There are six key drivers of transformation success that CFOs must know, said EY when releasing results of its research in collaboration with University of Oxford’s Saïd Business School.
While at least three-quarters of CFOs surveyed said they have experienced at least one underperforming transformation in the last five years, many CFOs still don’t understand that buy-in from staff is a critical factor in determining the success of transformational programs, the firm noted.
According to EY, the research shows that successful transformation leaders are more effective at managing the stress and pressure on the workforce, and that by mastering six key levers, they increase the likelihood of a successful transformation by a factor of 2.6 — from only a 28% chance of success up to 73%.
Six key drivers of transformation success
EY has the following key drivers of transformation success that CFOs must be aware of and take actions. Today we focus on the first three of them and tomorrow the rest of them.
Inspire: create a vision that speaks to all and defines a compelling “why”
Leaders may fail to fully recognise the importance and the symbolism a vision can have in triggering and inspiring a sense of purpose.
Because of this, the time and money organisations spend on collaboratively creating a vision is often wasted. Nearly half of the finance workforce impacted by an unsuccessful transformation state they didn’t understand the leadership vision.
CFOs do not always value the power of a shared purpose in inspiring teams. They sometimes need help challenging their personal biases and sense of what motivates others.
In the absence of a personal connection, individuals often reach negative conclusions around intent, resulting in an unwillingness to engage in — and sometimes active resistance to — the objectives of a program.
CFOs must always keep the human element of transformation in the forefront. It is crucial for leaders to have a clear understanding of what is going to happen, as well as the impact on individuals and groups.
Typically, CFOs think in terms of program milestones and organisational goals rather than individual journeys or personal milestones. CFOs need to invest in a narrative that addresses individual journeys to help staff members take ownership of their roles, removing anxiety that can come from feeling a loss of control.
Lead: develop an empathetic and authentic leadership style to build alignment around the finance vision
Successful transformation requires leaders to exhibit determination, courage and empathy, particularly around the workforce’s expectations and priorities.
While clarity of purpose is necessary to drive the momentum, CFOs also need to demonstrate empathy and draw direct links between the transformation vision and the positive outcomes for the organization and workforce as a whole.
This is not always easy for senior executives who have grown up mastering a technical subject and have been trained to show self-confidence and certainty when explaining plans and outcomes to stakeholders.
Communicating to teams how a transformation is going to impact them requires a very different playbook.
EY’s research shows that finance function leaders need to reflect on their leadership skills.
Two-thirds of the finance workforce did not agree that leadership understood the needs of the workforce.
Similarly, finance function employees were less positive about their leaders’ ability to demonstrate effective and inclusive leadership than finance leaders themselves, with only one third (33%) of finance workers agreeing that finance leaders made timely and tough decisions under pressure versus nearly half (47%) of finance leaders.
Care: deliberately build a supportive environment for teams that feel their jobs are at risk
Successful transformations take people on the transformation journey, achieving buy-in and commitment along the way.
While leadership is important, a participative transformation culture where everybody feels fully engaged in the journey is even more important. Yet in our survey, while 46% of finance leaders said they accepted ideas from junior personnel, only 31% of finance workers felt leaders listened to them.
CFOs need to work hard to enable psychological safety and support to staff through what will be an emotional journey for many.
This can be done through active listening, demonstrated empathy and constructive problem solving.
People want to feel as if they are part of something bigger than themselves. And they need to feel empowered to voice their opinions.
To this end, it is important for CFOs to be actively seen listening and responding to staff feedback.
Sometimes this can be as simple as acknowledging the pressures finance teams are under and the volume of work they’re being asked to do both for the transformation and as part of their day-to-day activities.
There can also be a disconnect between the impact of change from the perspective of the CFO and the finance leadership team versus the impact on middle managers and the teams working beneath them.
This is where honesty in communicating what may be changing is essential.
Finance teams will feel more supported the more transparent CFOs can be about the changes and what they mean, the expectations of middle-management’s role, and the relative balance between the opportunities and the risks.