CFOs have the unique position of managing performance in times of both financial famine and feast. Regardless of company performance, CFOs can play a much more crucial role than simply serving as an “economic advisor.” Instead, CFOs can exercise greater leadership roles to drive innovation and growth in the company. Especially in times of slow anemic economic growth, the potential leadership role a CFO can fulfill is great. Three key areas where CFOs can bolster their leadership include:
- The Finance – HR Relationship
- Increasing Capital Flexibility
- Improving Internal Insight and Transparency
Improving the Finance and Human Resources Relationship
Recent surveys have shown that CFOs are much more critical of the head of the HR department than CEOs. Why is this? Because finance advisors deal with specific and tangible measurements whereas HR leaders don’t necessarily work in quantifiable elements. While the HR department understands the HR needs of the business and wants to keep talent satisfied, CFOs are consistently looking for ways to cut back on costs. The two end goals create a professional clash.
Unfortunately, a CFO who is highly critical of the HR department – approximately 75 percent of CFOs according to a recent survey – can actually hamper growth. To enrich their leadership roles, CFOs should work purposefully to improve their HR relationship for the benefit of the company. By openly discussing financial expectations, limitations, and boundaries, CFOs and HR can work in better harmony.
Increasing Capital Flexibility
CFOs that provide capital flexibility help the company’s potential for growth. Increased capital spending allows the company to invest in new opportunities organically and aggressively. While increasing these investment opportunities, CFOs should create a balance sheet of strength and infrastructure to allow investments without jeopardizing the bottom line. To successfully increase flexibility without risk, CFOs should ask questions such as:
- Have we thoroughly investigated all potential financial scenarios and preparedness for potential changes?
- What’s the ROI? Will this investment truly drive growth and earnings?
- Do I have access to the capital funds at this time?
Improving Internal Insight
Making decisions to drive growth requires access to as many internal statistics as possible. Leaders must proactively plan for changes in the economy that will have an effect on all businesses. By improving internal insight and transparency, CFOs will be able to better use analytics and econometric modeling to identify opportunities for investment and growth. Furthermore, breaking down the leadership barriers internally improves the company’s overall performance.