“The leader has to be practical and a realist, yet must talk the language of the visionary and the idealist.” —Eric Hoffer
This is an apt quote for the month that ACCA South Africa looks at transformation and what makes it successful.
Leading the transformation of the finance function has two critical leadership roles – the CEO and the CFO. According the ACCA report, Transformation Challenges in Finance, it might be assumed that leading the change should be the CFO but the CEO has a role to play too. That role is dictated by the type of transformation.
Accenture’s Julie Spillane believes that whether the CEO needs to be visibly involved depends on how profound the change actually is, but she expects the CFO to act as the functional sponsor for finance change. And therein is the key to the differing leadership roles of the CEO and CFO in finance transformation.
The CFO’s role in transformation will always be functional whether the stimulus is functional transformation, profound business transformation, transactional processing transformation, or a move to the Global Business Service Model.
The CEO’s role in all facets of organisational change varies from championing the change – being seen as a visible sponsor, to underscoring that participation is not optional, and at the very least to determine the rules of engagement. According to Irish Water’s Colm Darcy at the very least the CEO should act as the chief cheerleader, saying with his / her leadership “Now that we’ve made that change how do we want one another to work together, what are the rules of engagement, how do we treat one another, how do we talk to one another, how should our leaders act?”
The common thread in the leadership roles of the CFO and CEO when it comes to finance transformation is an often undervalued quality and one that is key to the success of any transformation – effective communication. Finance leaders are required to run their finance operations as cost effectively as possible, create high quality stewardship and controllership and generate critical financial and data insights that assist the CEO and the organisation to make accurate commercial decisions in what is an increasingly complex and volatile environment. According to ACCA’s collated report called Transformation Challenges in Finance, finance leaders acknowledge that the best stimulus for change is top-level sponsorship.
In the report, Chris Gunning states that the CFO is the sponsor of any finance delivery transformation, but without a mandate from the CEO, transformation is destined to fail. According to ACCA’s report, CEOs need to be visibly involved while CFOs are expected to act as the functional sponsor to create a ‘burning platform’ for finance transformation.
The Project Management Institute refers to change leadership as sponsorship and say, “Sponsors play a critical role in effectively integrating project management and a disciplined approach to change management that dramatically improves the odds of a successful project implementation. The sponsor plays a key role by promoting and sustaining the focus on the project’s critical nature and its urgency as well as by coaching employees and executives and, finally, by communicating a shared sense of the need for change.”
We can see that effective communication is not just talking about a topic at hand. Communication in terms of transformation is effectively driving change within the all-important change management programme, according the leadership role defined by organisational position.
Finance transformation is a formula. Its success is the sum of leadership, communication, and an effective change management programme.