CFOs have to quickly establish effective relationships with the CEO, the audit chair, the board, peer executives and staff members as they advance their agendas. Failure to master any one of these relationships, a report by Deloitte suggested, can handicap the very agenda the CFO is trying to advance particularly when it comes to stakeholders.
According to Ajit Kambil, global research director for Deloittes CFO Program, there are a few key principles that will help the finance team avoid relationship pitfalls and help them win over critical stakeholders.
These principles include asking upfront what stakeholders want, knowing what currencies can be used to influence without authority and understanding differences in communication styles and thus adapting communications to the personalities of individual stakeholders.
Kambil found in his research that new finance chiefs often undertook listening tours to understand what stakeholders wanted. These conversations were seen as vital to establishing relationships and to addressing any legacy issues a company may have. But despite these conversations, some CFOs often run into roadblocks due to a lack of information.
Read more about stakeholders:
- Stacking the odds in your favour through effective stakeholder engagement
- How to balance your director duties with stakeholder management
- Stakeholder relationships: Why they should be managed
“Understand that what stakeholders say they want may not express their entire universe of so-called wants,” Kambil said, parting with some advice for finance leaders. “For example, a business-unit leader may say he needs better information and support from finance to create budgets or make investment decisions. But his true want may be ‘to be really listened to’ by the finance organisation; or he may want finance to ‘help support the personal initiatives he believes will advance his career.’
“If the stakeholder runs a shared services unit, he or she may want to ally with you as the finance leader to advance the common agenda of shared service units like finance. By understanding stakeholders true wants, CFOs can identify the currencies they can use to gain support and sponsorship for their agenda.
“And know that what key stakeholders do not want is as important as knowing what they want. Imagine an entrepreneurial CEO who hires a CFO to help build better processes. The CFO dutifully designs those processes only to find the CEO reluctant to implement them. To the CEO, the processes he/she thought they needed undermine the collaborative, entrepreneurial approach to problem solving prevalent in the organisation.
“In the quest for efficiency, the CFO misread the importance of the existing culture and values because he didnt know what the CEO did not want. Thus cultural due diligence and finding out what key stakeholders do not want is as vital as discovering what they want.”
As keepers of the purse strings, CFOs have some power. But in most companies, the CEO has final operational authority. Thus, to successfully drive change or accomplish priorities, CFOs must master the art of influence without authority. Once they know what key stakeholders want, Kambil claimed, they need to determine what currencies are available to trade for influence and support of key stakeholders.
Some currencies are often at the CFOs disposal, such as the ability to provide resources, aka people or investment capital in a stakeholders agenda.
Effective communication is the foundation of influence. But being truly effective at communication requires adapting your style to the personalities or cognitive styles of different stakeholders.