Many CFOs know what it’s like to ask a room full of employees if they have any questions — only to be met with deafening silence. Even when the finance chief earnestly solicits queries, employees often clam up. Perhaps they’re not engaged. Perhaps they doubt an honest answer. These days, they simply may be afraid of what they might hear.
“It’s a very difficult setting with the whole company there, with the whole range of company hierarchy. You’re not going to get real questions in that setting,” says Michael Roberto, a professor of management at Bryant University in Rhode Island and the author of Know What You Don’t Know: How Great Leaders Prevent Problems Before They Happen. “Many executives say ‘My door is always open,’” Roberto adds. “But bad news does not come through an open door.”
In this volatile environment, where any insight into performance can be critical to planning and forecasting, how does a finance chief stay in tune with operations and learn what employees really think? How can he avoid the separation from the day-to-day business that so often isolates the executive suite? To learn the bad news, Roberto says, a CFO must walk out the door and hunt for it.
“There are a whole bunch of natural filters in an organization,” Roberto explains. “It’s not because people are necessarily hiding things, but as information moves through the hierarchy of a company, it gets packaged, streamlined, and analyzed.” As a result, the “news” that arrives at the CFO’s desk has usually been cleaned and polished. And distorted.
Laying a Foundation
Creating a culture in which employees feel comfortable speaking up is the first step in breaking out of the trap of executive isolation. Building such a culture can take time, and often results from many subtle signals rather than a splashy companywide push for openness or dialogue.
The budgeting-and-planning process is one obvious opportunity to send those signals. For many employees, it is their most significant interaction of the year with the finance department. Yet it is often a dysfunctional one, and many finance chiefs are guilty of rewarding the overly optimistic or suspecting that bearers of bad news are simply trying to lowball their targets. (This is a problem that Ford Motor has gone to great lengths to address; see “Eat My Dust.”)
“You have to make clear to people that you’re not going to shoot the messenger,” says Roberto. “You don’t want people to feel like they’re going to get blamed or punished for sharing bad news or disagreeing with something. You want the data, and you want people to know that you’d rather hear the news sooner than later.”
Regularly talking with employees and working to build a personal connection with them can also help send that message. Trivial chitchat can blossom into a trusting relationship between CFO and employee. John Currie, finance chief and treasurer at Lululemon Athletica, an athletic-apparel retailer based in Vancouver, works in the company’s stores once a week. Although the effort began mainly as a way for executives to interact with customers, it also helps them get to know the staff at the company’s 119 locations. “We try to spend time in informal ways with the staff,” says Currie. “Coming in and having a stiff Q&A wouldn’t be productive. We might meet them for breakfast or take them out of the store to grab a coffee. We try to make ourselves visible and accessible.”