(Note: This continues our series of blogs highlighting individual functions in an organization and how their operations within workplace culture can either promote or hinder the achievement of desired outcomes. This blog showcases the insights of Culture Partners CFO, Stephen Wright.)
The delivery of desired results depends on how well you manage workplace culture. Do people understand the strategic impact of their roles? Are they equipped with what they need to collaborate, make decisions, and perform their jobs effectively? When all that is addressed properly, the CFO function is better positioned to improve financial results—benefiting the organization, employees, and stakeholders alike.
But saying that and doing it are two different things. According to Stephen Wright, CFO at Culture Partners, there can be widespread confusion about which results matter most. In many organizations, Marketing has defined the results its team is focusing on while Sales has its own key metrics, and still other measures may be in place for gauging performance in Operations or other areas. In this scenario, you could have hundreds or thousands of people from different teams unintentionally working at cross-purposes. And that can lead to behaviors and decisions that waste time, misallocate resources, and add to costs, like these examples:
- A salesperson who discounts excessively to meet quarterly quotas without considering specific revenue goals or sells highly customized offerings that now require the Product team to engage in a significant and costly effort.
- Client-interfacing managers who go out of their way to accommodate clients and fail to gently, but firmly, push back when requests increasingly go beyond scope.
- Accounts Payable clerks who may be so focused on processing a specific number of invoices by week’s end that they may overlook opportunities to save the company money.
“Collectively and over time, these situations can undermine your organization’s ability to achieve financial goals. And in any one of them, employees might have made better decisions if they thought about how what they’re doing or not doing impacts EBITDA,” says Stephen.
The Importance of Alignment and Feedback
The fact is almost every decision in an organization impacts EBITDA. This reality makes it all the more critical for leadership to agree to and align on the highest-level results, or what we call “Key Results,” that everyone rallies around. From this level of clarity, leaders then need to identify and communicate how each specific departmental goal connects to a particular Key Result. In this way, they can provide greater guidance and focus to employees and ultimately boost performance in their respective functional areas.
Achieving this alignment is a major step forward, yet optimizing results can’t be done without regular feedback, especially when there are faulty perceptions about finance. “Because finance is the underlying language of business, CFOs often believe other leaders in their organization have comparable financial knowledge and maintain the same laser-like focus on EBITDA,” explains Stephen. “And while many leaders may strive to do so, they may be more focused on building client relationships or delivering new solutions—and less adept in certain aspects of financial operations.”
For these reasons, asking for and providing leaders of other functions with regular feedback will yield insights into what different teams may not understand when interacting with Finance. It will also provide opportunities to continually align and improve processes to produce the best financial results. What’s more, this regular sharing of feedback brings Finance out of the back office and provides greater visibility into the value it can deliver to the organization.
Prioritizing Culture Management
Just like establishing and driving toward the same Key Results is fundamental to shifting your culture, so is regularly employing a feedback mechanism. But how can you tell if you’re headed in the right direction on a daily basis? Like other leaders, CFOs need to prioritize culture management by looking for tell-tale signs of progress. Are they seeing greater employee engagement? Are people shifting the way they think and act to achieve desired results? Are they making direct connections to how their role can impact EBITDA?
But it’s not just about how members of Finance teams are performing. It’s about what CFOs can do to foster desired behaviors by modeling the changes they want to see. For example:
- Are CFOs demonstrating alignment through greater collaboration and communication within Finance and with other functions?
- Are they keeping the Finance team apprised of where the business is going and what they need to do to help the organization get there, especially when there’s a change in strategy?
- Are they engaging in feedback at every level, even with external stakeholders, to gain insights into how to improve results?
According to Stephen, an unwavering commitment to culture management is what makes the difference. “When CFOs continually step up in this way, they can make significant progress in accelerating the changes needed to transform culture,” says Stephen. “And that’s how they’ll help achieve the organization’s Key Results and long-term goals.”
