What Financial Executives Need to Lead
The mandate to transform finance into a force for organizational change and business effectiveness has clearly been issued. In response, the Financial Executives Research Foundation has conducted research that has changed the direction of financial practices. Beginning with Changing Roles of Financial Management: Getting Close to the Business (1990), and subsequently with The Empowered Organization: Redefining the Roles and Practices of Finance (1994), these studies have helped financial executives climb out of their silos and begin integrating themselves into the business lives of their organizations.
Although the leadership challenge for financial executives is now clear, uncertainty remains: Do financial executives really have the full range of competencies1 to make this leadership mandate a reality? Moreover, in our eagerness to embrace changing roles and a new mandate for financewithout fully addressing such competenciesare we actually setting the stage for future disappointments and failures? These concerns, expressed by corporate CEOs and CFOs alike, are increasingly rising to the surface.
One of the most noteworthy surveys of financial practices offers the following observation, critical to the future leadership success of all finance executives:2
We categorize the competencies CFOs require as foundation and leverage. Foundation competencies are professional, technical and control relatedthese are the minimum competencies for all CFOs. In contrast, leverage competencies3 allow CFOs to build both the business (strategic thinking, innovation, managing business risk and change) and personal relationships (teamwork and coaching, inspiring leadership). Our research shows that most, if not all, CFOs rate themselves competent in foundation attributes. But many see further scope for personal development in leverage competencies.... Of all business functions, finance tends to lead fastest to the boardroom. This leaves precious little time for planned personal development. The CFO's leverage competencies tend to be acquired haphazardly or neglected altogether. (Emphasis added.)
The importance of competencies, and the new challenge of leadership outlined above, is echoed by the following quote regarding the requirements of leadership in the twenty-first century:4
The truly successful managers and leaders of the next century will be determined not by what they know but by how fast they can learn.... They will excel not by possessing traditional skills and tools but by demonstrating a high degree of flexibility and adaptability in dealing with both technology and people and by being able to stay constantly meaningfully connected to others in the ever-changing world.
The difference between 1990 and 2000 will probably be less extreme than the differences between 2000 and 2010, as we experience a world that that is demanding not only of a rethinking of management competencies, but a fundamental redefinition of the social contract between employer and employee, between colleague and colleague, between worker and work itself.