MOST Analysis

Mission Statement

This is the second workshop in the Financial Leadership program and is designed to introduce the participants to the Catalyst Competency. We will introduce the three building blocks of the Catalyst Competency, initiative, curiosity, and influence. We will discuss how the building blocks work together to form the Catalyst Competency.

Participants in the workshop will also learn how to recognize when the building blocks are not present and strategies to deal with performance gaps. This will allow the participants to further test the Competency Matrix developed in the first workshop and see if further refinements are necessary. Finally, we will discuss and establish KPIs to track performance as the program progresses.

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Objectives

01. Understand the catalyst competency and how it fits into the Financial Leadership Model: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month

02. Understand and analyze the Curiosity building block; departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month

03. Understand and analyze the Influence building block; departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month

04. Understand and analyze; departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month

05. Understand how the 3 building blocks build and support the Catalyst Competency; departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month

06. Understand the three common performance gaps; departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month

07. Understand how to assess the team and individuals for performance gaps: departmental SWOT analysis; strategy research & development. 1 Month

08. Identify and understand potential strategies for addressing performance gaps: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month

09. Review the performance standards in Competency Matrix and analyze to see if refinements are necessary: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month

10. Identify performance metrics for baseline measurement and future KPIs: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month

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Strategies

01. Each participant is to set aside time to study the elements of the workshop: Each individual department head to undertake departmental SWOT analysis; strategy research & development.

02. Review and discuss the workshop elements related to the Curiosity building block: Each individual department head to undertake departmental SWOT analysis; strategy research & development.

03. Review and discuss the workshop elements related to the Influence building block: Each individual department head to undertake departmental SWOT analysis; strategy research & development.

04. Review and discuss the workshop elements related to the Initiative building block: Each individual department head to undertake departmental SWOT analysis; strategy research & development.

05. Review, discuss and analyze how the three building blocks interact and support the formation of the Catalyst Competency: Each individual department head to undertake departmental SWOT analysis; strategy research & development.

06. Discuss and analyze the performance gaps and visible symptoms the organization is experiencing: Each individual department head to undertake departmental SWOT analysis; strategy research & development.

07. Discuss, analyze and plan to assess the current performance of the team for the Catalyst competency: Each individual department head to undertake departmental SWOT analysis; strategy research & development.

08. Analyze and discuss different strategies for addressing building block performance gaps: Each individual department head to undertake departmental SWOT analysis; strategy research & development.

09. Review and analyze the calibration done in Module 1 for the Competency Matrix: Each individual department head to undertake departmental SWOT analysis; strategy research & development.

10. Review the KPI materials. Analyze and discuss possible KPIs: Each individual department head to undertake departmental SWOT analysis; strategy research & development.

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Tasks

01. Read through the entire workshop and make notes.

02. Schedule time to review and discuss any potential implementation issues with the building block, Curiosity.

03. Schedule time to review and discuss any potential implementation issues with the building block, Influence.

04. Schedule time to review and discuss any potential implementation issues with the building block, Initiative.

05. Determine if any existing infrastructure issues exist. If necessary, update any plans for infrastructure integration for the Catalyst Competency.

06. List the performance gap symptoms identified by the participants.

07. Review and update the competency assessment plan developed in module 1.

08. Update the competency assessment plan.

09. Update the Competency Matrix for the Catalyst Competency.

10. Establish a KPI baseline.
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Introduction

Building Blocks

Competencies in the Financial Leadership Model

If a financial leader wants to build an effective, resilient team that will support them as a financial leader, it is critical for all members of the financial team to have all four of the financial competencies in the Financial Leadership Model.

These competencies are:

Catalyst – The ability to see what and how things need to be done to meet the goals of the company.

Reporting – The ability to communicate on the activities of the company while preserving assets with control.

Balance: The ability to balance different activities and requirements to fulfill the needs of the customer.

The Curve: The ability to use the company objectives to navigate uncertainty.

This workshop will focus on the catalyst competency; The catalyst competency is the ability to see what and how things need to be done to meet the goals of the company.

Building Blocks form Competency

Each competency in the Financial Leadership Model is made up of three building blocks. These building blocks allow us to explore the competency in greater depth and to understand performance gaps that teams experience. For an employee to have a successful performance level of a competency all the building blocks need to be present. The lack of a building block results in a performance gap. When a performance gap exists, the competency cannot be fully utilized, and execution suffers.

The three building blocks of the Catalyst Competency are: Curiosity, Influence, and Initiative. All three of these attributes work together to form the competency. Missing building blocks result in a performance gap. If an employee is missing curiosity, the result is the Assumer performance gap. A lack of initiative results in the Big Talker performance gap. The Steam Roller performance gap is when there is a lack of influence. The building block structure provides a framework for leaders to understand the behaviors they are experiencing. This framework will also provide leaders a communication tool for providing feedback to employees.

This framework also makes it easier for leaders to see performance gaps. Many times, leaders will allow an employee’s work output or strength in other areas to hide the underlying issues caused by the lack of a specific building block. This bias can exist due to not having a framework to measure and gauge the performance of employees. By identifying common performance gaps associated with missing building blocks, this framework provides for easier identification of the missing building block. Once the performance gap is identified strategies are identified to resolve the issue and close the performance gap.

Benefits of Building Block Structure

A key benefit to the building blocks for each competency is the creation of a structure or framework. This creates a tool for leaders and employees to understand expectations and performance. The framework allows for specifics to remove the perception of these being soft issues or a manager’s opinion on an employee’s personality.

The framework can also be used proactively. When managers and supervisors see performance gaps, they can act when it happens. Employee’s can be coached and put back on track. Employees that see a performance gap can have an opportunity to self-reflect and make corrections. When recruiting for employees the competencies in the Financial Leadership Model help to identify employees that already have the competencies necessary to be successful.

The building blocks link together to form the competency and to establish cause and effect relationships when the certain building blocks are missing. These relationships make performance gaps easier to identify and allow for common strategies to be used to eliminate the performance gap. This allows for earlier identification of performance issues and allows for early intervention with employee coaching. All of this will reduce costs, organizational stress and improve teamwork.

Lower costs will also be achieved through more effective recruitment, lower involuntary turnover, and higher productivity. Recruiting a new employee is an expensive process. There is the cost to conduct the search and interview candidates and there are additional costs to onboard and train the new employee. If a company misses on a hire, the cost is even more significant; There is the lost productivity, wasted time, damage to the team dynamics and then you have to recruit again. The competencies and their building blocks help the recruiting process by providing a framework to help select employees that have not only good technical skills but also the soft skills to be part of a strong, resilient team.

Once you have recruited the right team, the Financial Leadership Model provides several benefits to employees. The competencies and building blocks help to communicate expectations regarding what many perceive to be the softer side of a job. Many elements of financial roles are concrete with deadlines and how much work should be done. However, there are expectations regarding teamwork, how you interaction with others and solving problems. The competencies in the Financial Leadership Model provides insight for employees into expectations and an objective way to view their performance. This provides clarity regarding the employee’s career and helps managers provide more meaningful coaching. This aides in the retention and development of employees.

Other benefits financial leaders will see include improved transparency and a reduction in common organizational stressors. Having a common framework to communication expectations and identify issues improves transparency and accountability. Additionally, employees will see more clarity and will want to work in this environment, reducing turnover. Employees will be able to see clear expectations for development. When there is a common framework of expectations, feedback and coaching will also improve in quality and effectiveness.

Decision Making Process

The Financial Leadership Model has four financial competencies that allow financial leaders to be effective. In order for a financial leader to be effective the team supporting them needs to be effective and resilient. Effective teams meet the needs and expectations of customers. Resilient teams are able to adjust to a changing business environment. A resilient team will adapt, improvise, and follow through to make sure the company goals are met.

One of the keys to resiliency is the ability to make effective decisions.To make effective decisions, employees need to have the financial competencies in the Financial Leadership Model. If an employee lacks in the competencies, they cannot make effective decisions. Employees that lack the capacity for effective decision making require more supervision and management intervention. This results in either additional costs or an inability of financial leaders to focus on strategic issues that require their attention.

Early in my career I had an employee that worked for me that would come to me at the end of the day with a list of questions regarding days activity. At first, I answered the questions thinking it was a lack of training that was causing the questions. Over time the number of questions increased and the amount of time that I was spending answering simple questions increased. Soon I was spending over two hours daily answering questions from one employee. After a few late evenings in the office, I came to realize the employee did not need answers to questions, the employee was afraid to make a decision. In this case the issue was a lack of curiosity. It took a while to change the employee’s behavior and stop the daily questions for answers that should have been known.

Consequences

Let us take a look at the consequences of the example above. It is a common situation and a trap many financial leaders fall into. An employee needs help, and a leader provides the help. The trap is allowing the situation to continue because of another factor, most likely the quantity of work the employee gets done. The consequence for the financial leader is an increase in their personal workload because they are taking on some of the employee’s responsibility.

The leader must now deal with the additional work and there are three possible coping mechanisms. First, the leader can work more, spending more time in the office. While this may be a good short-term solution, over time it can lead to burn out and a loss in productivity for the leader. The leader could look to eliminate other tasks to accommodate the time, however this is only a short-term solution.

You can push things off but at some point, the work needs to get done and the result of pushing them off further is to risk not getting it done or reverting to spending more time in the office. The third solution is to try and mix the two strategies. Again, this in only a short-term solution. Eventually you end up with burnout or not getting the work done.

The long-term consequences for this kind of scenario can be even bleaker. Other managers and leaders in the business will perceive you as disorganized, unable to get things done, or not able to focus on the bigger picture. This is not a plan for long term success. Successful financial leaders must build teams that will support them and allow them to serve the strategic needs of the business.

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3 Building Blocks

Curiosity Building Block

Curiosity is one of the Catalyst Competency building blocks. Curiosity is a desire to understand the environment related to the employees work. Curiosity allows an employee to develop an understanding of their work environment. Without curiosity an employee will have a limited understanding of how they fit into the team and the larger organization. Without this understanding an employee will have difficulty putting actions or decisions into the context of the larger organization or team.

Employees with the curiosity building block ask questions and have an understanding of how things work around them. Employees with curiosity are often referred to as having ‘tribal knowledge’ or are subject matter experts. If you ask an employee with curiosity why something is done in a certain manner, they will be able to answer with their understanding of why. Employees that do not understand the work environment will tell you the procedure, who told them to do it or something truly unhelpful like ‘I just work here’.

Influence Building Block

Influence is the second Catalyst Competency building block. Influence is a capacity to engage others to consider action or a different point of view. Employees with influence are often employees that others look to for guidance and direction. Employees with influence are effective at training and teaching others. They also work well with other departments and teams. These employees can communicate the perspective of their department or function and can take messages back to the team.

When an employee lacks the influence building block, they will have difficulty selling others on their ideas and will often result rely on formal authority when sharing ideas with others. Using formal authority, while necessary at times, should not be the primary tool that an employee uses. Influence is about engaging others in discussion. Employees that lack influence are also uncomfortable working with others and many cases others can be uncomfortable with the employee.

The influence building block is not an outgoing or extroverted personality. Influence is about the ability and willingness to engage others in a thoughtful manner. This can be done with words and deeds. A financial leader should look to see if others listen, even if a lot is not said.

Initiative Building Block

The third building block of the Catalyst Competency is Initiative. Initiative is the willingness to take steps towards action. Employees with this building block will frequently offer to help others. These employees are also not easily discouraged by setbacks, will look for solutions and will seek help if a problem is encountered. The willingness to take steps towards action includes being willing to follow as well as lead.

Employees that do not have the initiative building block will show hesitation when there is an opportunity to take action. This can manifest itself in several different ways. An employee may be hesitant to try an alternate or newer solution. An employee may give up on a challenge quickly or adopt an ‘I told you it wouldn’t work’ attitude. It is also common for employees without this building block to be hesitant to lead or follow, even when prompted to do so.

Leaders should not confuse shyness with a lack of initiative. It is possible there is another dynamic at work. The employee may feel that someone else is more qualified or there are more outspoken volunteers in the group. Leaders will get a better understanding if they prompt any employees that are shy or rarely volunteer. While it is preferable to not have to prompt employees, this will help you understand if you are dealing with an issue of shyness or an inability to take action.

Interaction forms Competency

All three building blocks are necessary to successfully build the Catalyst Competency. While the building blocks are separate, they are also dependent on each other. Curiosity, the understanding of your environment helps strengthen influence. It is easier to engage others if you have an understanding of the environment. At the same time, a willingness to engage others helps to build a better understanding of the work environment.

Curiosity and Initiative also compliment each other. It can be difficult to take action if you have a limited understanding of the environment. It is easier to develop an understanding of your environment if you are willing to take action to develop that understanding.

Influence and Initiative are also complimentary. Imagine taking action without having the capacity to engage others. In world today, it is difficult to take initiative on your own. It is also difficult to engage others if you are not willing to take action.

Absence of a Building Block

The absence of a building block results in a performance gap. If an employee is missing two or all three of the building blocks, the performance issue is generally obvious. When an employee is only lacking in one of the three building blocks it can be more difficult to detect. Employees become adept at hiding their weaknesses and leaders can experience a bias based on other performance factors.

There are three common performance gaps. The lack of curiosity results in the Assumer Performance Gap. The lack of curiosity results in employees taking action and trying to exert influence without a proper understanding of the environment and situation. A lack of influence results in the Steamroller Performance Gap. The lack of influence results in an employee having an understanding of the situation and willing to act, however they do not engage others. Finally, is a lack of initiative. This results in the Big Talker Performance Gap. The lack of initiative creates situations where an employee understands and engages others, but nothing ever happens.

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3 Performance Gaps

Using building blocks as diagnostic tools

Building blocks are helpful for leaders is to use diagnostic and communication tools. Understanding the building blocks and their interaction will help leaders to recognize performance gaps and develop effective strategies for dealing with the gaps. Additionally, the building blocks will help communicate with employees. Telling an employee, they need to ‘Catalyst’ better is not going to an effective conversation. However, if the employee is struggling with initiative it is easier to explain the performance gap you see and discuss the issue is the lack of being willing to take action. This allows an employee to understand what they do well and what needs to improve.

Using building blocks as a diagnostic tool is helpful in situations where an employee uses two of the three building blocks. In these situations, it can be difficult to identify the missing building block. To help identify these situations there are three common performance gaps when there is a missing building block.

Steam Roller Performance Gap

When the missing building block is influence, the result is the Steam Roller Performance Gap. The lack of influence results in an inability or unwillingness to engage others. However, the employee has a willingness to take steps towards action and understands the environment. This creates situations where an employee can attempt to push whatever decision they are making without consulting or engaging others that would be affected by the decision.

The challenge a financial leader faces is that the decision may be the right solution, but the implementation is significantly more difficult without the proper engagement of others. While the employee may have determined a viable solution, the financial leadership may be required to get involved to provide the necessary influence to solve any implementation problems.

Financial leaders should also be aware that this performance gap can do damage between teams and departments in a company. Other employees can feel ‘steam rolled’ by employees with this performance gap. If financial leaders are seen as enabling the behavior it can only magnify the damage to internal relationships in the company.

The Assumer Performance Gap

When an employee has initiative and influence without curiosity, the result is the Assumer Performance Gap. An employee will have the capacity to engage others and a willingness to take action, however they will lack an understanding of the environment. This results in the employee needing to make assumptions in the decision-making process. While employees will sometimes be successful with their assumptions, this is a less than optimal process. When the wrong assumptions are made the results can cause several issues for the financial leadership. In almost all cases this will result in additional work to the financial leader to get involved and fill in for the missing understanding that should have been provided by the employee’s own curiosity.

A financial leader may also have to get involved to address any issues or fix any damage because of the assumptions made. Financial leaders should be aware there is a difference between coaching and helping employees with complex processes to augment their understanding and having to provide insight the employee should already have.

The assumptions made can also damage internal relationships in the organization. It is difficult to work with people that are always making bad assumptions. This can make other employees feel resentment at having to address the issues created by the poor assumptions. The behavior can also have an impact beyond the employee, to the team or even department.

Financial leaders should be aware that failing to address these problems can be seen an endorsement of the behavior.

The Big Talker Performance Gap

When an employee is missing the initiative building block the Big Talker Performance Gap will happen. In these situations, an employee has an understanding of the work environment and is willing to engage others, however they do not have a willingness to take steps towards action. The result is almost exclusively a failure to execute. The employee will have a well thought out and socialized idea but is unwilling to take action. For a financial leader, the result is the need to get involved to make sure action is taken when they are aware of the situation. If a financial leader is not aware of the situation there is a missed opportunity. These situations can be rather frustrating for financial leaders, especially when one of the primary coping mechanism employees will use, will be to keep quite or suppress their ideas.

The impact on the organization can equally frustrating. Financial leaders should be aware that this performance gap can create a perception that finance can talk but not walk. This can be damaging to the team’s credibility.

Consequences

The performance gaps result in two different groups of consequences for the financial leaders of a company. The first group consequences are personal. Leaders are always judged by the performance of their teams and the expression that a leader is only as good as the team behind them is true.

While perception matters, the bigger issue for leaders is the impact on their time. Financial leaders only have a fixed amount of time and while we have many tools to try and manage our time, building the right team alleviates many of the time constraints a financial leader will have. Think about the performance gaps mentioned and the time that is spent dealing with these issues. If you have the right team you do not need to address these issues, the team does it correctly for you. Having the right team allows a financial leader to be a financial leader. When you build the right team, the team can be leveraged to help when something happens that demands a significant amount of your attention.

The second group of consequences are relationship based. Financial leaders have many different relationships they need to maintain in order to have success. Having the right team will make building and growing relationships easier. An effective team will make things easier for you as a financial leader to build relationships. If a leader in the business has a poor team people will only want to communicate and deal with the leader and allow the leader of the poor team to deal with the ineffectiveness of the team. The team you have built will also have an impact on your credibility with others. A poor performing team will affect the credibility of a financial leader.

3 Issues

Performance gaps have three causes, cultural issues, leadership issues and individual issues. Cultural issues are the result of an underlying element of the company’s culture causing the performance gap. Leadership issues are the result of a failure on the part of the financial leadership of the company. Individual issues are performance issues related to the individual. Sometimes the causes are complex, meaning the issues are the result of more than one set of issues.

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Building Competency and Success

Building Success

Building success with the catalyst competency of the Financial Leadership Model requires that leaders address competency issues and eliminate performance gaps. Focusing on building the right team will help. The right team will have all the building blocks for each competency. For the Catalyst competency leaders need to make sure their teams have the curiosity, influence and initiative building blocks. This will allow you as a financial leader to build the effective resilient team you need to be successful.

Leaders should also know that even after you have assembled the right team, performance gaps will still happen on occasion. This is the result that none of us can be perfect all of the time. When this happens, it is important to make sure as the leader you are vigilant and use these incidents as an opportunity to coach your team to reinforce the competencies.

Cultural Issues

Cultural issues are one of the sources of performance gaps. Almost all cultural issues arise from unwritten rules or behavioral norms that are integrated into how the company operates on a daily basis. These informal cultural elements can be company wide or specific to a department, function, or geography. The informal cultural elements can have a powerful impact on individual behavior including leaders.

When a cultural issue is identified it is important to gain a firm understanding of the cultural element that is causing the behavior. These are unwritten and informal standards, processes, expectations that are not written down and are not part of any standard operating practice, but they exist. Without a firm understanding of the rules governing the cultural element a solution will be difficult to implement.

Leaders often ask, how do I know recognize a cultural issue? It can be difficult recognize these cultural issues especially when you are part of the culture. The best way to look for a potential cultural issue is to look for signs and indicators of such an issue. The best indicator is a lacking building block that appears to be a trait for an entire team or a significant majority of a team. While it is possible that this is a coincidence, the more likely scenario is there is another factor causing the majority of a team to be missing a building block. Another good indicator will be large scale resistance when you communicate the expectations of the competency. Frequent questions of a similar nature are another indicator of a potential cultural issue.

Cultural issues need to be addressed with care. If leaders fail to take into consideration how integrated the cultural norm is, you may only see a temporary improvement while the cultural element is suppressed. Once you turn your attention to something else, the cultural element will surface again, causing the performance gap to happen again. Once you have identified and understand the cultural element that is causing the conflict with the catalyst competency there are three strategies for dealing with the situation.

The easiest solution to implement is to refine and clarify the competency so it does not cause a conflict. For example, if a company has an element of employees being private and minding their own business, this could create all kinds of issues with the curiosity building block. A refining and clarification strategy would be a financial leader acknowledging the existing element of minding their own business and refining this to meet that this meant to respect confidentiality and allow everyone to have privacy in their personal lives. The leader should also clarify that curiosity in the financial leadership model is about understanding how the business works, which is not confidential or an encroachment of anyone’s personal privacy. By refining the cultural element and clarifying that there is no conflict, you allow the two to coexist.

A more robust solution is to bridge or reconcile the cultural element and the catalyst competency. The purpose of this strategy is to reconcile the cultural norm to the competency and create a bridge so they can coexist. I had a client that had a cultural norm of being nice. While the people at the company were the nicest and friendliest people I have ever encountered, the behavior did have a few side effects. The internal requirement to be nice made it challenging to have difficult conversations. This was a significant challenge for employees to show influence and engage others when there was a difficult or challenging situation. The solution was to use bridge the cultural requirement to be nice with the influence building block. To create the bridge, I explained that having a tough conversation was the right thing to do if you wanted to be ‘nice’, as long as the feedback was based on wanting to help the company and individual be better. This allowed the team to feel that they were being nice and use the building block properly.

The last solution is to change the cultural element. This is the right solution if there is no way for the competency element to coexist with the cultural element. This solution will require time and significant effort from financial leaders to extinguish the cultural element and replace it with the competency from the Financial Leadership Model.

Leadership Issues

Leadership issues are another cause of performance gaps. Leadership issues are the result of the behavior of a financial leader. Financial leaders can have a significant impact on behaviors of the people they lead. If the financial leader is not properly trained or accepting of the Financial Leadership Model, they will not be able to promote the proper behaviors and coach employees to improve.

Identifying leadership issues are as difficult as identifying cultural issues. The Financial Leadership Model provides for methods to assess financial leaders, these methods will be discussed later in the workshops dealing with the leadership traits. This should make it evident which leaders need additional support in understanding and implementing the model and which leaders are resistant to implementing the model. These assessments will provide indicators for which leaders are at risk for creating leadership issues. Another indicator of a possible leadership issue is when there are issues with performance gaps or building blocks that are isolated to employees of leader and not other financial leaders.

Implementation of the Financial Leadership Model is the primary solution for financial leadership issues. Once the model is implemented financial leaders will have the tools necessary to build effective, resilient teams. The model will also provide tools for analyzing and monitoring your team. Financial leaders will also be encouraged to share their success and challenges implementing the model. This will help to create a support network for your financial leaders as they implement the model.

After the model is implemented, the remaining issue is a Financial Leader that is unwilling or resistant to implementing the model. Financial leaders can be trained, coached, and given support tools. However, as the old expression goes, you can lead a horse to water, but you cannot make it drink. If a financial leader will not implement the model, there are only three options.

Option one is to confront the financial leader and explain this is the direction the company is moving and having financial leaders that do not accept the process is not a viable option for the company. Sometimes this will result in the employee getting on board and sometimes the employee will choose to leave. The second option is to remove the employee from a financial leadership role. This is not possible in all scenarios, but sometimes the company may have a role in another function or without the requirements to be a leader.The last option is to do nothing. Doing nothing is a conscious decision to allow the financial leadership model to fail. By not addressing the issue the decision will be made that implementation of the model is not a priority.

Individual Issues

The last cause of performance gaps are individual issues. Issues with individuals should not be addressed until cultural or leadership issues have been addressed. The influence of cultural and leaderships are difficult for most individuals to overcome. Identifying individual issues is a primary function of the assessments that will be discussed in later workshops. The assessments should eventually become integrated into the finance function’s standard assessments of its team.

Solutions for individual issues are similar to the solutions for financial leaders. The primary solution for individuals is coaching and targeted development from their manager. The goal of the coaching is to help employees develop the building blocks necessary for the competencies of the Financial Leadership Model. If an employee refuses to be coached or cannot develop the necessary building blocks there are two options for the financial leader to consider.

The primary option is to have the difficult conversation with the employee regarding the expectations and that the employee is not meeting the expectations. If the employee cannot meet the expectations, they cannot remain with the company.

The second option is finding an alternate option for the employee. This option is only for instances where the employee can be removed from the financial team, or the performance gap can be managed until a pre-planned exit date like retirement. If a financial leader chooses to do nothing, this is no longer an individual problem, but a leadership issue and will need to be addressed as a leadership issue.

Complex Issues

Complex issues occur when there are multiple issues causing a performance gap. If this happens financial leaders should address the issues in order. First, resolve cultural issues then leadership issues and finally individual issues. It is important to address complex issues in this order due to the relationship between the issues. Financial leaders will find that addressing a cultural issue can resolve many individual issues. The same strategies that are used for cultural, leadership and individual issues are the same strategies that are used for complex issues.

Success

As you learn and implement the Financial Leadership Model you will begin to see visible improvements in your team. The purpose of the competencies is to build an effective, resilient team to enable financial leaders to focus on leading their teams and having a positive impact on the business. Once the competency portion of the model is ready for implementation you will identify the performance gaps and start addressing the issues causing the performance gaps.

As the performance gaps are addressed you will begin to see visible improvements in the finance team. You should see the individual team members making better decisions and becoming for effective. You will see gradual improvement in the relationships within the finance function and with the customers of the finance. As these progresses, you will see a change in how the financial function of the company is perceived.

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KPI’s and Measuring Success

Successful Measurements

Measuring progress towards your success is important. Tracking a measurement helps you to understand the progress that has been made, how far you still have to go and how well you are maintaining once you have reached your goal. What makes a measurement helpful in attaining a successful outcome?

Successful measurements have two elements. The first element is comparability. All good measurements can be compared to some other benchmark. The benchmark may be an internally set goal, an industry standard or the performance of others using the same measurement. Comparability is important, otherwise you have a number with no context. The score of a sporting contest in a measurement, but if I only communicate the score of one team, it tells you nothing. You need to score of both teams to compare and determine who won the contest.

The second element is the requirement for an emotional connection to the metric. An emotional connection will provide relevance, direction, and purpose to the metric. If the metric is not perceived to be relevant and have a purpose, why would anyone pay attention to it? Take the example of a sporting contest. If you have no interest in the sport or the participants in the event, will you pay any attention to the score? If I tell you the score, will it have an impact on you? The emotional element is also necessary to validate metric.

All of us need a metric to make sense compared to other perceptions and data that we have. If the metric does not, we will find ways discount or ignore the metric. If I showed you metrics that showed that an average player was better than a player considered to be the greatest you would not believe the metric was accurate. It would not pass the simple eye test of what you have seen.

Setting Goals

When looking to establish goals, there are two well-known schools of thought. Most people have heard of the SMART goal process. SMART goals are Specific, Measurable, Attainable, Realistic and Time-bound. This process provides a methodology for crafting goals that are attainable and easy to communicate.

The second school of thought comes from Jim Collins in his well-known book ‘Good to Great’ where he describes a BHAG, big hairy audacious goal. A BHAG is a large goal that is similar to climbing a mountain. The idea is that the goal is inspiring and works to rally everyone to meet the goal.

I recommend financial leaders strongly consider combining the best of both in creating their goals. Building an effective and resilient team is a big task and will require a goal that will inspire people, however specifics and the ability to measure are equally important. This will have the specific and measurable elements of SMART, a BHAG and a timetable or milestones for getting up the mountain. This kind of goal will help you to establish a goal that will go with your measurement. In addition, your goal will share the same two key elements of your measurement. It will have an inspirational or emotional component to go with the tangible element.

Selecting Measurements

When considering measurements or performance indicators you should consider the audience and the type of measurement. Consideration of the audience is important. Different audiences will have different communication needs and requirements. These needs usually reflect differences in the frequency, precision, and sophistication.

Frequency is how often the measurement is calculated and communicated. When you build a metric to measure the finance team’s success with the Catalyst Competency, the finance team may want to see the metric every month or possibly more often if possible. However, the CEO and other executives may only wish to see the results on a quarterly basis.

Precision is the level of granularity of the metric. Employees and managers in the finance function will want to see their performance on the metric in terms of their team, but the CEO may want to only see the total performance for all teams. The sophistication of the metric is also something to consider for each audience. In general, the easier the calculation the more transparent that calculation will appear.Financial leaders should keep in mind that the further the audience is from the day-to-day elements of the calculation, the greater the need for transparency. Financial leaders should also consider the type of measurement they are selecting and make sure the audience understands what kind of measurement it is.

There are two basic types of metrics, lagging and leading. Lagging indicators or metrics are metrics that measure historical performance where the metric typically lags when improvements have been made. Leading indicators or metrics that show indicate improvement before the improvement is fully implemented. It is important for your audience to understand if your metric is lagging or leading and how significant the time difference may be.

When financial leaders are considering the metrics to use, simplicity should be considered. Metrics that are overly complex in the measurement, interpretation or calculation will be met with skepticism with your audience. Remember metrics need to pass an emotional response from the audience. If your audience feels the process is overly complex there will be that feeling that they are being manipulated, this frequently results in the metric not passing the ‘gut check’ and being met with skepticism.

Communication Strategies

Financial leaders should develop a communication strategy for the metrics that are selected. The strategy should include details on when, how and frequency of communication. When considering the ‘when’ of the communication strategy timing and location should be considered. Will you be communicating the metrics as part of a larger in person employee meeting on a regularly scheduled basis, or will the communication be more informal over email? Financial leaders should design this strategy to be appropriate for their organization. Additionally, might make sense to for the metrics to be communicated in multiple settings. For example, the company CFO may present the results to the entire finance team in a more formal setting and then department or team leaders may review the metrics with their teams more informally.

One you have determined when to communicate, financial leaders should determine how to the communication will be done. Will the results be posted internally for employees to be reviewed? Will someone use a formal presentation or a less formal scorecard? Is a combination appropriate? Financial leaders should also consider if a scorecard or presentation will be used if it will be made available for employees to review.

The final element financial leaders should consider will be the frequency of the communication. The frequency of communication and the calculation of the metrics should be considered. While it is convenient if they match, it is not required. Many companies will calculate metrics on a monthly basis but there is discussion on the metric and progress being made on a more frequent basis. Financial leaders will need to balance the need to periodically report on a metric with the need to discuss building the necessary competencies for an effective, resilient team.

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Executive Summary

Changing Role of Finance

The role of finance has been evolving for decades. The days of finance keeping accurate books and monitoring transactions for compliance is only part of the expectation today. Financial leaders are expected to understand the business and to provide advice on the strategic direction of the organization. Companies expect financial leaders to understand complex issues, communicate with key stakeholders and help to drive the business towards its strategic goals.

The average tenure of a CFO has dropped from five to three years in the last five years. There are many reasons the average tenure for the CFO is shrinking. Many organizations have started to view that a change in strategy, necessitates a change in the CFO. The thought process is that there are types of CFO’s and if you are in a growth stage you need a ‘growth’ financial leader. If you need to reduce costs and improve operating performance, you need the financial leader for that situation. If you have technical accounting issues, there is a financial leader for that situation too. This movement towards type casting financial leaders is helping organizations with their challenges.

One of the common reasons for the reduction in CFO tenure has been the declining average tenure for CEOs. The average tenure of a CFO is about the same as the average CEO. While on the surface it may make sense that a new CEO will want to have their CFO on the team, this is not necessarily the best option. If you are a new CEO would you really want to replace the person that understands the business processes, will provide analysis and decision support? If the CEO decides to replace his financial leader, he / she will have to search and onboard a new financial leader. During this time, the financial function in the company will be at a reduced capacity. The company will either have no financial leader, an interim financial leader, or an obvious situation where the financial leader will be replaced. All of this can cause chaos and delay the CEO from implementing changes or from having the appropriate financial counsel during the transitional period.

Impact of a Financial Leadership Change

This chaos cascades through the organization, starting with the finance team. Employees will fall into one of three groups. The panic group will begin looking for employment and may start to disengage from the business. This can be dangerous in many aspects. First it could lead to a loss of talent since typically the first employees to leave in a crisis and uncertainty are the most talented employees. There is also the risk of one or two key people leaving to start a stampede for the door. A concentration of turnover in finance can have an impact on overall company morale. When there is a concentration of turnover in finance, it is a red flag to the rest of the company. Do these employees know something I do not? Is the financial outlook not positive? The CEO / Business Leader will need to help manage situation, it is improbable that an interim leader or a leader that is considered to be their way out of the organization will be capable of managing the situation by themselves.

The second group is the optimistic group. This is the opposite of the first group. The optimistic group will either consider change positive or have an optimistic view on the company. While this group will still be engaged the challenge is to keep them that way during the transition. If the transition is not handled well, you may find employees shifting out of this group and joining the first group looking to leave.

The third group take a wait and see approach. This is the typical group of fence sitters, waiting for more information or to see what happens. The leadership during the transition needs to make sure that employees in this group stay in this group. It is unlikely they will join the optimistic group until a new financial leader is in place however they may move into the first group looking to leave. The company will also need to watch out for the development of toxic employees. A toxic employee is one that is actively working against the company’s leadership and are working to taint other employees’ perceptions of the company and the changes being made. These employees can be found in either the panic group or the wait and see group.

Consequences

There are several consequences as a result of this process. The CEO will be distracted from their responsibilities by having to pay closer attention to the financial team and this can have an impact on the CEO’s agenda. The new financial leader will have to immediately work to stabilize the existing team. The financial leader will also face pressure to quickly build the team which can lead to poor hiring decisions. The key to success for any new CFO is having an effective team that allows the CFO the opportunity to address the issues they were hired for.

What happens if the new financial leader has different expectations and demonstrates different behavior because the company decided to hire a different CFO ‘type’? Chaos will continue and possibly accelerate. There may be the appearance of smooth, calm surface like a slow flowing river, however, there will be many currents under the surface. Employees will be scrambling to understand changes that have become explicit while trying to read the tea leaves to predict what new expectations and changes may happen.

New leadership will shuffle the groups of employees and cause employees possible shift to a different group. The biggest risk for the new financial leader and the company will be employees that are positive on the change will take a wait and see approach. It is unlikely that an employee that has turned negative on the company prospects will revert and become positive. The new leader will need to find ways to get employees that are taking the wait and see approach to move towards feeling positive and secure about the prospect of the new financial leader.

Leadership change in the financial function can be necessary but changing a financial leader because there is a new CEO, or the company strategy has changed can be cause unnecessary disruption.

Financial Leadership

Financial Leadership is different from organizational leadership. The financial leader is not the face of the company and does not have the formal authority of the CEO. Financial leaders need to have the be able to use influence to affect change in an organization. While financial leaders have formal authority, the successful leaders are able to influence others. The ability to use influence to affect change is the key to financial leadership. The Financial Leadership Model will help financial leaders build these skills and the team necessary to build their ability to influence the organization.

Is it possible for a financial leader to develop skills that allow for them to adapt and change to new business leaders and shifts in the company strategy? After all it is in the best interests of the organization to have a financial leader that can change as the business environment changes. There are ways for financial leaders to learn to pivot their style in different situations. Financial leaders can also build great teams to help them in times of crisis and turmoil. In the case of a new business leader, it would make sense for that leader to want to have someone that will be able to help them understand and improve the business they are leading.

The Financial Leadership Model teaches financial leaders to vary their style based on the business circumstances and to build resilient, capable teams to support them in the process. The Financial Leadership Model has two critical components. First, there are competencies that all members of the finance team should have. These skills are necessary for the financial leader to develop on the team in order for their leadership to be effective. The second component are the leadership traits that are necessary for financial leaders to unlock true financial leadership in their organization. These skills will allow the financial leader to adapt to different situations in the business and to become a valued counsel and advocate for the business.

Company’s do not want to change their financial leadership if the current leader can pivot to the situation. This is great news for leaders that can develop these skills and the necessary team. Why lose time and possibly add chaos to the situation.

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Financial Competencies

In today’s business environment it is critical for CFOs and other financial leaders to have the right team behind them. The most dynamic financial leader cannot be successful if the team supporting them is not effective and built for long term success. Having a team with the right financial competencies is a good first step in the process. There are four competencies that financial employees need to demonstrate. The more senior the role in the organization, the more skill that is required in each of these competencies.

Catalyst; the ability to see what and how things need to be done to meet the company goals is the first of these competencies. The second is Reporting or the communicating on the activities of the company while preserving assets with control. Balance is the ability to balance different activities and requirements to fulfill the needs of the customer. The Curve is the ability to use the company objectives to navigate uncertainty.

It is critical to determine the appropriate level of mastery for each of the competencies and to assess your team based on the expected performance against each competency. If an employee is lacking in the competency you need to develop strategies to address the performance gap. Failing to address these performance gaps requires financial leadership to get involved, distracting them from the working to guide the company to meet its strategic goals.

Catalyst Competency

The catalyst competency is the ability to see what and how things need to be done to meet the company goals. The competencies are broken down into 3 building blocks. The building blocks make it easier to analyze employee performance. The absence or lack of a particular building block results in a performance gap, which can be identified by the missing building block.

The building blocks aid in the analyzing employee performance by focusing on traits that are necessary to be a part of resilient and effective finance team. While the building blocks help analyze the employee’s ability within the competency, we are only assessing if an employee is a good fit for the finance team. The competencies are not an indicator of technical skills or actual performance in their role. Leaders need to be aware that a lack of the catalyst competency indicates a lack of fit within the team and not necessarily a lack of performance. The opposite is also true, strong technical performance in a role does not necessarily mean the catalyst competency, and therefore fit, is present. The building blocks and competencies of the Financial Leadership Model help to identify employees that are a poor fit. Financial leaders should be aware of the good performance, bad fit trap. An employee that does a lot of work but leaves a mess for you to clean up may be a problem and not a solution.

The three building blocks of the catalyst competency are curiosity, influence, and initiative. Curiosity is the desire to understand the environment related to the employees work. Influence is the capacity to engage others to consider action on a different point of view. Initiative is a willingness to take steps towards action. When all three of the building blocks are not present, a performance gap will manifest.

Consequences

When performance gaps develop, there will be consequences for the financial leadership of the company. These consequences are typically additional effort or time that will be required of financial leaders to address the performance gap. This results in added stress for the financial leadership and less time for the strategic issues that are necessary to meet the financial goals of the company. Consider for a moment an employee that is missing the building block curiosity. How will this employee meet the criteria for the catalyst competency, without the ability to understand their environment? There are two possible outcomes.

First, the employee does not take action because of their lack of understanding. While they are not doing any harm, they are participating in meeting the company goals. The second outcome is they could take action without any understanding of what should be done. While the person may have good intentions, they will most likely not have the proper solution. The result for the financial leader will be to fix whatever was done and explain to others the individual meant well but lacked a full understanding of the situation.

Environment

The rate of change in the world is increasing and companies are looking to build resilient teams that can anticipate and deal with change. The automation of transaction processing will further disrupt finance. The role of finance will shift from processing transactions, to analysis and supporting the business. Financial leaders face the challenge of building teams that have the resilience and flexibility to adapt to the changing business environment.

The Financial Leadership Model creates a framework for financial leaders to build these teams through four essential competencies for all members of the finance team. Understanding and deploying these competencies will allow the financial leadership of the company to develop a right team for the future and to have the leadership skills to adapt to the changing environment.

Finance Team

As a financial leader, imagine a future where you have the right people in place to do the day-to-day work and the managerial structure in place to lead the team. This will allow you to focus on the strategic elements of what is required of the financial leader. Most financial leaders struggle to get to this future because they do not take the time to build the right team, with the right skills. They spend too much of their time covering the team’s weaknesses instead of addressing the u