One of my favorite pastimes is watching The Food That Built America on the History Channel. Before you ask: Yes, I mostly watch it because I love food. But I also enjoy the many intriguing journeys food industry companies like Wendys (S3.E7) and their founders took to find success. More often than not, that success hinges on those individuals’ financial leadership as much as it does their culinary creativity, innovative business mindset, and stubborn persistence. Therein lies a truth that transcends pretty much every industry: A business can’t grow and thrive when its financial house is in disarray.
True financial leadership demands exceptional management skills and a metric ton of foresight. A financial leader works closely with sales, marketing, and finance teams to ensure consistent cash flow and robust financial performance. While the Chief Financial Officer or CFO is typically the primary financial leader within a company, that individual isn’t alone. Multiple individuals within a company can exhibit financial leadership in ways that significantly impact the organization’s bottom line.
In this post, we’ll help you understand a bit more about what financial leadership means, common traits associated with this leadership style, and how to develop yourself (or others) to take the lead.
What Is Financial Leadership?
Financial leadership focuses on the financial success and health of an organization. Companies that take constantly stay on top of their financial health find a smoother path to growth and profitability. An organization’s stability and viability are on shaky grounds when it doesn’t have consistent revenue growth and a clear path toward profitability.
Finding the right leader takes time
This is why selecting the right individuals for key role financial leadership roles is critical for a company, and why it’s something that often takes time. In fact, in a 2023 blog post on the website CFO Brew, Kristen Talman writes that hiring a CFO can take up to 4 months once the search has started.
According to executive recruiting firm Pixcell, getting to the point of selecting an executive can take 7 to 14 weeks (or up to 3.2 months), meaning the CFO search tends to be one of the longer executive searches for a company.
Yet financial leadership isn’t just about one leader
Note that financial leadership is not restricted to the CFO or even the Chief Revenue Officer (CRO). Other inidviduals within the company whose actions will directly impact a company’s revenue include:
- Vice President of Sales: Manages the sales team and strategies.
- Sales Manager: Directly manages sales representatives.
- Account Executive: Conducts direct sales.
- Business Development Manager: Seeks out new opportunities and partnerships.
- Chief Marketing Officer (CMO): Oversees marketing strategies and implementation.
- Marketing Manager: Implements marketing plans and campaigns.
- SEO Specialist :Optimizes website and online content to drive organic traffic.
- Digital Marketing Specialist :Manages online advertising and digital channels.
And that’s just the short list. Direct and indirect impacts on a company’s finances all matter. That’s why there’s a common phrase in the business world that often gets repeated by leaders: “Everybody sells.” An extension of that is a concept I taught during my years as a high school English teacher: “Everything is persuasion.”
Financial leadership can happen at any level within a company, because everyone working at a company can and does play a part in ensuring the company sells its product. Even junior-level employees in roles outside of sales and marketing can impact the financial success of the company by being positive and effective represetnatives of their organization they work for. The simple act of being a good person makes that math pretty simple:
Awesome Person + Works for Company = Positive Public Perception.
That’s why companies are often quick to fire employees who started trending on social media for bad behavior. Public perception is everything, and if the public thinks your company hires and supports bad actors, it can kill demand for the product or service. And that kills revenue.
All of that to say: Financial leadership is, in some fashion, everyone’s responsibility at a company, even if the minimal amount of leadership one can take is being a decent human being.
Still, there must be fairly definied roles within a company for leadership over financial matters. Those leaders must collaborate with other departments, make sound business decisions about strategies that impact or influence revenue and profits, and having a visionary approach to anticipate and forecast financial trends. It’s why Summit CPA, a virtual CFO company, calls forecasting a “team sport” and recommends including “both leadership and front-line employees“.
Understanding the key traits that define great financial leadership is essential. Recognizing and instating the right people who can fill role can be the difference in securing a competitive edge and formulating effective financial strategies for the organization.
The Role of Financial Leaders
As we work with the understanding that everyone in an company can play a part in the financial success of the company, those individuals in clearly definied leadership roles will also have distinct duties to perfom. Anyone training to become a financial leader or HR teams hoping to identify high-potential indviduals in a company who can be mentored to take on leadership roles that impact revenue should consider how they incorporate the following aspects of the role into the development strategy.
1. Facilitate collaboration across departments
A financial leader’s purview extends beyond the finance department, necessitating collaboration with various divisions within the company. Although each department operates with a degree of autonomy, they are interconnected through the financial outcomes they influence. By actively participating in cross-departmental initiatives, a financial leader can cultivate a comprehensive understanding of the organization’s financial requisites.
Effective collaboration with leaders from diverse departments equips a financial leader to make decisions that resonate with the unique financial needs of each sector.
2. Educate on the organization’s finances
Beyond internal collaboration, a pivotal role of financial leadership is to demystify not only the company’s financial data but also how the company generates revenue and remains solvent. For numerous entities, financial specifics are either inaccessible or not thoroughly comprehended. It’s the responsibility of financial leaders to clarify these intricacies. By presenting a comprehensible version of financial goals and reports, they ensure organizational-wide fluency in financial affairs.
Companies with a strong knowledge sharing culture tend to be very good at disseminating information. They’ll often create documentation and internal knowledge bases that allow anyone in the company to learn independently, or support open mentoring programs that allow employees to request 1-on-1 development through social learning.
3. Empower employees with financial insight
Financial leaders must also foster a deeper understanding among employees of how their roles influence the organization’s financial health. Implementing the top-down Objectives and Key Results (OKR) business model can streamline this endeavor.
By beginning dialogues with departmental heads and cascading these discussions, financial leaders can instill a cohesive vision aligned with financial objectives. Recognizing and highlighting standout contributors further reinforces the connection between individual efforts and broader financial outcomes.
4. Demonstrate resilience through scenario planning
Modern financial leadership is underscored by resilience, especially given today’s unpredictable business landscape. The paradigm of operation-focused revenue ledaers has seen a shift, now demanding closer collaboration with business resilience planning teams. Scenario planning stands as a cornerstone strategy, enabling leaders to anticipate future challenges and craft contingency plans.
Key Traits of a Great Financial Leader
Excellent financial leadership helps you excel in a highly competitive business world. The best financial leaders possess these important traits and attributes.
1. Visionary perspective
Great financial leadership demands foresight. This role necessitates the crafting of strategic plans and making pivotal business decisions. A visionary perspective allows a leader to visualize the broader landscape, identify opportunities, and set ambitious goals for the organization’s future.
More importantly, it also means gauging and taking calculated risks while avoiding unwarranted pitfalls. Leaders must be able to innovate and rally finance, sales, and marketing professionals and teams behind a shared vision, plotting a roadmap to that envisioned future.
2. Analytical acumen
Financial leaders juggle cash flow, financial data, and reports on a daily basis, making analytical prowess non-negotiable. With the evolution of financial analytics, adept analytical skills are crucial for forecasting, planning, and strategically guiding the organization.
This analytical proficiency aids in identifying potential issues early on, allowing leaders to act proactively. By delving deeper than just numbers, leaders can derive actionable insights to drive informed decisions.
3. Ethical integrity
Ethics and integrity are the cornerstones of exceptional financial leadership. Maintaining moral rectitude is paramount in a realm rife with potential pitfalls and temptations. The best financial leaders prioritize organizational well-being over personal gain, setting a sterling example for the entire entity.
4. Strong communication skills
Effective communication is a keystone for financial leaders. Beyond managing finances, they interact with other executives and departments, necessitating clarity and cohesion in interactions.
Given the myriad inter-departmental collaboration and mentorship needs, robust communication skills are essential to streamline processes and prevent operational conflicts. Plus, as the conveyors of financial insights to various stakeholders, their ability to articulate complex financial data is invaluable.
Resilience and adaptability
The inherent volatility marketing, sales, and corporate finance means resilience and adaptability emerge as pivotal traits. Resilience equips leaders to mitigate risks, ensuring steady cash flows and robust financial health, even amid adversities.
During crises, resilient leadership can be the difference between floundering and flourishing. Simultaneously, adaptability — the ability to pivot in the face of external shifts and devise inventive solutions — ensures an unwavering focus on financial objectives, irrespective of the challenges at hand.
How Mentorship Can Impact Financial Leadership
Mentorship plays a pivotal role in crafting the leaders of tomorrow, and its significance is also profound in nurturing high potential employees who could become your next financial leaders.
Finance can be brutal
The finance industry is marked by its fierce competitiveness. In such an environment, mentors can offer invaluable insights and counsel, equipping emerging leaders with the tools to navigate complex financial operations and challenges. This guidance not only fosters confidence in budding financial leaders but also offers real-time feedback on leadership roles within finance, as well as guidance on sidestepping potential pitfalls.
Follow the trends
One of the standout benefits of leadership mentoring is the continuous exposure to contemporary trends and best practices in finance and risk management. With the knowledge and feedback acquired from seasoned mentors, aspiring financial leaders are better positioned to advance their careers, armed with the requisite skills and experiences.
Neworking is an important outcome
Last but not least, mentorship presents an invaluable networking opportunity. Engaging with mentors allows financial leaders to expand their professional networks, connecting with other stalwarts in the finance domain. Such interactions can pave the way for strategic planning insights and execution tactics. Leveraging these insights can offer a distinct competitive edge, essential for those seeking to ascend the ranks in the world of finance.
Navigating the World of Financial Leadership: Next Steps
From thinking big and analyzing data to sticking to the straight and narrow, great financial leaders need a mix of skills.
The journey to successful financial leadership can, at times, feel like you’re walking through a maze. It doesn’t have to be a confusing and frustrating journey. Mentorship helps streamline the process, allowing anyone interesting in developing their financial leadership skills do so through hands-on, discussion-based, and importantly, social-focused learning.
Sure, you could use ChatGPT to give you a list of marketing, sales, and finance jargon. But a better option, and one that gets better results, is to make that learning personalized and human.
Book a demo today and see why mentoring software is a finacial leaders biggest dream come true with how much money it saves on program development and retention.