No one thinks much about a certain leadership quality, necessary for Chief Financial Officers (CFOs) to possess— until crisis hits. This crucial, but overlooked, leadership quality is crisis management. This is at least as important as financial skills during a time of crisis.
Thankfully, true crises are relatively rare occurrences, but when they do occur, it takes a skilled business leader to develop and help implement a plan of action to help his or her company successfully navigate the difficult road ahead.
This is unfortunately one of those difficult times. Several months ago, when the stock market was making all-time highs, only the rare few could have predicted what has unfolded in recent weeks — companies would tell employees to work from home, universities would close, followed by museums, cathedrals, and Broadway to name a few.
While it’s natural in uncertain times for people to turn to the CFO for definitive answers, sometimes the authentic answer is “I don’t know right now” — quickly followed by, “But here’s what we are going to do.” In a crisis such as today, CFOs need a Plan B — and a Plan C and Plan D as well. In addition, strong CFOs need to be able to guide CEOs in making new decisions in the face of rapidly changing situations and new data.
CFOs often deal with ambiguity. It’s timeless and comes with the job. During crises, ambiguity becomes exponential. As fear becomes contagious across organizations, CFOs must manage their own responses to ambiguity.
How should they do that? By following these six steps of business leadership:
1. Anticipate– predicting what lies ahead
2. Navigate– course correcting in real time
3. Communicate– continually and even over-communicate in crisis
4. Listen– to what you don’t want to hear
5. Learn– learning from experience to apply in the future
6. Lead– improve yourself to elevate others
In a crisis, CFOs first need to meet employees where they are. Naturally, no one is interested in talking about the company’s strategic plan when they’re out buying hand sanitizer. Once their essential needs are addressed, then the focus can shift to strategic alignment, common purpose, elevating others, and even opportunities for growth.
By running the “unknown” of the current crisis against the “known” of previous ones, seasoned CFOs are able to gain perspective, identify patterns, connect the dots, and determine appropriate and timely responses. They apply past lessons to new and unfamiliar situations.
In California, we’re accustomed to earthquakes and know that when one occurs, aftershocks are coming. Other crises also demand that you have to anticipate the consequences of the initial shock. Too often, people don’t consider all the possibilities.
For example: what if travel bans expand, commerce slows, or a liquidity crisis develops? What is the impact on all aspects of the business? What are the implications for employees, customers and investors? Anticipation of certain events can help shape and direct business strategy.
Urgent vs. Important: Day to day, business leaders face a multitude of issues, both urgent and important. It can be difficult to distinguish between the two, especially when crisis occurs. Everything blurs as events and their implications constantly change. What’s important often becomes urgent, and what’s urgent becomes critical. CFOs must delegate the urgent by empowering the CEO and executive management to lead around a common business purpose.
Leave No One Behind: In a crisis, business leaders must connect with, motivate, and inspire employees and show genuine compassion and support.
Amid uncertainty, business leaders need to be hyper-focused on past experiences and synthesize and apply them to real-time, fluid conditions. Clarity comes from finding a close comparison. Is it like the Great Recession? The 1987 stock market crash? The outbreaks of SARS or MERS?
By running the “unknown” of the current crisis against the “known” of previous ones, leaders gain perspective, identify patterns, connect the dots, and determine appropriate and timely responses. True business leadership is creating a “bottom-up” culture of world-class observers to accurately perceive today in order to predict tomorrow.
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