Key Leadership Skills for Corporate Finance

What’s your definition of a great leader?

by Rick Telberg

With the financial meltdown of 2008 and the ensuing credit crunch, Corporate America has been rocked to its foundations by a crisis of confidence, requiring a new era of smart and principled leadership.

We’ve been asking CPAs and finance executives to explain a little about the hallmarks of good leadership in today’s finance organization. It’s still too early in the research to report any statistically significant results, but your comments have been interesting and enlightening, to say the least.

Here’s a sampling of the comments we’re getting:

What do some leaders do wrong?

• Easily swayed by those who speak loudest and longest.
• Bureaucratic, reactive, de-motivating.
• Main owner would rather retire than lead.
• Lack of leadership, too much focus on group consensus.
• No real leaders are willing to put themselves on the line for the decision.
• Too much second-guessing of every decision and often decisions are changed multiple times before coming to a final conclusion.
• Poor leaders do not consult or value the opinions of others; they tend to put a very heavy emphasis in upwards communication and a low emphasis on downwards communication.

And what do the best leaders do right?

• Set objectives, set strategy to achieve the objectives and delegate responsibility to execute the strategy.
• Innovative, problem-solver, talk-to-action.
• Someone who sets a strong example for others through their own actions and isn’t afraid to fail in the process, while bringing consensus among the group in a diplomatic and politically correct fashion, as often as possible.
• One who can both envision the total enterprise and understand what that total is comprised of.
• A leader has a vision of direction for the organization and motivates members to move toward that vision.
• Someone who inspires people to achieve a common goal that is understood and believed in by all.
• A clear understanding of the goals, then communicates and motivates the staff to accomplish the goals.
• One who listens and communicates well across the organization. One who inspires the organization to reach well-defined and communicated goals.

“Most companies these days are run by ‘technical’ managers not leaders,” says Richard M. Luthman, who runs his own financial management company in Dayton, Ohio. “Leaders inspire workers to ‘go beyond.’” He admires George Patton, Ronald Reagan and Lee Iacocca, adding, “Leaders quite simply care more about those who work for them than they do for themselves.  Not surprisingly, that kind of leader is revered. The ‘technical’ managers are quickly forgotten.”

At a large government health-services provider, one finance manager shows what can go wrong: “A new CFO has brought in somebody he knew to fill the director of finance position. The competition to fill the position was a foregone conclusion, which was counter to the stated organizational belief in succession planning. Now there are way too many rumors as to what changes are coming and far too little communication to even senior managers.”

At a mid-size company, another finance manager complains: “The leadership group does not promote professional growth.  They give assignments to individuals [who] provide them with gossip.  They do not take the time to train employees or to get to know each individual.  They update and change schedules without explaining or teaching why the changes were necessary.  They do not praise successful assignments but berate when something goes wrong.”

This CPA manager continues, “A leader is someone who guides and teaches but allows you to incorporate your style into your work.  A leader has a ‘hands-off’ approach, is not controlling or narrow minded.”

But here’s another lesson that can be drawn from these comments: Leadership responsibilities and opportunities are not necessarily limited to those with a title or a corner office. In fact, in a truly professional workplace, every CPA can — maybe should — be a leader. Your colleagues and clients, supervisors and stakeholders are looking to you for your competence, your integrity, and your advice.

In these turbulent times, CPA leadership is needed more than ever.

Copyright 2009 AICPA.

Posted on December 3, 2009