Finance Leaders & Their Impact On The Company

Finance Leaders & Their Impact On The Company

Based on my experience and observation over the two decades of my career, there are three kinds of Finance leaders – 

1. Leaders who Question everything and just follow rulebook without any deviation. Let’s call this leader as “Bureaucrat”.

2. Leaders who follow the rule book and laydown rules to support compliance and facilitate business around the rule book. Let’s call this leader as “Tough Facilitator”.

3. Leaders who just follow what CEO and other leaders want. Let’s call this leader as “Jovial Leader”.

The first category of Finance leaders as mentioned above, typically follow the rule book. As long as the rules are followed they simply approve the decisions. It’s highly immaterial if strict compliance is impacting business performance. All that matter is, deliver within the policy framework. If the framework is not supporting don’t deliver.

Typically in such organizations, please are quite relaxed in their functions and knows the rule book by word and organization normally records growth year on year close to industry average or just below the average. These organizations will not have the zeal to chase something which is new or innovative. These organizations are happy to produce what they already producing and innovation will be very low. People once join the organization they normally spend decades there itself and retire ultimately there itself.

Any crisis like COVID 19 will make the organization die also serve the employees unemployed forever. These people most pessimistic in life and are typically risk-averse. Most of the time they talk of destiny and want to lead life as per a preconceived plan in their minds. Any unforeseen circumstances will uproot them and the organization too. These kinds of leaders in the company will typically have one or two godfathers who also typically believe in go by the book.

In this category companies typically characterized by the stagnation or average growth in a niche market, employees without much global corporate exposure, organization operating in outdated technologies, Family businesses and the next generation is not willing to join the business or even the next generation comfortable with existing people and growth path. Compliance with laws will up fully met and Finance operates as an isolated department in the company. 

The Second category finance leaders are very tough to handle. They try to understand issues and facilitate the business within the rule book of law. These leaders typically never give in to follow unethical means and will have very limited admirers in the company. They ensure the plans are executed and organization grows as per plans. However, companies and CEOs who believe in short cuts and high jumps by hook or crook will not like this kind of finance leaders and rather they work rigorously to ensure they leave the company. These kinds of Finance leaders ensure organization if full proof in terms of risk exposure in the compliance side, investment risk side and execution side. They bring overall accountability. If you look at their careers they are achievers in their space and companies grow across in their time. If you talk to any employee in private you can feel the admiration towards such leaders. The normal conversations with them limited to business and very small scope for conversations outside the business. They come out openly in meetings with issues and suggest solutions too. These kinds of leaders believe competency is measured by performance and results only. So they try to bring performance culture to the company and they don’t accept nonsense in the system.

These kinds of leaders typically drive companies up to date on compliances, ensure visibility to leadership on returns and performance on investment and provide visibility on the growth path and highlights and inform all the predicted unpleasant occurrences too. It needs full maturity and competitiveness to hire and work with such leaders. Only companies that acknowledge these kinds of leaders will grow in the long run.

At last the third category of finance leaders who are liked by most members of the company because they never resist anything. To put simply, they are “YES” masters. These are the people who trump on allowing what makes others happy rather than what is required. When there are deviations, these kinds of leaders will rather suggest how to change the documentation to cover up the deviations. This keeps the employees happy. These kinds of finance leaders never question the leaders or disagree on any decisions or proposals. They typically agree to implement anything and everything which is decided by the superiors. The companies you look at more of noise than real stuff. Typically many startups will have such kind of leaders as CFOs. These kinds of companies die over a period of time. These kinds of leaders are liked by the CEOs and most others in the leadership team for accepting everything and not questioning.  Under this category of leaders company will have a huge backlog of compliances to meet, massive compliance issues that will come out later during the time of tax assessments.

In the third category company on the verge of collapse sooner or later but no one really bothers but all want to relax and enjoy the things as long as they stay. There will be personal bonding with the leaders under such setups. In the third category, you find the finance leader just appraising others all the time to win their acceptance.

So, if you are a CEO out there, do hire a Finance leader who falls under the second category as mentioned above. It’s very important to have a professional disagreement on issues and a leader who gives you honest feedback on things even though at times they are against your expectation. CFO or Finance leader is your true sounding board in the company and it is very important you hire a person who is competent and honest in his or her approach in leading the company.