Aside from the occasional coaching stint, most CFOs’ Little League days are long past, but the lessons learned on those distant summer evenings may hold the key to their future success. Two such lessons — learning to take a leadership role on a team and to collaborate with other team members — are critical for any finance executive who aspires to advance. Whiff on those and the result can be career stagnation.
CFOs face two distinct team challenges: they must lead the finance team as well as play on the senior management team, where the dynamics can be fraught with tension as members compete for resources, the CEO’s favor, and even his job.
Building a strong team is critical because the CFO role is now so varied and demanding that no individual can effectively manage and execute all parts of it alone. Finance executives who hope to put their time to best use — working on strategic planning with the CEO, say, or meeting with large institutional investors — must rely heavily on their supporting cast. “Work is much more complex than it was 10 or 20 years ago,” says Todd Harris, director of research at consulting firm PI Worldwide and an adjunct professor of psychology at the University of Massachusetts. “It’s becoming increasingly difficult for any one person to have all of the knowledge and all of the skills to get his or her work done. This is really driving a need for teams.”
“CFOs need to get results through others,” says Fred Adair, a leadership consultant and former partner at executive search firm Heidrick and Struggles. “The demands on different subfunctions in finance are becoming much greater, and if the CFO has not created an organization with competence at each level, he gets pulled back into the details.”
As an entry point, Adair often asks executives to think about the best sports team they were ever on — from Little League to high-school basketball to intramural Ultimate Frisbee — and try to recall what was great about it. “The answers are always the same,” he says. “People say, ‘We knew each other. We knew what it took to win. We had a common goal. We had fun.’ You need to draw on that experience.”
Taking the Lead
Building and leading a strong team is easier said than done, of course, and that may be particularly true in finance. “CFOs are numbers people,” Adair says. “Building an organization is where they tend to fall down.”
Experts on team behavior cite a few important steps that finance chiefs can take to build better teams. Having the right mix of skills and people is an important starting point, but the nuts and bolts of the team’s processes are also critical, says Harris. The most effective teams establish ground rules for how they’re going to communicate, make decisions, handle conflict, and evaluate performance.
Adair agrees. “So much of the improvement you can make in leadership effectiveness is not through changing out team members or doing rope climbs,” he says, but by specifying “basic agreements about goals and roles and processes.”
The best teams then coalesce around a “point of ignition,” or an inspiring goal or mission, says Lynda Gratton, a professor of management practice at London Business School who has studied high-performing teams. While never easy to come by, such a goal can prove particularly elusive for finance. “In finance, there tends to be a relatively simple vision, like achieving a given return on invested capital,” says Gratton. “The CFO has to think of more-energizing goals.” For example, encouraging the finance team to identify new areas for business development may provide a stimulating counterpoint to months of cost-cutting.
High-performing teams also work across company boundaries, says Gratton. When team members reach out to users of finance information throughout the organization, for instance, better ideas or practices can result. But this, too, can be difficult for finance. “Functions build great big walls around themselves and [each] department becomes like a fortress,” she says.
Highly skilled groups like finance or research-and-development also struggle with what amounts to a language barrier — their technical vocabulary can hinder communication with their colleagues throughout the rest of the company. But attempts to bridge that gap and share ideas prove worthwhile, helping finance staffers raise their profiles and find new ways to contribute throughout the business. Some of the most innovative work in the finance function, for example, occurs when finance works with marketing or sales.
Playing Well with Others
The CFO faces a different set of challenges as a member of the senior management team. A recent study by Adair and Heidrick and Struggles partner Rich Rosen shows a striking gap between the CEO’s evaluation of the management team’s performance and the team members’ evaluation of their performance. While the CEOs surveyed rated their teams 5.4 out of 7 on overall effectiveness, the other top executives studied rated themselves only 4, on average. Management team members also gave themselves lower scores on important executive team functions, including sharing information, building a common culture, strategy formulation, problem-solving, and aligning the organization with the company’s strategy.
“Members of the senior team are not necessarily consciously withholding [information] from each other,” says Adair. “But they are often devoting only part of their attention to the team, while most of their focus is on how their part of the business is doing.”
This is partly because many compensation structures provide incentives for management team members to compete rather than collaborate, says Gratton. With each member jockeying to advance his or her own agenda and score points with the chief executive, team goals often fall by the wayside. Boards often try to address such team dysfunction by hiring a new CEO, when the problem actually lies within the team itself, says Adair.
To reduce such counterproductive competition, Gratton advises companies to consider designing incentives based on meeting group goals. Adair cites a CEO who changed the compensation structure for his top lieutenants to tie their bonuses to the achievement of his own companywide goals, thus encouraging them to work together to meet the company’s broader strategic agenda.
Barring such significant company- or teamwide changes, finance chiefs can improve their own performance within the management team by attempting to see the company through their fellow executives’ eyes, says Adair. “On a good senior management team, everybody feels required to share his or her point of view about other parts of the business,” he says. Perhaps adopting that broader perspective is the best thing CFOs can do to improve their skills as both team players and team leaders.
Kate O’Sullivan is a senior writer at CFO.