in creating the organization's strategy. Once a person has reached this high level of responsibility, it's now time to think about how to transition from being a financial professional to being a full-blown financial business partner.
In order to achieve this goal, senior managers must: (1) become competent in stakeholder and customer relations, (2) become a change manager/agent, and (3) learn every aspect of M&As and new market and product development. Again, at some level, all of these competencies can start early in the career continuum, and these are just a few of the "rites of entry," so to speak, involved in becoming a respected and valued senior manager.
To achieve long-term shareholder value, it's critical to maintain a constant and open line of communication with stakeholders and customers alike. To help foster these relationships, regular meetings to understand the needs and concerns of each group and ensure that proper business processes are in place to meet their expectations are a must. In today's turbulent economy, transparency and reliability are essential to building customer and stakeholder confidence. Communicating with external audiences, including customers and investment analysts, is often a tricky mix of transparency, "telling the truth," and protecting the organization's confidential information.
Given their communications channels to investors, control of corporate financial resources, and broader knowledge of the business, today's CFOs have greater opportunities than ever before to become corporate change agents. Seize this opportunity by using your growing clout to drive positive change by responding to new realities in the marketplace. Be an arbiter of various strategic options. Lead the company!
Senior managers need to place more focus on the bigger-picture, "market-facing" activities -- M&As and new market and product development vs. "internal product" activities. Senior managers take leadership roles in mergers and acquisitions and in developing and evaluating new market opportunities for the organization, and they lead the development of new products and offers to realize these opportunities.
Today's volatile market conditions have redefined the role of the CFO and that of the CFO team. The paradigm has shifted: What were once minimal expectations of a CFO -- like transaction processing, book close, compliance, and internal controls -- have now become the full-blown realization of CFOs as business partners whose influence is critical to business decisions.
At the end of the day, for an organization's strategy to be successful, accountants and financial professionals in the business at every level need to understand how their everyday work activities contribute to strategy execution and how they can improve this contribution with process improvements and new ideas. While demonstrating an aptitude for the hard and soft skills learned along the way, we must recognize the importance of teamwork and involving others in the financial process. This combined approach is the surest path toward becoming a true financial leader.
Financial leadership has become a critical and prerequisite core competency for professionals. But it's important to remember that financial leadership isn't confined to the top (i.e., the CFO or controller): The entire CFO team is expected to bring the organization to the next level of performance in an increasingly complex global marketplace. Essential to professional growth is staying on top of the skills and experiences required to be a successful financial leader, while constantly looking for ways to expand and enhance one's skills. The realization of the skills described here will help in your journey to becoming a successful financial professional and strategic business partner.
Watch our related video Acquiring Leadership Skills [1].
Links:
[1] http://businessfinancemag.com/video/acquiring-leadership-skills-1202