What Makes A Great Leader Today?*

Thousands of words have been written about leadership and some of the finest minds in the world have tried to capture the key attributes.  Our reading and experience pushes us towards three main conclusions – leadership behaviour is context specific, great leaders adapt to changing circumstances and everyone should see themselves as a leader.  We would like to see more to be written about the leadership requirements of CFOs which is why we enjoyed Charles Holley’s article for Deloitte, which talks about their responsibilities as communicators, influencers and change agents before more functional responsibilities

Founders and CEOs are usually the focus of media attention but at all levels there is always the danger of confusing charisma with competence, or a style that fits specific circumstances, with leadership qualities for the long term.  We broadly agree with Dr Tomas Chamorro-Premuzic that competence, humility and integrity are attributes of exceptional leaders more than self-confidence, narcissism and charisma.  The former mark out our very best candidates and reflect the personal characteristics we encourage candidates to build and emphasise as the foundations of their careers.

We don’t claim to be at the rarified end of research into the subject of leadership but we have seen, through running departments and recruiting for dozens of companies, what can work.  This blog touches on pinch points in company lifecycles where optimal recruitment of finance professionals is essential but can be compromised.  The thoughts and references in this blog also provide insights for any individual looking to grow as a leader or facing the challenging of building a team.

Realities of Today…Unknown Possibilities of the Future

When Archie Norman joined a major UK retail business as CEO it was on the verge of bankruptcy, but three years later celebrated its turnaround and became a Harvard Business School Case Study.  His thoughts on his role as leader at the start of that journey were primarily directional – “a defeated army needs to know which way to march” – and reflective – “give yourself time to listen”.  He suggests that the core leadership team can only be three or four people but must develop a more widespread culture of people taking individual responsibility to drive the business forward.

A major corporate turnaround is an extreme business situation but start-ups often carry the same elements of risk, uncertainty and potential reward.  Different investors look for varying qualities in a founder and while these will often be about knowing “which way to march” they may not be as focused on building a team or listening hard to alternative views.   But all successful start-ups reach a stage where they have to add talent that will enable them scale up and this is where the problems can start.

Harvard Business Review talks about founders needing to be “willing to pivot their leadership approach” but it’s not unusual to find that the founder and team which got a business started, broke things, moved fast and worked hardest is incapable of scaling and maturing.  A lot has been written about the role of CEO in these transitions but chief finance officers who start with a business are not always able to move on to the next stage as the challenges of  compliance, public reporting regulations and other stakeholder replace a breakneck dash for growth.  Many articles giving advice use the words “finance leader” and then focus on technical details rather than finance professionals as leaders at a transformational moment.

Techcrunch gets it about right when number one, two and three on the list of CEO priorities before an IPO relate to the CFO, finance team and finance systems.  But attracting top talent from a secure role, where they are well remunerated and highly valued, to enter a more speculative environment with fewer support mechanisms can be difficult. Some clients automatically seek the comfort of what they think is the safest bet and think of candidate CVs with names like Goldman Sachs, McKinsey, Harvard and Princeton on them, rather than addressing the job they need doing and the personality to do it.  What is often needed could be summarized as “PhDs who can win a bar fight” although the author of those words was talking about special forces recruits.

In some ways, prepping for an IPO, acquisition or rolling out an ERP can be likened to a financial combat zone where outstanding technical ability, problem solving capacity and calm assurance under stress are all vital to completing the mission.  Whether it’s the CFO or functional finance leaders a step below the board we advocate for individuals who can adapt and adjust to circumstances without compromising on the types of personal standards that characterize servant leadership.   What we see at interview is that individuals who have these qualities are more than able to demonstrate their confidence and self-belief in a way which can reassure even the most charismatic and off-the-wall founder.

Not for the Comfortable Predictability of Yesterday

Another tricky life-cycle moment for businesses is when they have reached a stage of maturity and are in danger of sliding into “business as usual complacency”.  Frigo and Madden’s work on Strategic Life- Cycle Analysis:The Role of the CFO does a good job of describing some of the management tools available to extract long term value from a business but is short on the leadership challenges that must be overcome.  Making fundamental changes can be challenging for internal appointees and is as much about leadership as technical ability which may be why recent research suggests that 80.5% of CFO hires are external appointments.

The intersection and importance of digital and financial transformation means that most ambitious professionals recognize what McKinsey call ‘the new CFO mandate” in terms of change management.  But it is the leadership qualities needed to take companies through significant reorientation that leads so many organizations to look for new blood.  These are circumstances where breadth of experience, exposure to risk, operational delivery and collaborative working become vital in a successful appointment.

The point is summed up neatly by the notion that “Getting to CFO is 80% functional/technical and 20% leadership skills. Once in the CFO chair this equation is turned on its head.”  But Korn Ferry have identified “the right brain leadership gap” in CFOs which is likely to impede their success and any ambitions they might have to become CEOs.  They point out that finance professionals would do well to take career risks, have new challenges and diversify experience if they want to sit in the top chair.

They also need to learn how to build and manage teams which are not simply providers of financial processes and systems.  This means having a close focus on the team’s attributes, actions and characteristics while keeping a check for the signs of a dysfunctional team.  Team building is a skill that the best leaders set out to learn intentionally and where they recognize that external input can be a useful support to challenge any biases, blind spots or lazy thinking.

We have previously commented on CFOs that exemplify this approach and have been fortunate to work with many who demonstrate their leadership qualities  Their wisdom usually comes from breadth of experience gained from taking risks and being faced with unexpected challenges, although we are conscious that too much job hopping can be seen as unproductive.  They are also relentlessly inquisitive and curious in their pursuit of new insights, theoretical foundations and knowledge from outsiders or different sectors.

The focus in this short article has been about leadership and reflects our experience of working with companies to recruit senior finance talent at moments of stress and fundamental change in the organization.  Another of our interests is the role of leader/managers of finance functions and of the ways in which highly specialized finance professionals need to consider themselves leaders if they are to secure the best outcomes.  We will return to these areas in future articles but for now wish everyone a happy and healthy Thanksgiving.

Notes

*We have read and watched many thrilling points of view about leadership and chose to title and sub-title this piece with words from the Roselinde Torres, TED Talk, What It Takes to be A Great Leader, on the subject.  We recommend following all the links in the article but this one takes you to a pithy, powerful and closely reasoned nine minutes on the subject.

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