How CFOs Can Be Better Leaders in the Age of COVID-19


Productive relationships are as important for chief financial officers (CFOs) as for any other C-suite role. In fact, the quality of their relationships will be the differentiating factor for CFO success during the COVID-19 pandemic and increase the odds of improved business performance, according to Catherine Dixon, Tjai Nielsen, Divya Sadarangani and Jennifer Sturman, co-authors of this opinion piece. Dixon, Nielsen, Sadarangani and Sturman are consultants with ghSMART, a leadership advisory firm.

It’s a lonely time to be a chief financial officer. COVID-19 has disrupted business, requiring many CFOs to make tough and often painful decisions to preserve and protect their organizations. Layoffs, slashed budgets, and canceled bonuses are only fueling stereotypes of CFOs as cold-hearted number-crunchers. During periods of intense pressure, it can be tempting for CFOs to double down on what they do best – diving into the analysis to figure out how to mitigate risk and maximize financial returns. This does little to counter the unfortunate perception of finance leaders as myopic, risk-averse human adding machines who care more about making the numbers than creating long-term value.

As leadership advisors to C-suite executives, boards, and investors, we have found that successful leaders do three things well: They have the right Priorities, the right people (Who), and the right Relationships to achieve results. We call this Full Power (PWR) leadership. We have also found that many CFOs tend to focus mostly on the first two elements of that equation – shaping business direction and building functional muscle – while paying less attention to the third element of that equation, which involves managing relationships.

Yet productive relationships are as important for CFOs as for any other C-suite role. In fact, we believe the quality of their relationships will be the differentiating factor for CFO success during the COVID-19 pandemic and increase the odds of improved business performance both in the near term and over the longer term. We offer below suggestions for how CFOs can engage more effectively with their colleagues in all directions – up, out, across, and down their organizations.

Pressure-testing Assumptions

Up: The partnership between a CFO and her CEO matters now more than ever. Smart CFOs anticipate the needs of their CEOs, both stated and unstated. These CFOs take the initiative to run multiple scenarios, recognizing that the level of uncertainty and complexity today far exceeds that of prior downturns. They go beyond responding to inbound requests, and they pressure-test assumptions with extra rigor. One CEO we know has developed a newfound appreciation for his CFO, who has pushed back against overly rosy projections and partnered with operating leaders to help them “look around corners” and predict what might come next.

Savvy CFOs also have a realistic handle on their CEOs’ financial blind spots and know when they need to shine light on issues that otherwise wouldn’t get the attention they deserve. We recommend that CFOs increase the frequency of their communications with their CEOs and regularly discuss the best ways to preserve profitability and protect future growth.

CFOs can be an important source of leverage for overtaxed CEOs as well. For example, if the CEO has been taking the lead on deciding who stays and who goes, CFOs can step up their participation and help shoulder some of the emotional burden. We partner with one CFO who has forged a closer relationship with his CEO by bringing a more expansive set of data to difficult people decisions, allowing for more targeted cuts. A tighter CEO-CFO relationship also provides a stronger foundation on which to build when the economy begins to stabilize.

Out: Despite uncertainty around the short- and long-term repercussions of the COVID-19 crisis, pockets of opportunity exist in many sectors. CFOs need to arm their boards and investors with rich scenario planning that covers base case, worse case, and disaster scenarios – along with analyses of potential upside. Today’s fluid environment means that CFOs also need to ramp up communication of issues and leading indicators, so they can help boards and investors understand when they may need to change course. We see CFOs updating financial plans more frequently – in some cases daily – to catalyze discussion and ensure mission-critical decisions are informed by the most relevant data. CFOs also have an important role to play in working with their CEOs to pre-wire board members and build support for their agendas.

CFOs have an important role to play in working with their CEOs to pre-wire board members and build support for their agendas.

We recently spoke with a director of a private-equity-backed business who was impressed by the active role the CFO played in helping the PE firm re-think its value creation plan. Not only did the CFO schedule weekly touchpoints to share the most recent numbers and adjust forecasts, he also was “a rock” when strategic debates got heated, openly acknowledging the stress the board was under and helping reframe the discussion and steer it in a more productive direction.

Tapping External Networks

This is a good time for CFOs to tap into external networks as well. Even a half-hour a week checking in with colleagues in other industries can equip CFOs with fresh perspectives on ways to drive value from the Finance seat. One Fortune 200 CFO told us that he had reached out to some of his connections for the first time in years, just to see how they were holding up. Not only did these conversations give him ideas to try at his own company, he found it unexpectedly cathartic to hear that he was not the only one struggling with the stress of being responsible for the financial health of a business in such a challenging environment.

Across: CFOs should also invest in relationships with their peers, business unit leaders and CHROs. Business unit leaders need a sounding board to think through creative and practical solutions for thorny operating and commercial challenges, and CFOs play an important role in highlighting guiding principles, decision rights, and tradeoffs between competing options. One business unit CEO partnered with his CFO to optimize pricing as immediate customer demand declined, which required striking a careful balance between long-term market positioning and short-term profit.

Close relationships with the business units are also a two-way street, yielding better information flow that can improve the quality of scenario planning and forecasting. Another CFO tapped his internal network for perspectives from the front lines to better calibrate the risk of continuing with investments underway. As a result, the COO could move forward with confidence on two capital-intensive projects rather than shutting them down out of an excess of caution. In contrast, a weak link between the CFO and a business leader can slow the pace of decision making and impede execution. This was the case for a divisional leader who told us how frustrated she feels with having to reach out to the CEO for decision support because the CFO is so unresponsive.

A Three-way Partnership

Another must-have relationship is a tight three-way partnership between the CEO, CHRO, and CFO. As businesses evaluate layoffs or cuts to compensation, CFOs have an important role to play in bringing the best options forward in partnership with HR, balancing the tough calls to protect the enterprise with empathy and care. One executive leader praised her CFO for the “practicality, creativity, and lens of humanity” he brought to crisis management. Another CFO restructured bonus plans to tie payouts to a three-year performance period instead of annually, allowing the company to save cash in the short term while still fairly compensating employees who perform well over the medium to long term.

A weak link between the CFO and a business leader can slow the pace of decision making and impede execution.

Down: Finance team members are now working from home without many of their usual touch points with colleagues. They are also learning new skills in real-time (e.g., closing the books 100% remotely) while caring for family members. Thoughtful CFOs take the time to show compassion and adjust to the new realities of working from home. One public company CFO avoids scheduling meetings during lunch so team members can take a break and eat with their families. CFOs can also better understand and support their teams by staying connected – for example, opting for shorter but more frequent interactions, to keep an eye on morale and gather key intel on business trends. They talk about what they know, what they don’t, and when they will have new information.

To optimize their teams, smart CFOs are attuned to which team members can sustain performance or take on more, and who needs additional support or would benefit from a lighter workload. They know they must be both courageous (e.g., willing to make difficult decisions) and strategic (e.g., knowing whom to let go and whom to retain) as they evaluate their teams. They also take active steps to promote psychological safety – which is a leading predictor of team performance, as Harvard professor Amy Edmondson writes in her 2019 book, The Fearless Organization. This ensures that people are comfortable voicing questions or concerns. Framing key challenges as learning problems vs. execution problems (e.g., ”We can’t predict the future so everyone must learn”), openly acknowledging their own fallibility (e.g., “I may miss something, so I need to hear from you”), and modeling curiosity are all ways to encourage healthy candor. We work with the CFO of a private equity portfolio company who explicitly asked his team to help him keep multiple balls in the air by calling out issues he might inadvertently let drop. This was one of the first times in his career he had admitted to anyone that he needed help, and to his surprise it almost immediately created a stronger bond with his team.

While there are no silver bullets for COVID-19, CFOs have a pivotal role to play in guiding their organizations through this crisis and positioning them for future success. Close relationships with the CEO, other leaders and their teams are as important an ingredient for CFO effectiveness as managing cash and ensuring liquidity. Intensifying their focus on relationships can help CFOs optimize business performance while minimizing organizational disruption and laying a stronger foundation for the health of the enterprise.

CFOs who invest in deepening and broadening their relationships will emerge as even more capable leaders as they learn to engage with colleagues for maximum impact.

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