4 Reasons CFOs Must Communicate at a New Level This Year

Chief financial officers (CFOs) that like to keep a low profile no longer have that luxury in most organizations. The pandemic made sure of that by thrusting them into the thick of executive decision-making designed to both stabilize the business in the short term and increase its future resiliency.

But even before then, many finance leaders found themselves increasingly in the spotlight, with their input being sought in many areas beyond the finance function, from IT to human resources.

However, not all CFOs are comfortable with their heightened visibility and influence. And some struggle to understand why they aren’t more successful at adapting to the new expectations of their role. For many of these finance executives, their lack of comfort or adaptability comes down to a communication problem. More specifically, communication isn’t their strong suit — whether they know it or not.

Findings from a recent Oracle NetSuite survey indicate that many CFOs do think they’re good communicators, even though 40% of nonfinancial executives and managers said their company’s CFO lacks communication expertise. Given that most nonfinancial respondents to that same survey believe the finance group is more important now than before the pandemic, it’s a good bet that they would like to see their finance leaders improve their communication skills sooner than later.

If you’re among the many CFOs who have been working hard to improve your communication abilities so you can effectively convey financial data to the CEO, investors, regulators, suppliers and other key stakeholders, these findings are no doubt frustrating. However, communication expectations for today’s CFOs involve more than just being able to tell the story behind the numbers to various audiences, including those with nonfinancial backgrounds.

Here’s a quick look at four reasons — several of which are interrelated — that CFOs need to take their communication skills to the next level as soon as possible.

#1. Employee Expectations

To increase retention, morale and productivity in your finance department, and help drive all of the above within the broader company, engaging in more frequent and meaningful communication with employees is a must. That includes everything from being proactive about discussing the firm’s business goals, to outlining the reasons for significant changes to processes, to encouraging employees to share their feedback and ideas (and responding timely to their input).

Most workers are eager to have a better dialogue with management, including senior leadership. A recent survey found that employees, especially younger professionals, want better communication from management generally, and more than half of employees ages 18 to 34 (54%) reported that they would like their employers to be more transparent in 2023.

#2. Remote and Hybrid Work

In the new world of work, there really is no such thing as overcommunication. If your organization has embraced remote or hybrid work for the long term, management at all levels will need to make a concerted effort to keep all workers, including contract professionals, informed and engaged — and feeling like they are one cohesive team no matter how dispersed they are.

Schedule regular calls with your finance team members to evaluate progress toward ongoing initiatives and special projects, including relevant digital transformation efforts, and stay on top of issues that could undermine success. Whether you’re taking part in a one-on-one meeting with teams that report directly to you or with other groups in the organization, leave time to answer questions and receive comments and suggestions from attendees.

It’s also imperative to make the extra effort to communicate regularly, in person, by phone or video, with your peers, such as the chief information officer and the chief human resources officer. All of these efforts will help to increase camaraderie, elevate transparency and fortify trust at the top, which helps to drive the same throughout the whole organization.

#3. Engagement With the Board

Gartner asked CFOs to list their top priorities for 2023, and “communicating and engaging with the board” ranked third. The firm noted that it was the only priority that didn’t relate to redefining and remodeling how the finance function supports the business for the future.

Marko Horvat, vice president, research, in the Gartner Finance practice, said in a release about the survey that “given all that’s going on” in the world, from regulatory issues to high inflation to supply chain problems, “it’s easy to understand why effective communication with the board is a top priority for CFOs” this year.

The challenge for CFOs seeking to increase engagement with the board will be providing the right amount of information to members on the financial topics and business risk issues they need and want to cover, and ensuring they provide it in a way that’s easy to digest and prompts constructive discussion. Closely observing how the CEO interacts with members during meetings can help you determine the best way to approach increasing your communication with the board.

#4. Environmental, Social and Governance (ESG) Reporting

As a CFO, you’re well aware that many organization are looking to their finance leaders to take the lead on ESG reporting. It’s likely you’ve already been asked to do this at your company, considering that more than two-thirds (68%) of executives surveyed by Accenture said that finance takes ultimate responsibility for ESG performance within their enterprise.

The ESG reporting responsibility is a tremendous challenge, and opportunity, for finance leaders. As ESG disclosures become mandatory for many companies, clear, accurate and timely reporting on ESG issues will become mission critical. CFOs will need to drive ESG accountability, help to create policies and procedures for collecting data, lead the charge on bringing together systems and data, and much more. CFOs that aren’t effective communicators will struggle to even make a dent in this hefty to-do list that involves coordination and cooperation from an array of internal and external resources.

These are only a few reasons CFOs should focus even more on growing their communication skills in the year ahead. If you’re a finance leader who intends to embrace the expanded role of a “chief future officer,” or if you aim to one day hold the CEO title, the stakes are even higher for improving your ability to be an effective communicator.

Regardless of your longer-term career goals, you’ll want to accelerate your investment in these efforts because up-and-coming CFOs are already prioritizing them. Research conducted for a recent Billtrust report, “The DNA of Future CFOs”, found that emerging CFOs are more focused on investing in management and leadership skills like communication than current CFOs. Also worth noting: Even non-CFO members in the C-suite are markedly more invested in honing these skills than current finance leaders, according to the report.

In other words, dismissing the importance of communication skills on your ability to perform successfully as a CFO might put you at risk of losing your position one day. At minimum, your relationships with the CEO and your C-suite peers may not be as productive and positive as they could be if you focused on making communication — beyond reporting on the numbers — a core strength.

 

This article was written by Paul McDonald from Forbes and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to legal@industrydive.com.